27 April 2004

Not The Valley

A great piece here from Always On on the real value that the Valley / Bay Area (whatever) has. Serial entrepreneurs, connections and capital make a real difference; and that is what the the Valley has to offer. But as this piece on The Two Californias of Venture Investing so very clearly points out the rewards for getting it right in other clusters are huge.

Here's hoping that Russia is a cluster; and not just a general missing a "l".
Iraq

Possibly the most damning indictment of UK (aka US) policy in the Middle East. This letter is from the who's who of UK Middle East experts. Blair's policy in Iraq followed by his European Constitution u-turn should be enough to elect a Tory at the next election. That it's not a foregone conclusion is a testimony to the power of Murdoch. But Blair may have just lost his ally through the referendum. When he turns the power of his media against Blair his time will have come. The question is whether Murdoch will support Brown or Howard.

26 April 2004

WiFi Roaming

When WiFi was all about Cometa we heard endlessly how Intel Capital’s investments in supporting services were going to create aggregators or roaming alliances to get rid of the problems below.  Clearly as T-Mobile cannot / will not allow roaming across national networks not sure how the rest of the WiFi world is getting on.

Albeit that I had read somewhere that T-Mobile was about to allow international roaming.

Getting to Heathrow, even from the well-connected location where I live, is a nightmare. Traffic congestion, construction works, police cameras and more make driving profoundly stressful. Checking-in is pretty stressful too, so I tend to leave myself plenty of time (although not as much as the ridiculous recommendations the airlines give at the behest of BAA, which seem to me aimed mainly at increasing shopping).

So I'm at Heathrow with time on my hands. Sitting in the Admiral's Club, there's at last a friendly little sign saying that this is now a T-
Mobile HotSpot. Hurrah! It's taken a while but at last it's here too. So it's out with the Powerbook, do the WiFi mating dance and... No luck. Log-in screen is there but it won't let me. I call the help desk (there's a UK number). I am clearly not the first to call in this circumstance. In the US the help-desk would want to know where I was and what equipment I had, but the first question is "have you ever logged in before". Yes, I have an annual account. "Is that a US account?" Yes. "Your account isn't valid here. You need to buy a UK account." Well that sucks. As that costs more than using GPRS as far as I can see, and as I have already paid T-Mobile megabucks, I think I'll pass.

So I'm connected using Vodafone GPRS, and I think T-Mobile WiFi are really missing the point of 'Mobile' if they expect me to buy an account in each country I visit.


[WebMink]

21 April 2004

The Valley Endeth

Two good blogs in Always On this week and this: The Silicon Valley Diaspora is the second. They should let President Putin know it would be one less thing for him to worry about. My reply in its entirety below:

"Lots of good points, all well made and the trend line is right. However, sitting in Russia looking to commercialize disruptive technologies you have to view a start up in its whole life cycle to get the full picture.
From start up stage through to first meaningful sales companies can be run from not-the-US, and at a fraction of the cost etc. However, for many tech companies and all that I have invested in, their main customers and ALL their potential acquirers have their decision makers based in the US.
Which is where management has to be.
Talented sales and marketing people with the credibility to execute with the largest companies in the world cost the same whether the technology originated in China, India, Russia or Palo Alto. Finally as a VC I want out at some point. Ask your friendly Investment Banker to tell you the premium that a NASDAQ-listed company gets over a directly comparable company on the London Stock Exchange. Or how much Europe's leading tech company pays for a start up compared with the US. Our successful technology companies will look and feel like US companies to get that premium.
The Valley pretty much had a monopoly on innovation until recently. It's still the leading place in the world to sell innovative products and to obtain liquidity. When Russian, Indian, Chinese technology product companies have more IPO's per year than Valley ones I will join the list of worriers."

19 April 2004

VoIP / Skype

Not always a fan of what Rafe Needleman writes but his last two pieces on VoIP, including this on Skype economics from Always On is once again pretty close to the money. It's a. well written, b. well thought through and logical without reverting to journalistic stock phrases to fill space and c. he's pretty much right.

