Amazon jumped into a new niche today with the announcement of a beta version of an online cellphone store,AmazonWireless. As someone who recently went through cellphone purchasing hell, I welcome their entrance into a market where the sales effort contains too much unnecessary friction, and too often have unhelpful people, with best intent, just not helping.
It's about time
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Friday, July 10, 2009
Thursday, July 9, 2009
All that shines is not Chrome
I've been doing some more thinking about the Chrome OS and its implications/next steps.
1. Google's ecosystem today is concentrated on breaking its service (SEO) vs supporting its infrastructure. There will have to be a huge amount of work to switch the DNA of this relationship to create the primordial muck for a new OS to be successful.
2. The OS will have a Linux kernel and much Javascript. The later is known for not being a speed demon and performance will be the first measure for its competitiveness (similar to the Chrome browser).
3. Despite the OS being 'fast, lightweight and optimized for the cloud' it will need to run/support some local applications. Such applications need to be readily available, perhaps via a GOOG iTunes like application store.
4. With Android and Chrome OS I would not be surprised if Eric Schmidt resigned from the Apple board as the more he takes on MSFT, the more Apple is exposed to 'friendly fire'
5. The PC era is now rapidly being commoditized from two fronts. The iPhone, which is now a computer, phone, camera, video camera, GPS, music player and game platform represents fantastic value and a classic example of exporting deflation for the benefit of customers. Let's do the math* (courtesy of Amazon):
Netbook PC $375
Phone (Nokia) $ 90
Camera (p&s) $125
Flip video $129
GPS $ 90
iPod $224
Nintendo DS $130
Total $1163
iPhone $399
Savings $764
% savings 66%
The other commoditizing force is the cloud which moves storage and computations away from the personal computer. Hence the move to low cost netbooks that, despite being low(er) power, represent the fastest growing segment of the PC market.
It's easy to look at Apple as a purveyor of premium priced products that gets away with it due to design and brand. I think this is a misplaced perspective that competitors will ignore at their peril.
*I know it's not totally 'apples to apples' due to quality of comparisons (e.g. camera pixels)
MOGUAI - Sittin On Chrome - The best home videos are here Sphere: Related Content
1. Google's ecosystem today is concentrated on breaking its service (SEO) vs supporting its infrastructure. There will have to be a huge amount of work to switch the DNA of this relationship to create the primordial muck for a new OS to be successful.
2. The OS will have a Linux kernel and much Javascript. The later is known for not being a speed demon and performance will be the first measure for its competitiveness (similar to the Chrome browser).
3. Despite the OS being 'fast, lightweight and optimized for the cloud' it will need to run/support some local applications. Such applications need to be readily available, perhaps via a GOOG iTunes like application store.
4. With Android and Chrome OS I would not be surprised if Eric Schmidt resigned from the Apple board as the more he takes on MSFT, the more Apple is exposed to 'friendly fire'
5. The PC era is now rapidly being commoditized from two fronts. The iPhone, which is now a computer, phone, camera, video camera, GPS, music player and game platform represents fantastic value and a classic example of exporting deflation for the benefit of customers. Let's do the math* (courtesy of Amazon):
Netbook PC $375
Phone (Nokia) $ 90
Camera (p&s) $125
Flip video $129
GPS $ 90
iPod $224
Nintendo DS $130
Total $1163
iPhone $399
Savings $764
% savings 66%
The other commoditizing force is the cloud which moves storage and computations away from the personal computer. Hence the move to low cost netbooks that, despite being low(er) power, represent the fastest growing segment of the PC market.
It's easy to look at Apple as a purveyor of premium priced products that gets away with it due to design and brand. I think this is a misplaced perspective that competitors will ignore at their peril.
*I know it's not totally 'apples to apples' due to quality of comparisons (e.g. camera pixels)
MOGUAI - Sittin On Chrome - The best home videos are here Sphere: Related Content
Wednesday, July 8, 2009
Shifting sands
MSFT has done a historic job of utilizing the combination of applications (Office) and its Windows brand to build an industry defining company over the past 30 years. It's competitors were primarily in the applications camp (e.g. Lotus), the infrastructure business (Novell...once led by Eric Schmidt), or the hardware space (IBM). Its business strategy of utilizing the interplay between the two to defend its flanks, while commoditizing the overall price users paid for computing was brilliant and added value for its 'users' while maiming its competitors.
For the first time in many years there are now real storm clouds on the horizon for MSFT. Not anemic growth due to a customer saturation, or self-infliced mediocre products. But a real core competitive challenge.
