VOIP
An interesting piece entitled Broadband Wireless: BWIA VOIP = New Generation Phone Company from Steve Stroh. That's precisely what my provider in Moscow gives me and its the most reliable broadband I have used anywhere - and it's voice product is cheaper than Vonage's.
23 May 2004
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".
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.
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]
24 April 2004
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."
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.
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.
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.
http://techdirt.com/news/wireless/article/3645
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?"
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]
26 March 2004
Social Networking
Clay Shirky on why you cannot program a machine to replicate a relationship here via Tim Oren.
Some of the comments make the assumption that the brain is a computational machine and therefore should be replicable in code on another computational machine.
This morning whilst waiting for the guys from Mosenergo (Moscow energy utility company) to come to finally authorize the meter in my new apartment (I have only been living there 3 months) I was reading the story of the Spassky / Fisher chess match. The book moved away from history and politics briefly to talk about the mathematical permutations of a chess game, as close to infinite as I will ever get. The authors stated that the number of permutations available in any move were far too great for the brain to compute them. Some were clearly excluded immediately from experience and knowledge with a few options taking the most time. The conclusion was that great chess players used their computational ability as a base but that they were actually artists. It was their ability to "see" or visualize the chess board that made them brilliant, not their computational ability. In one section they described how players "felt" that a piece was in the right place rather than computing its ability to be there.
What's the relevance to Shirky's piece? The brain is computational, but it is also multi-layered in a way that computers just aren't (yet?). Social networking software is a tool which is fairly useless just now and will improve, but it will still have to be employed using human intelligence. Some will be better at creating relationships than others and it will have nothing to do with software and everything to do with emotional intelligence.
Clay Shirky on why you cannot program a machine to replicate a relationship here via Tim Oren.
Some of the comments make the assumption that the brain is a computational machine and therefore should be replicable in code on another computational machine.
This morning whilst waiting for the guys from Mosenergo (Moscow energy utility company) to come to finally authorize the meter in my new apartment (I have only been living there 3 months) I was reading the story of the Spassky / Fisher chess match. The book moved away from history and politics briefly to talk about the mathematical permutations of a chess game, as close to infinite as I will ever get. The authors stated that the number of permutations available in any move were far too great for the brain to compute them. Some were clearly excluded immediately from experience and knowledge with a few options taking the most time. The conclusion was that great chess players used their computational ability as a base but that they were actually artists. It was their ability to "see" or visualize the chess board that made them brilliant, not their computational ability. In one section they described how players "felt" that a piece was in the right place rather than computing its ability to be there.
What's the relevance to Shirky's piece? The brain is computational, but it is also multi-layered in a way that computers just aren't (yet?). Social networking software is a tool which is fairly useless just now and will improve, but it will still have to be employed using human intelligence. Some will be better at creating relationships than others and it will have nothing to do with software and everything to do with emotional intelligence.
24 March 2004
Russian VC Tech Conference
A global first; an online blog from a Russian conference. Albeit, that I am on battery power and there is not even a dial up connection available. It’s being held in the Astoria Hotel in St. Petersburg. This is the hotel that Hitler intended to make his headquarters when he invaded Russia.
Anyway there are probably 4 people who are worth listening to (of which I am clearly one) and we all flew up from Moscow today to speak at this thing to each other and then fly back again. A great way to spend $200 and waste a day along the way.
There is also a whole bunch of bullshit being spoken as well – high tech investing in Russian technology is a nascent industry and there are very few people who really understand it – which does not stop them speaking.
Worth listening to were Marie Trexler of Intel Capital and Sasha Johnson of Landbridge Capital.
Sasha says that we will compete. She is wrong – we will co-operate on some deals and we will compete as well. But Russian technology being what it is we will all be secretive about what we are doing.
18 March 2004
The Russian Infosys?
In a piece of news that will go mostly unread across the entire world Epam Systems agreed to merge (acquire) Fathom Technology. The press release is EPAM Systems Continues Expansion through Strategic Merger with Fathom Technology. Its been a long time in the making.
There will be 1 maybe 2 real powerhouses in the offshore programming business based on talent in the FSU. I believe that Epam is a contender for that position. Fathom's senior management is good and understands that they will never compete with India etc on price - it has to be quality and complexity. Time Warner Music's CIO got it right the other day when he commented that the competition was not $/hour, or people at a desk, or lines of code produced, but the quality of the programme at the end. If anyone knows any metric to measure that please let me know.
In a piece of news that will go mostly unread across the entire world Epam Systems agreed to merge (acquire) Fathom Technology. The press release is EPAM Systems Continues Expansion through Strategic Merger with Fathom Technology. Its been a long time in the making.
There will be 1 maybe 2 real powerhouses in the offshore programming business based on talent in the FSU. I believe that Epam is a contender for that position. Fathom's senior management is good and understands that they will never compete with India etc on price - it has to be quality and complexity. Time Warner Music's CIO got it right the other day when he commented that the competition was not $/hour, or people at a desk, or lines of code produced, but the quality of the programme at the end. If anyone knows any metric to measure that please let me know.
17 March 2004
Israel Dismisses China and India
and fails to even mention Russia! The European Tech Tour is in Israel this week (well Israel qualifies for the Eurovision song contest so they get a bunch of VC's as well) The article is here from Forbes.