VoIP is a convergence application - it makes most sense to the IT community, but its a telecom application in the broadest sense. The telecom industry is going through the same issues, internally. If you are in need of a more edifying sport than wrestling, toss the "who will be out of a job soon" question to the IT and Network divisions of a large telco. The answer is those who try to separate the two - they are one and the guys who learn both disciplines will be left standing at the end. As I have said repeatedly below, a fundamental undertsanding of the network is required to make this work.

I think that this means Skype could well be late to the party - but don't bet against DFJ's ability to sell it for a fortune.

17 April 2004

Collaboration Software

Good link here from Dan Gillmor's eJournal to an essay by Eugene Eric Kim: A Manifesto for Collaborative Tools. “This essay is a manifesto about software for collaboration -- why the world's future depends on it, why the current crop of tools isn't good enough, and what programmers can and must do about it.”

At the most fundamental level he is right.  Today’s collaboration tools are not good enough mostly because they are not people friendly enough.  Though I think we may differ in what we mean by people friendly.  At the point I was going to agree with the essay unreservedly I got the impression that technology was supposed to be people friendly not designing the tools around how most people interact with their computers.

This is not a rant for build everything around M$oft products, it’s a rant for build products that fit in to products that people use.  This Blog is being created in Outlook through Newsgator’s excellent product.  The application that is open on my computer 100% of the time is Outlook (it’s a very poor program but it’s still overall better than anything else I have played with.) 

I may be, and would like to be, wrong but I feel that this article is more about technology than making collaborative tools useful to the end user – which they aren’t today.

16 April 2004

DRM & File Sharing

Coincidence?  Fred posts, I go to visit a company that moves in the same area.  I think that it has great applications in the Adult movie / online pron business – at least as a starter.

Back in 1997, some friends showed me a deal called Reciprocal.
Reciprocal_website.jpg
Actually in 1997, the company wasn't even called Reciprocal, but that's what it became. The idea was great. Reciprocal had licensed some core technology called Digital Rights Management (DRM) from a company called InterTrust and was building an entire system around the InterTrust technology that would allow content owners to make their content available on the internet without having to worry about illegal file sharing and copyright violations. The Reciprocal solution would insure that whatever rules the content owner wanted to create around the consumption of their content would be enforced. The system even allowed for "superdistribution" which is the concept that everyone who passes on a file to another person can be rewarded for doing that when the ultimate recipient pays for the content.

I liked the idea, saw that it was a necessary building block for internet commerce, and made an investment in January of 1998.

Things didn't work out too well for Reciprocal. The big problem is that the dogs didn't eat the dog food. The system worked pretty well, but the Company couldn't convince the big content owners to adopt their system. Everyone was looking for a "standard" to emerge, but none did.

Microsoft was a big investor in Reciprocal and even their considerable support couldn't get the various content owners to move. The Company ran out of money in the fall of 2001 and Microsoft took over the business as a result of a bridge loan it had made to the Company.

Fast forward to 2004. DRM is in the news in a big way all of sudden.

Intertrust, which went public and struggled for the same reasons, was taken private by Sony and Phillips in a transaction that is reminiscint of the way that Microsoft took over Reciprocal.

But InterTrust had its patents, the same ones that Reciprocal had licensed back in 1997. They had sued Microsoft for patent infringement in 2001. Last week Microsoft paid InterTrust $440 million to license the InterTrust patents and settle the long standing legal battle.

And also last week Rob Glaser sent the now infamous email to Steve Jobs looking for a partnership to team up against the newly strengthened Microsoft. Real has to pick a DRM standard. Rob's head is telling him to go with Microsoft, but his heart is telling him to work with Apple. Sadly for Rob, Steve doesn't seem interested.