GOOG's unrelated, but coincident announcements of removing the Beta from its mail client and the same day announcing it's entering the OS business via an 'open source (Linux based), free, lightweight' code base which will be initially targeted towards buyers of netbooks, represents an attempt to trap MSFT in a competitive pincer movement which combines the attributes of a technology shift to the cloud, a platform change to lighter computing (netbooks), and a differentiated business model (freemium).
I am sure there will be some initial confusion about where Android begins and this OS, named Chrome OS ends. GOOG says the following (in essence we are throwing both into the market and will let it decide which will do better:
"Google Chrome OS is a new project, separate from Android. Android was designed from the beginning to work across a variety of devices from phones to set-top boxes to netbooks. Google Chrome OS is being created for people who spend most of their time on the web, and is being designed to power computers ranging from small netbooks to full-size desktop systems. While there are areas where Google Chrome OS and Android overlap, we believe choice will drive innovation for the benefit of everyone, including Google."
In the past, MSFT was at its best when its core was challenged. Time for a Mojo test.
Sphere: Related Content
For the first time in many years there are now real storm clouds on the horizon for MSFT. Not anemic growth due to a customer saturation, or self-infliced mediocre products. But a real core competitive challenge.
GOOG's unrelated, but coincident announcements of removing the Beta from its mail client and the same day announcing it's entering the OS business via an 'open source (Linux based), free, lightweight' code base which will be initially targeted towards buyers of netbooks, represents an attempt to trap MSFT in a competitive pincer movement which combines the attributes of a technology shift to the cloud, a platform change to lighter computing (netbooks), and a differentiated business model (freemium).
I am sure there will be some initial confusion about where Android begins and this OS, named Chrome OS ends. GOOG says the following (in essence we are throwing both into the market and will let it decide which will do better:
"Google Chrome OS is a new project, separate from Android. Android was designed from the beginning to work across a variety of devices from phones to set-top boxes to netbooks. Google Chrome OS is being created for people who spend most of their time on the web, and is being designed to power computers ranging from small netbooks to full-size desktop systems. While there are areas where Google Chrome OS and Android overlap, we believe choice will drive innovation for the benefit of everyone, including Google."
In the past, MSFT was at its best when its core was challenged. Time for a Mojo test.
Sphere: Related Content
Monday, July 6, 2009
Marc Andreessen on his new fund, mega-franchise opportunities, and
Marc Andresseen, probably best known for starting Netscape and Opsware (now part of HP) and Ning. has just closed on raising $300mm for a new Venture Fund. He's on the board of Facebook and an angel investor in Twitter and is using the foundation of those experiences to look at 'franchise creating opportunities'. The following interview displays both is passion and irreverent sides. If you don't have time to read the whole interview from VCJnews, here's an annotated version of the discussion:
Q: What is a franchise company?
A: Andy Rachleff, who is a VC [formerly at Benchmark Capital] who now teaches venture capital at Stanford, did an analysis. Basically between roughly the mid-80s and the mid-2000s—a good cross section of time across a couple of different cycles—what he found is that basically there are about 15 companies a year that are founded in the tech industry that will eventually get to $100 million in annual revenue. Those companies in total represent a very large percentage of the returns to venture capital. His data show that they were 97% of all public returns, which is a good proxy for all returns. So those are the companies that matter. Those are the companies that have a big impact on the world. Those are the companies building foundational technology. Those are the companies that generate all the venture returns.
So, we’re going after those 15 companies and we’ll enter them at any point where we find them. Ideally, we’ll find them at the seed stage and we will help develop them and put in more and more capital as they grow. Failing that, if we screw that up, we will then, as we say, ‘correct our mistakes,’ and we would go into a later round.
Q: What’s your optimal deal size?
A: First of all, you’ll notice that there are two GPs. That’s a large ratio of dollars to GP, probably three or four times what you’ll find in a lot of funds. The deal-size range—this is an area where we’ve relaxed the focus—the deal size range is $50,000 to $50 million.
Here’s why. First of all, we think that it’s not a stage-specific exercise, at least the way that we do it. It’s a company-specific enterprise. We’re on the hunt for new franchise companies in the category I described. Our view is when you find one of those franchises—or a company that you think can be one of those franchises—you want to invest as much as you can both in time and effort across as many rounds as you can.
Q: How will that affect the number of investments you make?
