VCinJerusalem

Is Twitter Worth Billions? Jeff Thinks So. I'm still not convinced.

See this interview with my good friend Jeff Pulver on the "State of Now" and the "Real Time Internet." Oh, and by the way, Jeff thinks Twitter is worth billions. Now. Well, good thing Jeff is public that he is a shareholder, we wouldn't want him to be objective about this company...

JAXTR HAS 10 MILLION "USERS": Now what? Oh yeah, MAKE MONEY

Back in April 2007 I posted short notice about a cool new thingie (that's a highly technical term, sorry) from a start-up called Jaxtr. At the time I had no idea what their business model might be, and as I was not considering investing in them was only mildly curious.

Now I come across this press release from Jaxtr, with this headline and summary:

Jaxtr Goes Out of Beta; Launches World's First Talk Network In Less Than a Year, Jaxtr User Base Already Tops 10 Million

Jaxtr (www.jaxtr.com), the social communications company that links your phone to the Web, successfully completed eleven months of beta testing today and released version 1.0 of its service. The centerpiece of the new release is café jaxtr, a place where users socialize around the question: "What do you want to talk about?" With this 1.0 release, the company is also implementing its revenue model via the integration of text and display advertising within café jaxtr.

Now, I added the emphasis on the last line there, but find it so interesting. Over a year into the company's existence, with "10 million users," they are only now "implementing [their] revenue model." And, that model is...drum roll please....advertising. Wow. What a radical new concept.

Also, take a step back at Jaxtr's claim of "free international calls." What they really mean is to a limited subset of countries, with you calling into a local number (anyone say calling card?) they will complete the call. Not exactly free.

But anyway, in their press release they give no statistics of actual usage, just "users." I remember in the late 90s at VON conferences Jeff Pulver used to challenge all the speakers coming from VoIP companies to say how many minutes were actually going over their networks, and what minutes were really origanting on the net.  As one the frequent speakers at VON I loved that moment when we all would have to "open the kimono."

A year ago I liked the Jaxtr widget, for its creativity, but that was about it. I did not understand the company they were trying to build. Still don't. But glad to see they remember that the point of a business is to make money. I hope they do.

                                                           

                                                                                   

Identity Theft on Facebook: How Many Israelis Are there?

The field of social networking is an Israeli/Jewish art form...we have been perfecting it for thousands of years. Jews in general, and Israelis in particular (one can look at Israelis as super-Jews[both those that consider themselves Jewish and even those that do not], but that is a whole other conversation...), love to talk. Israelis also love to travel, mainly to find new people to talk to!

No surprise that Israel is a center of communications technology development and commercialization, ranging from IM to VoIP to wireless to [next thing to come]. I have had the honor to be in the center of a lot of this action over the past 12 years (yes, that long since we founded Delta Three (NASDAQ: DDDC), soon after the introduction of [the original] iphone from Vocaltec.

The new buzz on the block is of course social networking, with the somewhat friendly face of Facebook. And Israel has taken to Facebook in a big way. A very big way. As of yesterday (last I checked) there were over 200,000 Facebook members who identified themselves as originating in Israel, i.e. self-identifying as Israelis. That is a lot, especially given the fact that there are only 7.2 million citizens of Israel, according the Israel census bureau. If we take the numbers on face value, 2.7% of Israelis are members of Facebook. Remember, this in a country where a good 10% are ideologically opposed to the Internet.

Are a lot of Israelis using Facebook? Yes. 200,000? No.

So how to make sense of the numbers being reported?

Well, a few ways. First of all, when signing up for Facebook, and even after joining, one can set any country as your home "network." For example, my good friend, the uber-social blogger and all around tech-guru Jeff Pulver listed his home network as Israel. Now, many of us would love Jeff, Risa, Dylan and Jake Pulver to spend more and more time in the Holy Land, and while they are, formally Jeff is not [yet] a full fledged Israeli. But he makes up one of those 200K+ Israelis on Facebook. And he is not alone.
So Jeff is utilizing a very light form of identity theft. Without altering his real world passport, he has created a virtual identity that is not 100% accurate. But since we love Jeff, we are honored that in the virtual world he has thrown in his lot with Israel.

Lets move on to a more serious form of Facebook identity theft...over the past few months I have been friended by some well known political figures....and lets just say that while I would be happy to be friends with [some] of them, something tells me that these virtual friends are something other than they appear. For example, one of my "friends" is Shimon Peres. Now, I happen to like Shimon, and actually am in communication with some of his family members, but Shimon himself...but even that is welcome. I actually like Shimon, so even if not really him, proud to say I am friends with him. Now take another "friend" of mine: Yasser Arafat.  Now, him,  I didn't even like, especially when he was alive.  Now that he is dead, a real stretch to say he is a friend of mine. But there he is, listed as a friend (for the record "he" friended me). [For more info on all these friends and more just peruse my friends on Facebook, itself a dangerous feature....]