So even with all the progress made in the past year, the market is still looking for a "standard". Will it be Microsoft's WMA which includes the Reciprocal technology and a valid license to the InterTrust patents? Or will it be Apple's Fairplay which is by far the most user friendly DRM system i have seen? Can the market continue to develop with competing DRM systems?

I don't know the answers to all these questions and i am not sure Glaser, Jobs, and Gates do either. But i hope that they get them figured out because i still believe DRM is a critical foundation technology for internet commerce and i wouldn't want to see Real or Apple go the way of Reciprocal and InterTrust.


[A VC]

10 April 2004

VOIP

 

Smart comment on VOIP adoption.  For reasons I have written about previously Skype won't go mainstream - something to do with owning the last mile and the facilities and the knowledge.

Earlier this month we wrote about Clay Shirky's latest thoughts on why Skype was a bigger threat to telecom companies than Vonage. We disagreed with his analysis, pointing out that the so-called "revolutionary" differences of Skype may simply slow down adoption. It may influence the direction of VoIP, but it's a long way from there to completely undermining traditional telecom's business models. Salon is now weighing in on the matter, with an opinion piece suggesting that the telcos are poised to embrace and extend VoIP. They've seen what VoIP can do via Vonage, and are looking to add that on their own - mostly as part of their battle with the cable companies. In fact, the real issue isn't about VoIP undercutting voice revenues - but that VoIP may be the "killer app" that drives broadband adoption. For VoIP, users need a broadband connection. If telcos can offer "cheap" VoIP by bundling that price into their DSL offerings, then it's not such a big issue that VoIP eats away at their traditional voice revenue. That's not to say that things like Skype won't eventually have an impact on how VoIP services develop, but it does suggest that people shouldn't just count out the telecom companies. They may not fully embrace the power of VoIP - but they're not completely in the dark on this one. If anything, VoIP will drive them to focus more on being broadband providers, and less on being "telcos".

Corporate Venturing

A piece here from SAP Ventures on Corporate Venturing in Always On.  I’ve been through rather more Corporate Venture departments in the past 3 months than I can remember.  I would characterize their business models as more “hopeful” rather than meaningful.  The ingredient that seems to be most lacking is the ability to tie the investment in to the existing business units.  More time spent in this area could well create better results for them, whether they are principally fund-of-fund investors or B Round direct guys.

Question: "Should corporations retire from direct venture investing and just invest in VC funds or stay away altogether from the current market?"


[AlwaysOn Network]

09 April 2004

Making Money from VOIP

Good point from Fred on making money from investing in VOIP.  I have recently been looking at a VOIP softphone company.  Great technology, just cannot see how it’s going to make me money.

Babak Nivi, the primary blogger on Weekly Read, wrote recently that the next "killer app" will be written on OSX and one of his reasons was the excellent integration of VOIP and Video-OIP into the Apple OS.

While I don't disagree with Babak's assertion, I am not sure that the platform that the next killer app is built on is particularly relevant anymore.

And I think VOIP is a great example. Sure OSX has a great VOIP implementation, but as one of Babak's readers points out, so does Windows CE. And there's got to be some great open source libraries for VOIP that make it pretty simple to implement VOIP on any other platform that a developer might want to build on.

The reality is that core technologies like VOIP are getting commoditized more and more every day and the primary drivers of value in the technology marketplace are now applications of technology that solve real problems.

So I would not look at VOIP as an investment opportunity per se. But I would look hard for entrepreneurs who are using VOIP technologies to solve problems for businesses and consumers. If it costs almost nothing to allow two or more people who are connected via IP (wired, wireless, whatever) to talk to each other or even videoconference with each other, then what business problems does this solve? Are there problems in the healthcare system that can be solved with an elegant VOIP solution, are there problems in the financial services business that can be solved with VOIP, does my brother-in-law have a problem that VOIP will solve?

That's how I am going to think about VOIP oppportunities. If they are built on OSX, great. But it won't take much to port them to any other platform that matters. Look at iTunes.