Not entirely sure how you are supposed to compare Israel with China and India. There may be some great technology in China and India, but its the spending power that drives deals there. Not many people in Israel but it would be the third most VC-active state in the US if it were a US state. Which is apolitical discussion that I am not even willing to start right now.
Theoretically Russia should compete with Israel more than India and China. However the article is right - we are not yet on the radar screen. Hopefully, an article in 3 years time will not make that mistake.
and fails to even mention Russia! The European Tech Tour is in Israel this week (well Israel qualifies for the Eurovision song contest so they get a bunch of VC's as well) The article is here from Forbes.
Not entirely sure how you are supposed to compare Israel with China and India. There may be some great technology in China and India, but its the spending power that drives deals there. Not many people in Israel but it would be the third most VC-active state in the US if it were a US state. Which is apolitical discussion that I am not even willing to start right now.
Theoretically Russia should compete with Israel more than India and China. However the article is right - we are not yet on the radar screen. Hopefully, an article in 3 years time will not make that mistake.
Skype
Following the post a few daysa ago on Skype and its need to link to physical network - here from BoingBoing is link to a ZDNet story that says the same thing. Skype via BoingBoing.
I stand by my earlier comments - its way more difficult than IT guys think. I'll buy Vonage anyday.
Following the post a few daysa ago on Skype and its need to link to physical network - here from BoingBoing is link to a ZDNet story that says the same thing. Skype via BoingBoing.
I stand by my earlier comments - its way more difficult than IT guys think. I'll buy Vonage anyday.
15 March 2004
VOIP Business Models
Om Malik reports here on Skype’s funding by DFJ and Index. To quote; “Despite whatever the press might say, and how much fans of Skype might rave about the company, I still don’t see a business model.”
He’s right for two reasons; firstly because it’s voice over IP – not a new way of communicating, in the same way that the Internet spawned new ways of delivering content, but it was the same content – until blogging came along. Secondly, because it’s a closed format.
The first is the most challengeable assumption. In the case of VOIP the IP bit does not add much value to the voice; it just changes the way that the data (your voice) is carried. IP networks allow end user services to be rolled out more quickly and cheaply. (There are any number of forums over on Slashdot on building your own IP PBX.) So “follow-me” or PAM services aren’t premium priced elite services only for Fortune 100 companies, they can be made available to everyone. This has little to do with “voice over” and all to do with IP which is intelligence moving to the edge of the network. However, I am willing to accept the charge that different delivery methods open up new business models that may not have been available previously. It’s just that in this case I cannot see what they are.
To my mind the greater reason for Skype to fail is that it is a closed format. A not great analogy would be running fixed line networks next to mobile networks and not allowing for any interconnect. Actually it’s worse than that; it’s running two GSM networks next to each other and not allowing any interconnect. I understand that the plan is to allow connection to physical networks, for a price, along with plenty of other premium services. For anyone born and brought up in the IT world go have a look at what it takes to build a SS7 stack, put it alongside a SIP stack, H523, MGCP (and the other 100 that I forget about just now) which is what it takes to make this service ubiquitous.
All of the above notwithstanding, there is a reasonable chance that Skype will make its founders and investors money. Someone will buy it and be left with financial egg on their face.
Is the US Declining?
Dan Gillmor's Sunday column hits on the issue well. Can Silicon Valley, U.S. Lead in New Global Economy?
The majority of the posters then wander off in to concerns about offshoring and outsourcing, which IMHO slightly misses the point. I think the issue here is about globalization. Pre-bubble (I prefer telecom to Internet) the Valley was THE center for innovation. Scientists and engineers both conceived new technological solutions and partnered with business teams that built the business models that executed them.
The Valley no longer has an exclusive license on new technological solutions. If you examine the geographical origins of the nano deals that Steve Jurvetson has led at DFJ you will find that very few, if any, originated in California. So much for no investing more than 2 hours away from Sand Hill Road. Nano investing is an example of innovations happening away from the core Valley, there are plenty of other examples. The Valley was a leading exporter of globalization - we all looked, admired, enjoyed the schadenfreude and then tried to emulate. In particular, we focused on being technologically better / different.
However, its not just about the technology, the business plan is fairly important as well. It strikes me that there is a fairly unique DNA that is fostered in the Valley / Bay Area (call it what you like) that encourages people to take risks. Not just risks with your personal life, but with business plans and approaches to business. Name a technology business (not a technology service business) in the last 15 years that was not born in the Valley that is a meaningful part of the NASDAQ composite. I am sure there are plenty, but not more than 20-30% of the index and probably less. That's an extra-ordinary concentration of meaningful business start-ups.
So what has this to do with Russian technology? Or what's the take away? Innovation is increasingly global, but the change is less marked in the business leaders who will make the technology in to a business. Which is why DFJ Nexus is being born.
Dan Gillmor's Sunday column hits on the issue well. Can Silicon Valley, U.S. Lead in New Global Economy?
The majority of the posters then wander off in to concerns about offshoring and outsourcing, which IMHO slightly misses the point. I think the issue here is about globalization. Pre-bubble (I prefer telecom to Internet) the Valley was THE center for innovation. Scientists and engineers both conceived new technological solutions and partnered with business teams that built the business models that executed them.