A: The majority of the investments will be in seed stage. We may do as many as 60 to 80 seed stage investments in the first fund. Typically, in the seed stage, we wouldn’t go on the board. In fact, at the seed stage, we often advocate that the companies not even have boards. At the seed stage these days you’re talking about a company with like four or five people, so if you try to put a board together the board can end up with more people than the company. And a seed stage company’s mission in life, in our view, is to find product/market fit. Until it does that, all the rest of the company-building stuff doesn’t make any sense. That’s one side of things.
From our standpoint, a majority of our dollars will go into a much smaller number of deals at the venture stage than at the late stage. And so, hypothetically, 10 to 15 venture deals and two to three late stage deals or something like that. One twist is that we’re broadening the early to late side. We’re more multistage than most. Another twist is we’re narrowing the domain, which we discussed, pretty tightly.
Q: You seem to be a firm believer in the if-we-can-scale-this-thing, the money will come model. You’ve said as much about Facebook and Ning and Qik. But that doesn’t always work. It costs Pandora a lot of money every time it attracts a new user for example, but those users still prefer not to be fed ads. As an investor, how do you know when that’s a viable approach?
A: No. 1, the details really, really matter. The cost structure really matters. I don’t know enough about Pandora. When people get in trouble with this sort of thing, it’s usually for one of two reasons. Either the market wasn’t going to be that large—in which case deferring revenue to get to the market wasn’t worthwhile—or the costs are just too high. So, I don’t want to talk about Pandora specifically.
But, in contrast, here’s how I think about the economics of Twitter, for example. The economics of Twitter are that they’ve spent about $15 million. They have created already a global brand name. Ben likes to point out that the Bing ad campaign [by Microsoft] is $300 million of advertising. Would you rather own the Bing brand or the Twitter brand? So, what’s that worth? Two, they have a user base of about 30 million users now, growing very fast. And, three, they have that growth rate, so they have all the future acquisition.
But even just looking at the current user base, they’ve spent maybe 50 cents per acquired user. Total. For everything. All development, all marketing, everything. And so on the revenue side, you say: ‘Suppose they want to monetize that? Can they get 50 cents per user per year in terms of ads?’ Yeah, probably they could do that. So to go get that $15 million back seems really easy, and it seems like there’s a lot more upside beyond that.
Finally, here's a link to his blog (now on hiatus). Sphere: Related Content
Q: What is a franchise company?
A: Andy Rachleff, who is a VC [formerly at Benchmark Capital] who now teaches venture capital at Stanford, did an analysis. Basically between roughly the mid-80s and the mid-2000s—a good cross section of time across a couple of different cycles—what he found is that basically there are about 15 companies a year that are founded in the tech industry that will eventually get to $100 million in annual revenue. Those companies in total represent a very large percentage of the returns to venture capital. His data show that they were 97% of all public returns, which is a good proxy for all returns. So those are the companies that matter. Those are the companies that have a big impact on the world. Those are the companies building foundational technology. Those are the companies that generate all the venture returns.
So, we’re going after those 15 companies and we’ll enter them at any point where we find them. Ideally, we’ll find them at the seed stage and we will help develop them and put in more and more capital as they grow. Failing that, if we screw that up, we will then, as we say, ‘correct our mistakes,’ and we would go into a later round.
Q: What’s your optimal deal size?
A: First of all, you’ll notice that there are two GPs. That’s a large ratio of dollars to GP, probably three or four times what you’ll find in a lot of funds. The deal-size range—this is an area where we’ve relaxed the focus—the deal size range is $50,000 to $50 million.
Here’s why. First of all, we think that it’s not a stage-specific exercise, at least the way that we do it. It’s a company-specific enterprise. We’re on the hunt for new franchise companies in the category I described. Our view is when you find one of those franchises—or a company that you think can be one of those franchises—you want to invest as much as you can both in time and effort across as many rounds as you can.
Q: How will that affect the number of investments you make?
A: The majority of the investments will be in seed stage. We may do as many as 60 to 80 seed stage investments in the first fund. Typically, in the seed stage, we wouldn’t go on the board. In fact, at the seed stage, we often advocate that the companies not even have boards. At the seed stage these days you’re talking about a company with like four or five people, so if you try to put a board together the board can end up with more people than the company. And a seed stage company’s mission in life, in our view, is to find product/market fit. Until it does that, all the rest of the company-building stuff doesn’t make any sense. That’s one side of things.
From our standpoint, a majority of our dollars will go into a much smaller number of deals at the venture stage than at the late stage. And so, hypothetically, 10 to 15 venture deals and two to three late stage deals or something like that. One twist is that we’re broadening the early to late side. We’re more multistage than most. Another twist is we’re narrowing the domain, which we discussed, pretty tightly.