[A VC]

27 April 2004

Not The Valley

A great piece here from Always On on the real value that the Valley / Bay Area (whatever) has. Serial entrepreneurs, connections and capital make a real difference; and that is what the the Valley has to offer. But as this piece on The Two Californias of Venture Investing so very clearly points out the rewards for getting it right in other clusters are huge.

Here's hoping that Russia is a cluster; and not just a general missing a "l".

Iraq

Possibly the most damning indictment of UK (aka US) policy in the Middle East. This letter is from the who's who of UK Middle East experts. Blair's policy in Iraq followed by his European Constitution u-turn should be enough to elect a Tory at the next election. That it's not a foregone conclusion is a testimony to the power of Murdoch. But Blair may have just lost his ally through the referendum. When he turns the power of his media against Blair his time will have come. The question is whether Murdoch will support Brown or Howard.

26 April 2004

WiFi Roaming

When WiFi was all about Cometa we heard endlessly how Intel Capital’s investments in supporting services were going to create aggregators or roaming alliances to get rid of the problems below.  Clearly as T-Mobile cannot / will not allow roaming across national networks not sure how the rest of the WiFi world is getting on.

Albeit that I had read somewhere that T-Mobile was about to allow international roaming.

Getting to Heathrow, even from the well-connected location where I live, is a nightmare. Traffic congestion, construction works, police cameras and more make driving profoundly stressful. Checking-in is pretty stressful too, so I tend to leave myself plenty of time (although not as much as the ridiculous recommendations the airlines give at the behest of BAA, which seem to me aimed mainly at increasing shopping).

So I'm at Heathrow with time on my hands. Sitting in the Admiral's Club, there's at last a friendly little sign saying that this is now a T-
Mobile HotSpot. Hurrah! It's taken a while but at last it's here too. So it's out with the Powerbook, do the WiFi mating dance and... No luck. Log-in screen is there but it won't let me. I call the help desk (there's a UK number). I am clearly not the first to call in this circumstance. In the US the help-desk would want to know where I was and what equipment I had, but the first question is "have you ever logged in before". Yes, I have an annual account. "Is that a US account?" Yes. "Your account isn't valid here. You need to buy a UK account." Well that sucks. As that costs more than using GPRS as far as I can see, and as I have already paid T-Mobile megabucks, I think I'll pass.

So I'm connected using Vodafone GPRS, and I think T-Mobile WiFi are really missing the point of 'Mobile' if they expect me to buy an account in each country I visit.


[WebMink]

21 April 2004

The Valley Endeth

Two good blogs in Always On this week and this: The Silicon Valley Diaspora is the second. They should let President Putin know it would be one less thing for him to worry about. My reply in its entirety below:

"Lots of good points, all well made and the trend line is right. However, sitting in Russia looking to commercialize disruptive technologies you have to view a start up in its whole life cycle to get the full picture.
From start up stage through to first meaningful sales companies can be run from not-the-US, and at a fraction of the cost etc. However, for many tech companies and all that I have invested in, their main customers and ALL their potential acquirers have their decision makers based in the US.
Which is where management has to be.
Talented sales and marketing people with the credibility to execute with the largest companies in the world cost the same whether the technology originated in China, India, Russia or Palo Alto. Finally as a VC I want out at some point. Ask your friendly Investment Banker to tell you the premium that a NASDAQ-listed company gets over a directly comparable company on the London Stock Exchange. Or how much Europe's leading tech company pays for a start up compared with the US. Our successful technology companies will look and feel like US companies to get that premium.
The Valley pretty much had a monopoly on innovation until recently. It's still the leading place in the world to sell innovative products and to obtain liquidity. When Russian, Indian, Chinese technology product companies have more IPO's per year than Valley ones I will join the list of worriers."

19 April 2004

VoIP / Skype

Not always a fan of what Rafe Needleman writes but his last two pieces on VoIP, including this on Skype economics from Always On is once again pretty close to the money. It's a. well written, b. well thought through and logical without reverting to journalistic stock phrases to fill space and c. he's pretty much right.