The Valley no longer has an exclusive license on new technological solutions. If you examine the geographical origins of the nano deals that Steve Jurvetson has led at DFJ you will find that very few, if any, originated in California. So much for no investing more than 2 hours away from Sand Hill Road. Nano investing is an example of innovations happening away from the core Valley, there are plenty of other examples. The Valley was a leading exporter of globalization - we all looked, admired, enjoyed the schadenfreude and then tried to emulate. In particular, we focused on being technologically better / different.
However, its not just about the technology, the business plan is fairly important as well. It strikes me that there is a fairly unique DNA that is fostered in the Valley / Bay Area (call it what you like) that encourages people to take risks. Not just risks with your personal life, but with business plans and approaches to business. Name a technology business (not a technology service business) in the last 15 years that was not born in the Valley that is a meaningful part of the NASDAQ composite. I am sure there are plenty, but not more than 20-30% of the index and probably less. That's an extra-ordinary concentration of meaningful business start-ups.
So what has this to do with Russian technology? Or what's the take away? Innovation is increasingly global, but the change is less marked in the business leaders who will make the technology in to a business. Which is why DFJ Nexus is being born.
05 March 2004
Russians Helped Iraq with WMD
An article culled by the FT from the NYT about Russians assisting Iraq with its long range balistic missile programme here.
Um well of course it did. The money provided by the US to fight Iran principally went to the USSR in buying weapons (at the height of the Cold War - go figure.) The French got in on the act as well, did not see anyone from Halliburton though. Just about all that was left of Iraq ballistic missile programme by the time of Iraq 2 were Scud Missiles (what's the difference between British Rail and a Scud Missile? British Rail actually kills people.)
Anyway they weren't really working for the Russian government but for a private company - probably was Halliburton after all. And of course the Russian government filled as it is by ex-KGB was not in the slightest interested in what its citizens were doing, especially those who undoubtedly still struggle to get an international passport.
What utter bullshit - surely the headline should be: Bush team floats reason why Iraq has no WMD.
An article culled by the FT from the NYT about Russians assisting Iraq with its long range balistic missile programme here.
Um well of course it did. The money provided by the US to fight Iran principally went to the USSR in buying weapons (at the height of the Cold War - go figure.) The French got in on the act as well, did not see anyone from Halliburton though. Just about all that was left of Iraq ballistic missile programme by the time of Iraq 2 were Scud Missiles (what's the difference between British Rail and a Scud Missile? British Rail actually kills people.)
Anyway they weren't really working for the Russian government but for a private company - probably was Halliburton after all. And of course the Russian government filled as it is by ex-KGB was not in the slightest interested in what its citizens were doing, especially those who undoubtedly still struggle to get an international passport.
What utter bullshit - surely the headline should be: Bush team floats reason why Iraq has no WMD.
10 February 2004
Smartphone vs PDA
Yet more examples of the difference between the US/ European / Asian centric views of the untility of PDA v's Smartphone from FT.com.
I have been a PDA and simple mobile phone guy for a while because there are times when I don't want to carry all my data whilst I am having more than one drink. However, increasingly I am leaning toward an integrated device. RIM will die, its a service not a product, my iPAQ will not suffice - battery life drain on Windows CE is unbearable, which leaves a choice between the Treo and the P800. Unfortunately the Swedes lose this battle. Any one with any thoughts is most welcome to ping me on this.
Yet more examples of the difference between the US/ European / Asian centric views of the untility of PDA v's Smartphone from FT.com.
I have been a PDA and simple mobile phone guy for a while because there are times when I don't want to carry all my data whilst I am having more than one drink. However, increasingly I am leaning toward an integrated device. RIM will die, its a service not a product, my iPAQ will not suffice - battery life drain on Windows CE is unbearable, which leaves a choice between the Treo and the P800. Unfortunately the Swedes lose this battle. Any one with any thoughts is most welcome to ping me on this.
Dark Matter and Occam's Theory
Not usually a great fan of Slashdot - too many people too far up their own arses. But this thread Slashdot | What If Dark Matter Really Doesn't Exist? is utterly fascinating. On my way back from San Francisco I spent a fascinating hour or so with a Russian entrepreneur in the University Cafe discussing, inter alia, the first billionth of a second. Yes the very first billionth.
A random thought; how does Occam's theorem / postulation apply to modern politics? In the event of two politicians you should vote for the simplest unless evidence suggests otherwise.
As a Brit in Russia my ability to meaningfully comment on US politics is limited - but isn't that the point of blogging - anyhow I mailed a conservative friend of mine in DC about my concerns about Kerry's protectionist views and what a poor choice that left the US voter. Expecting a well vote GWB then response was slightly surprised to get a mail suggesting that the non/less-religous conservative right might be about to abandon GWB. Here's to that famous candidate - none of the above.
Not usually a great fan of Slashdot - too many people too far up their own arses. But this thread Slashdot | What If Dark Matter Really Doesn't Exist? is utterly fascinating. On my way back from San Francisco I spent a fascinating hour or so with a Russian entrepreneur in the University Cafe discussing, inter alia, the first billionth of a second. Yes the very first billionth.
A random thought; how does Occam's theorem / postulation apply to modern politics? In the event of two politicians you should vote for the simplest unless evidence suggests otherwise.
As a Brit in Russia my ability to meaningfully comment on US politics is limited - but isn't that the point of blogging - anyhow I mailed a conservative friend of mine in DC about my concerns about Kerry's protectionist views and what a poor choice that left the US voter. Expecting a well vote GWB then response was slightly surprised to get a mail suggesting that the non/less-religous conservative right might be about to abandon GWB. Here's to that famous candidate - none of the above.