Q: You seem to be a firm believer in the if-we-can-scale-this-thing, the money will come model. You’ve said as much about Facebook and Ning and Qik. But that doesn’t always work. It costs Pandora a lot of money every time it attracts a new user for example, but those users still prefer not to be fed ads. As an investor, how do you know when that’s a viable approach?
A: No. 1, the details really, really matter. The cost structure really matters. I don’t know enough about Pandora. When people get in trouble with this sort of thing, it’s usually for one of two reasons. Either the market wasn’t going to be that large—in which case deferring revenue to get to the market wasn’t worthwhile—or the costs are just too high. So, I don’t want to talk about Pandora specifically.
But, in contrast, here’s how I think about the economics of Twitter, for example. The economics of Twitter are that they’ve spent about $15 million. They have created already a global brand name. Ben likes to point out that the Bing ad campaign [by Microsoft] is $300 million of advertising. Would you rather own the Bing brand or the Twitter brand? So, what’s that worth? Two, they have a user base of about 30 million users now, growing very fast. And, three, they have that growth rate, so they have all the future acquisition.
But even just looking at the current user base, they’ve spent maybe 50 cents per acquired user. Total. For everything. All development, all marketing, everything. And so on the revenue side, you say: ‘Suppose they want to monetize that? Can they get 50 cents per user per year in terms of ads?’ Yeah, probably they could do that. So to go get that $15 million back seems really easy, and it seems like there’s a lot more upside beyond that.
Finally, here's a link to his blog (now on hiatus). Sphere: Related Content
Palm Pre...or Post?
I headed to the local Sprint store over the weekend to check out the Palm Pre and was deeply disappointed in the device. Coming from a BBerry, I was hoping its slide-out keyboard would give me a tactile typing experience, mated with an internet browsing experience that meets, or even exceeds (yea, multi-tasking) the iPhone.
Unfortunately, I could not get by an instant dislike for the keyboard, which reminded me of the ill-fated IBM PC Jr's chicklet keyboard.
It's no wonder that sales seem to be abating from the release hype.
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Unfortunately, I could not get by an instant dislike for the keyboard, which reminded me of the ill-fated IBM PC Jr's chicklet keyboard.
It's no wonder that sales seem to be abating from the release hype.
Sphere: Related Content
Friday, July 3, 2009
Chris Anderson's reply to Malcolm Gladwell's review
Enjoyable to see such thoughtful writers 'duke' it out:
http://www.longtail.com/the_long_tail/2009/06/dear-malcolm-why-so-threatened.html
If you have time, also read the thoughtful comment section. Sphere: Related Content
http://www.longtail.com/the_long_tail/2009/06/dear-malcolm-why-so-threatened.html
If you have time, also read the thoughtful comment section. Sphere: Related Content
Thursday, July 2, 2009
What's a professional?
A decade or so ago the firm I was in was experiencing hypergrowth and we retained a consultant to assist us in thinking through our organization structure. Being a good consultant, he began his session with us by asking a series of questions and one of the first was for us to define 'what's a professional'. We struggled with a number of weak answers and he gave a pithy definition that made (and still does) so much sense. He opined that a professional is someone who really cares about what they do. I often think about this in my interactions with all sorts of folk.
Earlier today, in response to my previous post, I was contacted by one of the marketing professionals at MyHeritage, who shared wtih me his perspective on the Company's view of the issues that lead to my frustration with their service. As a follow-up, the CEO wrote to elaborate:
"The locking out of your site due to exceeded tree size was a bug, that we fixed tonight after being alerted to it in your blog article.
This lockup was intended for expired sites (people who received a paid service and decided to stop paying for it) and was incorrectly applied to another scenario of an exceeded tree size, for old sites. This is now fixed, and I thank you for bringing it to our attention".
It was a professional response from a busy CEO, and much appreciated by this community member. Hope it also helps the other people affected by the issue.
Sphere: Related Content
Earlier today, in response to my previous post, I was contacted by one of the marketing professionals at MyHeritage, who shared wtih me his perspective on the Company's view of the issues that lead to my frustration with their service. As a follow-up, the CEO wrote to elaborate:
"The locking out of your site due to exceeded tree size was a bug, that we fixed tonight after being alerted to it in your blog article.
This lockup was intended for expired sites (people who received a paid service and decided to stop paying for it) and was incorrectly applied to another scenario of an exceeded tree size, for old sites. This is now fixed, and I thank you for bringing it to our attention".
It was a professional response from a busy CEO, and much appreciated by this community member. Hope it also helps the other people affected by the issue.
Sphere: Related Content
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