VoIP is a convergence application - it makes most sense to the IT community, but its a telecom application in the broadest sense. The telecom industry is going through the same issues, internally. If you are in need of a more edifying sport than wrestling, toss the "who will be out of a job soon" question to the IT and Network divisions of a large telco. The answer is those who try to separate the two - they are one and the guys who learn both disciplines will be left standing at the end. As I have said repeatedly below, a fundamental undertsanding of the network is required to make this work.

I think that this means Skype could well be late to the party - but don't bet against DFJ's ability to sell it for a fortune.

17 April 2004

Collaboration Software

Good link here from Dan Gillmor's eJournal to an essay by Eugene Eric Kim: A Manifesto for Collaborative Tools. “This essay is a manifesto about software for collaboration -- why the world's future depends on it, why the current crop of tools isn't good enough, and what programmers can and must do about it.”

At the most fundamental level he is right.  Today’s collaboration tools are not good enough mostly because they are not people friendly enough.  Though I think we may differ in what we mean by people friendly.  At the point I was going to agree with the essay unreservedly I got the impression that technology was supposed to be people friendly not designing the tools around how most people interact with their computers.

This is not a rant for build everything around M$oft products, it’s a rant for build products that fit in to products that people use.  This Blog is being created in Outlook through Newsgator’s excellent product.  The application that is open on my computer 100% of the time is Outlook (it’s a very poor program but it’s still overall better than anything else I have played with.) 

I may be, and would like to be, wrong but I feel that this article is more about technology than making collaborative tools useful to the end user – which they aren’t today.

16 April 2004

DRM & File Sharing

Coincidence?  Fred posts, I go to visit a company that moves in the same area.  I think that it has great applications in the Adult movie / online pron business – at least as a starter.

Back in 1997, some friends showed me a deal called Reciprocal.
Reciprocal_website.jpg
Actually in 1997, the company wasn't even called Reciprocal, but that's what it became. The idea was great. Reciprocal had licensed some core technology called Digital Rights Management (DRM) from a company called InterTrust and was building an entire system around the InterTrust technology that would allow content owners to make their content available on the internet without having to worry about illegal file sharing and copyright violations. The Reciprocal solution would insure that whatever rules the content owner wanted to create around the consumption of their content would be enforced. The system even allowed for "superdistribution" which is the concept that everyone who passes on a file to another person can be rewarded for doing that when the ultimate recipient pays for the content.

I liked the idea, saw that it was a necessary building block for internet commerce, and made an investment in January of 1998.

Things didn't work out too well for Reciprocal. The big problem is that the dogs didn't eat the dog food. The system worked pretty well, but the Company couldn't convince the big content owners to adopt their system. Everyone was looking for a "standard" to emerge, but none did.

Microsoft was a big investor in Reciprocal and even their considerable support couldn't get the various content owners to move. The Company ran out of money in the fall of 2001 and Microsoft took over the business as a result of a bridge loan it had made to the Company.

Fast forward to 2004. DRM is in the news in a big way all of sudden.

Intertrust, which went public and struggled for the same reasons, was taken private by Sony and Phillips in a transaction that is reminiscint of the way that Microsoft took over Reciprocal.

But InterTrust had its patents, the same ones that Reciprocal had licensed back in 1997. They had sued Microsoft for patent infringement in 2001. Last week Microsoft paid InterTrust $440 million to license the InterTrust patents and settle the long standing legal battle.

And also last week Rob Glaser sent the now infamous email to Steve Jobs looking for a partnership to team up against the newly strengthened Microsoft. Real has to pick a DRM standard. Rob's head is telling him to go with Microsoft, but his heart is telling him to work with Apple. Sadly for Rob, Steve doesn't seem interested.