28 January 2004
Sales Forecasting
Good point well made by Ed Sim on sales forecasting here at start ups. He's right it is mostly a mixture of art rather than science - but the key to me is the trust element. I hate, really loathe, percentage based sales forecasts because its almost impossible to measure success retrospectively - which is part of their point. We have one company that categorizes their pipeline by what Ed characterizes as meaningful meetings and then tracks the sales efforts as they move up, down or out. It does not mean that you can accurately say what the final revenue number will be at the end of the year - but its a good honesty board.
Good point well made by Ed Sim on sales forecasting here at start ups. He's right it is mostly a mixture of art rather than science - but the key to me is the trust element. I hate, really loathe, percentage based sales forecasts because its almost impossible to measure success retrospectively - which is part of their point. We have one company that categorizes their pipeline by what Ed characterizes as meaningful meetings and then tracks the sales efforts as they move up, down or out. It does not mean that you can accurately say what the final revenue number will be at the end of the year - but its a good honesty board.
Machine Translation
Another interesting blog from Tim Oren, this time on Machine Translation. My interest in this area was piqued about 2 years ago when we met about 3 teams based in either Moscow or St. Petersburg who had similar takes on the same problem. Russia has an inherent advantage in this area as a. programmers are smart and b. there are a surfeit of highly qualified linguists. As Tim points out the requirement for "a large stock of training data" makes this a human-resource intense project. Furthermore its not just data inputting but actually requires highly skilled linguists with reasonable computer skills to create the stock of data that is in effect the meta language.
The second reason that this area is so interesting is the marketing approach. MT will have to be at least as good as human translators before value will transfer from the services to software. Consider that much of the $10bn market is in highly specialized subjects which require very accurate translation and it would seem that humans will continue to dominate the market for some time. Yet if the product comes close to acheiving human translation standard once a document is analyzed the result is a reasonably accurate "semantic" analysis; which can be equally used for (say) document management.
So do you swing for the fence and try to grab the EU's tower-of-babel translation contract, or convince Asian eectronic goods manufacturers that their user manuals might even be helpful if translated in to a language that the end user recognised as his / her own, or take an easier route to the first, and less demanding $.
Another interesting blog from Tim Oren, this time on Machine Translation. My interest in this area was piqued about 2 years ago when we met about 3 teams based in either Moscow or St. Petersburg who had similar takes on the same problem. Russia has an inherent advantage in this area as a. programmers are smart and b. there are a surfeit of highly qualified linguists. As Tim points out the requirement for "a large stock of training data" makes this a human-resource intense project. Furthermore its not just data inputting but actually requires highly skilled linguists with reasonable computer skills to create the stock of data that is in effect the meta language.
The second reason that this area is so interesting is the marketing approach. MT will have to be at least as good as human translators before value will transfer from the services to software. Consider that much of the $10bn market is in highly specialized subjects which require very accurate translation and it would seem that humans will continue to dominate the market for some time. Yet if the product comes close to acheiving human translation standard once a document is analyzed the result is a reasonably accurate "semantic" analysis; which can be equally used for (say) document management.
So do you swing for the fence and try to grab the EU's tower-of-babel translation contract, or convince Asian eectronic goods manufacturers that their user manuals might even be helpful if translated in to a language that the end user recognised as his / her own, or take an easier route to the first, and less demanding $.
18 January 2004
I have been silent for a while due to a; moving appartments, b; my sister getting married over the holiday season and c; and most importantly because I have been writing a PPM. If ever anything causes a desire no to comment more on anything then this is it.
I did however, manage to read Chesbrough's Open Innovation. Brilliant. Best book of the year and it beats the hell out of Simon Sebag Montefiore's Stalin. Which is beginning to annoy me and I am only 100 odd pages in to a book that is 450 pages long.
In the meantime look out for a great book coming out on the great Spassky Fisher chess match in Reykyavik by John Eidenow and writer of Wittgenstein's Poker
I did however, manage to read Chesbrough's Open Innovation. Brilliant. Best book of the year and it beats the hell out of Simon Sebag Montefiore's Stalin. Which is beginning to annoy me and I am only 100 odd pages in to a book that is 450 pages long.
In the meantime look out for a great book coming out on the great Spassky Fisher chess match in Reykyavik by John Eidenow and writer of Wittgenstein's Poker
Overfunding Companies
Fred Wilson at Flatiron Partners on overfunding companies. A topic very dear to my heart as I believe that Russian companies have an inherent cost advantage in addition to being better by virtue of being different.
Fred Wilson at Flatiron Partners on overfunding companies. A topic very dear to my heart as I believe that Russian companies have an inherent cost advantage in addition to being better by virtue of being different.
22 December 2003
Arun Sarin; Vodafone's CEO on 3G, Life and the Universe
Arun Sarin here giving a full interview to the FT on Vodafone's strategy. For those of you with a subscription here is the link. For those without, a quick cut and paste;
"But are we investing seriously? - the answer is yes. And the point is it's not just that we're investing in 3G networks which are an important piece but we're investing in 3G handsets, we're investing in 3G content, we're investing in 3G service delivery platforms because it takes much more than just some infrastructure and a handset out there . That's kind of 2G thinking. The 3G world is a little more complicated and requires a little more systems integration on our part to bring these new products and services to light."
The interviewer immediate follow up question was back to handsets, which as I have pointed out before is neither the question nor the answer to the future of wireless connectivity. How players control the service delivery platform ("SDP") is. Vodafone are a mile ahead of their competitors in this. I don't think that this is generally understood. Too many VC dollars are still being thrown at the handset end of the market and far too few in to the engine.
Which seems a little counter-intuitive. The telecom downturn has seriously hurt the incumbent telecom manufacturers from Ericsson to Lucent and Nortel and just about everyone else along the way. To make it worse their pain happened as the telco world and the IT world really started to converge. IBM will start to eat Lucent's lunch because Lucent cannot compete. To paraphase Claude Leglise from Intel Capital; whenever this firm of disruption occurs there is money to be made by start ups. And if the VC community was clever enough to spot it by VC's. However, I am not sure that this train has pulled in to the station yet. There are a few plays out there - some of which make more sense than others; Opencloud, Apertio, Appium amongst others fit that bill. Then there are a group that seem to, but to my mind miss the point - tw leading contenders amongst these are Aepona and BayPackets. Each of these companies covers a different part of the new network ecosystem. There are plenty others out there, these together with our bet, see below, are the market leaders.
Stovepipe solutions and high integration costs are no longer acceptable. Unless startups use technology to differentiate and protect themselves from resurgent TEM's they will lose business to better funded incumbents. This is not a game of incremental improvements.
Disclosure - we have a big bet in this market BET
Arun Sarin here giving a full interview to the FT on Vodafone's strategy. For those of you with a subscription here is the link. For those without, a quick cut and paste;
"But are we investing seriously? - the answer is yes. And the point is it's not just that we're investing in 3G networks which are an important piece but we're investing in 3G handsets, we're investing in 3G content, we're investing in 3G service delivery platforms because it takes much more than just some infrastructure and a handset out there . That's kind of 2G thinking. The 3G world is a little more complicated and requires a little more systems integration on our part to bring these new products and services to light."
The interviewer immediate follow up question was back to handsets, which as I have pointed out before is neither the question nor the answer to the future of wireless connectivity. How players control the service delivery platform ("SDP") is. Vodafone are a mile ahead of their competitors in this. I don't think that this is generally understood. Too many VC dollars are still being thrown at the handset end of the market and far too few in to the engine.
Which seems a little counter-intuitive. The telecom downturn has seriously hurt the incumbent telecom manufacturers from Ericsson to Lucent and Nortel and just about everyone else along the way. To make it worse their pain happened as the telco world and the IT world really started to converge. IBM will start to eat Lucent's lunch because Lucent cannot compete. To paraphase Claude Leglise from Intel Capital; whenever this firm of disruption occurs there is money to be made by start ups. And if the VC community was clever enough to spot it by VC's. However, I am not sure that this train has pulled in to the station yet. There are a few plays out there - some of which make more sense than others; Opencloud, Apertio, Appium amongst others fit that bill. Then there are a group that seem to, but to my mind miss the point - tw leading contenders amongst these are Aepona and BayPackets. Each of these companies covers a different part of the new network ecosystem. There are plenty others out there, these together with our bet, see below, are the market leaders.
Stovepipe solutions and high integration costs are no longer acceptable. Unless startups use technology to differentiate and protect themselves from resurgent TEM's they will lose business to better funded incumbents. This is not a game of incremental improvements.
Disclosure - we have a big bet in this market BET
18 December 2003
ACOL Technologies
Blatant link venturewire to an investment we closed Monday. I have mentioned the CTO, Alex Shishov, before. The best Russian technologist I have ever met. It was great working with Amadeus and Apax - a good team.
Blatant link venturewire to an investment we closed Monday. I have mentioned the CTO, Alex Shishov, before. The best Russian technologist I have ever met. It was great working with Amadeus and Apax - a good team.
Open Innovation
I have been doing some research in to the role of internal R&D and innovation in large corporations. Slightly behind the times I came across Open Innovation by Henry Chesbrough via Amazon. The core of the idea is expressed in this interview that he gave to IdeaFlow Creativity & Innovation IdeaFlow - Corante:
This distinction between open and closed innovation is at the heart of the book. Closed Innovation is fundamentally about scarcity of useful knowledge. In order to do anything, you have to do everything. It is inwardly focused, and deeply vertically integrated. It takes little or no notice of external knowledge and resources. Open Innovation is fundamentally about operating in a world of abundant knowledge, where "not all the smart people work for you", so you better go find them, connect to them, and build upon what they can do. It seeks ways to build upon and leverage external knowledge, and focuses internal activities upon filling in the gaps, and integrating internal and external knowledge into useful systems.�
IdeaFlow has just joined my Powermarked list of must reads. Chesbrough's book is at this very moment being Amazoned to my parents in the UK (no Russia branch just yet) where it will be great I'm hiding reading.