So even with all the progress made in the past year, the market is still looking for a "standard". Will it be Microsoft's WMA which includes the Reciprocal technology and a valid license to the InterTrust patents? Or will it be Apple's Fairplay which is by far the most user friendly DRM system i have seen? Can the market continue to develop with competing DRM systems?

I don't know the answers to all these questions and i am not sure Glaser, Jobs, and Gates do either. But i hope that they get them figured out because i still believe DRM is a critical foundation technology for internet commerce and i wouldn't want to see Real or Apple go the way of Reciprocal and InterTrust.


[A VC]

10 April 2004

VOIP

 

Smart comment on VOIP adoption.  For reasons I have written about previously Skype won't go mainstream - something to do with owning the last mile and the facilities and the knowledge.

Earlier this month we wrote about Clay Shirky's latest thoughts on why Skype was a bigger threat to telecom companies than Vonage. We disagreed with his analysis, pointing out that the so-called "revolutionary" differences of Skype may simply slow down adoption. It may influence the direction of VoIP, but it's a long way from there to completely undermining traditional telecom's business models. Salon is now weighing in on the matter, with an opinion piece suggesting that the telcos are poised to embrace and extend VoIP. They've seen what VoIP can do via Vonage, and are looking to add that on their own - mostly as part of their battle with the cable companies. In fact, the real issue isn't about VoIP undercutting voice revenues - but that VoIP may be the "killer app" that drives broadband adoption. For VoIP, users need a broadband connection. If telcos can offer "cheap" VoIP by bundling that price into their DSL offerings, then it's not such a big issue that VoIP eats away at their traditional voice revenue. That's not to say that things like Skype won't eventually have an impact on how VoIP services develop, but it does suggest that people shouldn't just count out the telecom companies. They may not fully embrace the power of VoIP - but they're not completely in the dark on this one. If anything, VoIP will drive them to focus more on being broadband providers, and less on being "telcos".

Corporate Venturing

A piece here from SAP Ventures on Corporate Venturing in Always On.  I’ve been through rather more Corporate Venture departments in the past 3 months than I can remember.  I would characterize their business models as more “hopeful” rather than meaningful.  The ingredient that seems to be most lacking is the ability to tie the investment in to the existing business units.  More time spent in this area could well create better results for them, whether they are principally fund-of-fund investors or B Round direct guys.

Question: "Should corporations retire from direct venture investing and just invest in VC funds or stay away altogether from the current market?"


[AlwaysOn Network]

09 April 2004

Making Money from VOIP

Good point from Fred on making money from investing in VOIP.  I have recently been looking at a VOIP softphone company.  Great technology, just cannot see how it’s going to make me money.

Babak Nivi, the primary blogger on Weekly Read, wrote recently that the next "killer app" will be written on OSX and one of his reasons was the excellent integration of VOIP and Video-OIP into the Apple OS.

While I don't disagree with Babak's assertion, I am not sure that the platform that the next killer app is built on is particularly relevant anymore.

And I think VOIP is a great example. Sure OSX has a great VOIP implementation, but as one of Babak's readers points out, so does Windows CE. And there's got to be some great open source libraries for VOIP that make it pretty simple to implement VOIP on any other platform that a developer might want to build on.

The reality is that core technologies like VOIP are getting commoditized more and more every day and the primary drivers of value in the technology marketplace are now applications of technology that solve real problems.

So I would not look at VOIP as an investment opportunity per se. But I would look hard for entrepreneurs who are using VOIP technologies to solve problems for businesses and consumers. If it costs almost nothing to allow two or more people who are connected via IP (wired, wireless, whatever) to talk to each other or even videoconference with each other, then what business problems does this solve? Are there problems in the healthcare system that can be solved with an elegant VOIP solution, are there problems in the financial services business that can be solved with VOIP, does my brother-in-law have a problem that VOIP will solve?

That's how I am going to think about VOIP oppportunities. If they are built on OSX, great. But it won't take much to port them to any other platform that matters. Look at iTunes.


[A VC]