I have been doing some research in to the role of internal R&D and innovation in large corporations. Slightly behind the times I came across Open Innovation by Henry Chesbrough via Amazon. The core of the idea is expressed in this interview that he gave to IdeaFlow Creativity & Innovation IdeaFlow - Corante:
This distinction between open and closed innovation is at the heart of the book. Closed Innovation is fundamentally about scarcity of useful knowledge. In order to do anything, you have to do everything. It is inwardly focused, and deeply vertically integrated. It takes little or no notice of external knowledge and resources. Open Innovation is fundamentally about operating in a world of abundant knowledge, where "not all the smart people work for you", so you better go find them, connect to them, and build upon what they can do. It seeks ways to build upon and leverage external knowledge, and focuses internal activities upon filling in the gaps, and integrating internal and external knowledge into useful systems.�
IdeaFlow has just joined my Powermarked list of must reads. Chesbrough's book is at this very moment being Amazoned to my parents in the UK (no Russia branch just yet) where it will be great I'm hiding reading.
Subscribe to:
Posts (Atom)
23 May 2004
VOIP
An interesting piece entitled Broadband Wireless: BWIA VOIP = New Generation Phone Company from Steve Stroh. That's precisely what my provider in Moscow gives me and its the most reliable broadband I have used anywhere - and it's voice product is cheaper than Vonage's.
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]
24 April 2004
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.
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.
http://techdirt.com/news/wireless/article/3645
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?"
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]
26 March 2004
Social Networking
Clay Shirky on why you cannot program a machine to replicate a relationship here via Tim Oren.
Some of the comments make the assumption that the brain is a computational machine and therefore should be replicable in code on another computational machine.
This morning whilst waiting for the guys from Mosenergo (Moscow energy utility company) to come to finally authorize the meter in my new apartment (I have only been living there 3 months) I was reading the story of the Spassky / Fisher chess match. The book moved away from history and politics briefly to talk about the mathematical permutations of a chess game, as close to infinite as I will ever get. The authors stated that the number of permutations available in any move were far too great for the brain to compute them. Some were clearly excluded immediately from experience and knowledge with a few options taking the most time. The conclusion was that great chess players used their computational ability as a base but that they were actually artists. It was their ability to "see" or visualize the chess board that made them brilliant, not their computational ability. In one section they described how players "felt" that a piece was in the right place rather than computing its ability to be there.
What's the relevance to Shirky's piece? The brain is computational, but it is also multi-layered in a way that computers just aren't (yet?). Social networking software is a tool which is fairly useless just now and will improve, but it will still have to be employed using human intelligence. Some will be better at creating relationships than others and it will have nothing to do with software and everything to do with emotional intelligence.
24 March 2004
Russian VC Tech Conference
A global first; an online blog from a Russian conference. Albeit, that I am on battery power and there is not even a dial up connection available. It’s being held in the Astoria Hotel in St. Petersburg. This is the hotel that Hitler intended to make his headquarters when he invaded Russia.
Anyway there are probably 4 people who are worth listening to (of which I am clearly one) and we all flew up from Moscow today to speak at this thing to each other and then fly back again. A great way to spend $200 and waste a day along the way.
There is also a whole bunch of bullshit being spoken as well – high tech investing in Russian technology is a nascent industry and there are very few people who really understand it – which does not stop them speaking.
Worth listening to were Marie Trexler of Intel Capital and Sasha Johnson of Landbridge Capital.
Sasha says that we will compete. She is wrong – we will co-operate on some deals and we will compete as well. But Russian technology being what it is we will all be secretive about what we are doing.
18 March 2004
The Russian Infosys?
In a piece of news that will go mostly unread across the entire world Epam Systems agreed to merge (acquire) Fathom Technology. The press release is EPAM Systems Continues Expansion through Strategic Merger with Fathom Technology. Its been a long time in the making.
There will be 1 maybe 2 real powerhouses in the offshore programming business based on talent in the FSU. I believe that Epam is a contender for that position. Fathom's senior management is good and understands that they will never compete with India etc on price - it has to be quality and complexity. Time Warner Music's CIO got it right the other day when he commented that the competition was not $/hour, or people at a desk, or lines of code produced, but the quality of the programme at the end. If anyone knows any metric to measure that please let me know.
17 March 2004
Israel Dismisses China and India
and fails to even mention Russia! The European Tech Tour is in Israel this week (well Israel qualifies for the Eurovision song contest so they get a bunch of VC's as well) The article is here from Forbes.
Not entirely sure how you are supposed to compare Israel with China and India. There may be some great technology in China and India, but its the spending power that drives deals there. Not many people in Israel but it would be the third most VC-active state in the US if it were a US state. Which is apolitical discussion that I am not even willing to start right now.
Theoretically Russia should compete with Israel more than India and China. However the article is right - we are not yet on the radar screen. Hopefully, an article in 3 years time will not make that mistake.
Skype
Following the post a few daysa ago on Skype and its need to link to physical network - here from BoingBoing is link to a ZDNet story that says the same thing. Skype via BoingBoing.
I stand by my earlier comments - its way more difficult than IT guys think. I'll buy Vonage anyday.
15 March 2004
VOIP Business Models
Om Malik reports here on Skype’s funding by DFJ and Index. To quote; “Despite whatever the press might say, and how much fans of Skype might rave about the company, I still don’t see a business model.”
He’s right for two reasons; firstly because it’s voice over IP – not a new way of communicating, in the same way that the Internet spawned new ways of delivering content, but it was the same content – until blogging came along. Secondly, because it’s a closed format.
The first is the most challengeable assumption. In the case of VOIP the IP bit does not add much value to the voice; it just changes the way that the data (your voice) is carried. IP networks allow end user services to be rolled out more quickly and cheaply. (There are any number of forums over on Slashdot on building your own IP PBX.) So “follow-me” or PAM services aren’t premium priced elite services only for Fortune 100 companies, they can be made available to everyone. This has little to do with “voice over” and all to do with IP which is intelligence moving to the edge of the network. However, I am willing to accept the charge that different delivery methods open up new business models that may not have been available previously. It’s just that in this case I cannot see what they are.
To my mind the greater reason for Skype to fail is that it is a closed format. A not great analogy would be running fixed line networks next to mobile networks and not allowing for any interconnect. Actually it’s worse than that; it’s running two GSM networks next to each other and not allowing any interconnect. I understand that the plan is to allow connection to physical networks, for a price, along with plenty of other premium services. For anyone born and brought up in the IT world go have a look at what it takes to build a SS7 stack, put it alongside a SIP stack, H523, MGCP (and the other 100 that I forget about just now) which is what it takes to make this service ubiquitous.
All of the above notwithstanding, there is a reasonable chance that Skype will make its founders and investors money. Someone will buy it and be left with financial egg on their face.
Is the US Declining?
Dan Gillmor's Sunday column hits on the issue well. Can Silicon Valley, U.S. Lead in New Global Economy?
The majority of the posters then wander off in to concerns about offshoring and outsourcing, which IMHO slightly misses the point. I think the issue here is about globalization. Pre-bubble (I prefer telecom to Internet) the Valley was THE center for innovation. Scientists and engineers both conceived new technological solutions and partnered with business teams that built the business models that executed them.
The Valley no longer has an exclusive license on new technological solutions. If you examine the geographical origins of the nano deals that Steve Jurvetson has led at DFJ you will find that very few, if any, originated in California. So much for no investing more than 2 hours away from Sand Hill Road. Nano investing is an example of innovations happening away from the core Valley, there are plenty of other examples. The Valley was a leading exporter of globalization - we all looked, admired, enjoyed the schadenfreude and then tried to emulate. In particular, we focused on being technologically better / different.
However, its not just about the technology, the business plan is fairly important as well. It strikes me that there is a fairly unique DNA that is fostered in the Valley / Bay Area (call it what you like) that encourages people to take risks. Not just risks with your personal life, but with business plans and approaches to business. Name a technology business (not a technology service business) in the last 15 years that was not born in the Valley that is a meaningful part of the NASDAQ composite. I am sure there are plenty, but not more than 20-30% of the index and probably less. That's an extra-ordinary concentration of meaningful business start-ups.
So what has this to do with Russian technology? Or what's the take away? Innovation is increasingly global, but the change is less marked in the business leaders who will make the technology in to a business. Which is why DFJ Nexus is being born.
05 March 2004
Russians Helped Iraq with WMD
An article culled by the FT from the NYT about Russians assisting Iraq with its long range balistic missile programme here.
Um well of course it did. The money provided by the US to fight Iran principally went to the USSR in buying weapons (at the height of the Cold War - go figure.) The French got in on the act as well, did not see anyone from Halliburton though. Just about all that was left of Iraq ballistic missile programme by the time of Iraq 2 were Scud Missiles (what's the difference between British Rail and a Scud Missile? British Rail actually kills people.)
Anyway they weren't really working for the Russian government but for a private company - probably was Halliburton after all. And of course the Russian government filled as it is by ex-KGB was not in the slightest interested in what its citizens were doing, especially those who undoubtedly still struggle to get an international passport.
What utter bullshit - surely the headline should be: Bush team floats reason why Iraq has no WMD.
10 February 2004
Smartphone vs PDA
Yet more examples of the difference between the US/ European / Asian centric views of the untility of PDA v's Smartphone from FT.com.
I have been a PDA and simple mobile phone guy for a while because there are times when I don't want to carry all my data whilst I am having more than one drink. However, increasingly I am leaning toward an integrated device. RIM will die, its a service not a product, my iPAQ will not suffice - battery life drain on Windows CE is unbearable, which leaves a choice between the Treo and the P800. Unfortunately the Swedes lose this battle. Any one with any thoughts is most welcome to ping me on this.
Dark Matter and Occam's Theory
Not usually a great fan of Slashdot - too many people too far up their own arses. But this thread Slashdot | What If Dark Matter Really Doesn't Exist? is utterly fascinating. On my way back from San Francisco I spent a fascinating hour or so with a Russian entrepreneur in the University Cafe discussing, inter alia, the first billionth of a second. Yes the very first billionth.
A random thought; how does Occam's theorem / postulation apply to modern politics? In the event of two politicians you should vote for the simplest unless evidence suggests otherwise.
As a Brit in Russia my ability to meaningfully comment on US politics is limited - but isn't that the point of blogging - anyhow I mailed a conservative friend of mine in DC about my concerns about Kerry's protectionist views and what a poor choice that left the US voter. Expecting a well vote GWB then response was slightly surprised to get a mail suggesting that the non/less-religous conservative right might be about to abandon GWB. Here's to that famous candidate - none of the above.
28 January 2004
Sales Forecasting
Good point well made by Ed Sim on sales forecasting here at start ups. He's right it is mostly a mixture of art rather than science - but the key to me is the trust element. I hate, really loathe, percentage based sales forecasts because its almost impossible to measure success retrospectively - which is part of their point. We have one company that categorizes their pipeline by what Ed characterizes as meaningful meetings and then tracks the sales efforts as they move up, down or out. It does not mean that you can accurately say what the final revenue number will be at the end of the year - but its a good honesty board.
Machine Translation
Another interesting blog from Tim Oren, this time on Machine Translation. My interest in this area was piqued about 2 years ago when we met about 3 teams based in either Moscow or St. Petersburg who had similar takes on the same problem. Russia has an inherent advantage in this area as a. programmers are smart and b. there are a surfeit of highly qualified linguists. As Tim points out the requirement for "a large stock of training data" makes this a human-resource intense project. Furthermore its not just data inputting but actually requires highly skilled linguists with reasonable computer skills to create the stock of data that is in effect the meta language.
The second reason that this area is so interesting is the marketing approach. MT will have to be at least as good as human translators before value will transfer from the services to software. Consider that much of the $10bn market is in highly specialized subjects which require very accurate translation and it would seem that humans will continue to dominate the market for some time. Yet if the product comes close to acheiving human translation standard once a document is analyzed the result is a reasonably accurate "semantic" analysis; which can be equally used for (say) document management.
So do you swing for the fence and try to grab the EU's tower-of-babel translation contract, or convince Asian eectronic goods manufacturers that their user manuals might even be helpful if translated in to a language that the end user recognised as his / her own, or take an easier route to the first, and less demanding $.
18 January 2004
I have been silent for a while due to a; moving appartments, b; my sister getting married over the holiday season and c; and most importantly because I have been writing a PPM. If ever anything causes a desire no to comment more on anything then this is it.
I did however, manage to read Chesbrough's Open Innovation. Brilliant. Best book of the year and it beats the hell out of Simon Sebag Montefiore's Stalin. Which is beginning to annoy me and I am only 100 odd pages in to a book that is 450 pages long.
In the meantime look out for a great book coming out on the great Spassky Fisher chess match in Reykyavik by John Eidenow and writer of Wittgenstein's Poker
Overfunding Companies
Fred Wilson at Flatiron Partners on overfunding companies. A topic very dear to my heart as I believe that Russian companies have an inherent cost advantage in addition to being better by virtue of being different.
22 December 2003
Arun Sarin; Vodafone's CEO on 3G, Life and the Universe
Arun Sarin here giving a full interview to the FT on Vodafone's strategy. For those of you with a subscription here is the link. For those without, a quick cut and paste;
"But are we investing seriously? - the answer is yes. And the point is it's not just that we're investing in 3G networks which are an important piece but we're investing in 3G handsets, we're investing in 3G content, we're investing in 3G service delivery platforms because it takes much more than just some infrastructure and a handset out there . That's kind of 2G thinking. The 3G world is a little more complicated and requires a little more systems integration on our part to bring these new products and services to light."
The interviewer immediate follow up question was back to handsets, which as I have pointed out before is neither the question nor the answer to the future of wireless connectivity. How players control the service delivery platform ("SDP") is. Vodafone are a mile ahead of their competitors in this. I don't think that this is generally understood. Too many VC dollars are still being thrown at the handset end of the market and far too few in to the engine.
Which seems a little counter-intuitive. The telecom downturn has seriously hurt the incumbent telecom manufacturers from Ericsson to Lucent and Nortel and just about everyone else along the way. To make it worse their pain happened as the telco world and the IT world really started to converge. IBM will start to eat Lucent's lunch because Lucent cannot compete. To paraphase Claude Leglise from Intel Capital; whenever this firm of disruption occurs there is money to be made by start ups. And if the VC community was clever enough to spot it by VC's. However, I am not sure that this train has pulled in to the station yet. There are a few plays out there - some of which make more sense than others; Opencloud, Apertio, Appium amongst others fit that bill. Then there are a group that seem to, but to my mind miss the point - tw leading contenders amongst these are Aepona and BayPackets. Each of these companies covers a different part of the new network ecosystem. There are plenty others out there, these together with our bet, see below, are the market leaders.
Stovepipe solutions and high integration costs are no longer acceptable. Unless startups use technology to differentiate and protect themselves from resurgent TEM's they will lose business to better funded incumbents. This is not a game of incremental improvements.
Disclosure - we have a big bet in this market BET
18 December 2003
ACOL Technologies
Blatant link venturewire to an investment we closed Monday. I have mentioned the CTO, Alex Shishov, before. The best Russian technologist I have ever met. It was great working with Amadeus and Apax - a good team.
Open Innovation
I have been doing some research in to the role of internal R&D and innovation in large corporations. Slightly behind the times I came across Open Innovation by Henry Chesbrough via Amazon. The core of the idea is expressed in this interview that he gave to IdeaFlow Creativity & Innovation IdeaFlow - Corante:
This distinction between open and closed innovation is at the heart of the book. Closed Innovation is fundamentally about scarcity of useful knowledge. In order to do anything, you have to do everything. It is inwardly focused, and deeply vertically integrated. It takes little or no notice of external knowledge and resources. Open Innovation is fundamentally about operating in a world of abundant knowledge, where "not all the smart people work for you", so you better go find them, connect to them, and build upon what they can do. It seeks ways to build upon and leverage external knowledge, and focuses internal activities upon filling in the gaps, and integrating internal and external knowledge into useful systems.�
IdeaFlow has just joined my Powermarked list of must reads. Chesbrough's book is at this very moment being Amazoned to my parents in the UK (no Russia branch just yet) where it will be great I'm hiding reading.
Subscribe to:
Posts (Atom)