Bottom line: it's the Wild West out there, a new frontier, and the rules have not yet been created. But they need to be, and quickly. Because while the above examples are humurous, and we love to brag about the intense interest of Israelis in social networking (after all, we are the "people of the  [Face]Book"), very soon, if not already, we will see some bad stories, criminal uses of false Facebook identities, and worse. Lets hope that Mark and friends over at Facebook central will start to develop some controls in the system. Because if not pretty soon Facebook will become faceless.

Blu-Ray Spider-Man 3...I Guess Thanks Foursquare

So I have been off-line more than usual because I have been traveling, central in my trip was attending the  Foursquare Conference in NY, a semi-secretive gathering about which the NYTimes says "The FourSquare conference has become the East Coast incarnation of Allen & Company’s annual summer gathering in Sun Valley, Idaho, which has been the hatching place for all kinds of major and minor deals."

Not sure I walked away with any deals, but did very much enjoy the proceedings (thanks to Quadrangle partner Josiah Rotenberg   for sneaking me on the invite list). For more on the actual conference, see this posting from the uber-blogger, Jeff Pulver :see here .  I will try and opine on the actual content in the coming days, but for now just want to lodge a complaint about the gift bag!

Yes, I know, shouldn't look a gift horse in the mouth, but the gift bag was so nice...mp3 player, bluetooth headphones (nice ones), the new Bruce album, a Barry Manilow album (ok, that isn't no nice, but is funny). And then...Spider-Man 3, which was actually on the request list of my kids. I proudly announced to my four year old son that I had Spider-Man 3...and then broke our no movies during the week rule to try and show him (at least a few scenes....). And then...the DVD would not play. Got an error message saying "disc not readable." Tried it on a another machine, same error message. neThen I looked at the box: "Blu-Ray" and "Plays on Blu-Ray Players and on Playstation 3." I have ither. Thus resulting in a VERY UPSET four year old. Well, an hour later and many stories read by yours truly, he calmed down.

BUT WHAT IS SONY THINKING? How many people have Blu-Ray players at home???? Would it have been such an incredible engineering feat to have Blu-Ray discs sideways compatible with "regular" DVDs????  Does this sound like Laser Disk to you? A little Beta Max perhaps?

And the box is so nice, with raised picture of Spidey and everything...Sigh. Maybe it will make a nice coaster. And if anyone of you out there has a Blu-Ray player with no disc to play, have got a match for you!

I Hate To Say I Told You So...but $4 Billion for Skype?

OK, so maybe I am stuck on this whole issue of overpaying for rapid growth start-ups, but it really does hurt my business (seeding tech-enabled service companies, see Jerusalem Capital ). When market gets silly, my LPs (limited partners) expect "better" results, entrepreneurs expect higher valuations, and I get an inferiority complex...

Take a look at the news concerning the acquisition way back when of Skype by Ebay for over $4 billion. As Dan Primack  says in his recent posting (here), "In other words, eBay has finally figured out that Skype isn’t worth $4.1 billion."

Yes, the deal never made sense. The only explanation was that Meg used Skype once, saw how easy they made VoIP (and I say that as co-founder and former Chairman of    Delta Three, according to Jeff Pulver  "the first commercial VoIP provider") and told her  M&A team, "get me that." For Ebay $4 billion was not so much to pay, especially as only $1.5 billion was in cash, the rest in shares. The rest of us were left holding the bag, because we know the real value of Skype's "community."

Nu, so does that mean that Google will admit that they overpaid for YouTube ? No, they will not come out and say that, but I am sure down the line they will take an accounting charge to reflect that overpayment (which could be a doozer, based on existing and potential lawsuits).

Again, the rest of us in the ecosystem are left trying to build real sustainable businesses out of all this hype. Challenging, but fun.  Of course,  I (and my LPs) would not mind a 115X return on our money, at least some of the time...;-)

Until then, please only approach us with real business models!

More to Come, But for Now: Final Minutes of Jerusalem ROCKS!

We are still gathering all the video and editing, but here is final minutes of Jerusalem ROCKS!...watch for the "horn" welcoming in the Jewish New Year. Thanks again to my partners Jeff Pulver and Carmi Wurtman, and of course to Jerusalem Foundation, Ruach Hadasha/Nir Barkat, FJC, and many more. Rock on.

Jerusalem ROCKS! Live

Go now to here  for Jerusalem Rocks live....being broadcast by the man himself...www.jeffpulver.com

A Minute is A Minute is A Minute, Lets Mourn SunRocket

Many have heard me tell the story about my Zayde (yiddish for grandpa) Morris, who upon receiving my first VoIP (Voice over IP) call transmission to him said "sounds like a regular phone call...what's the big deal?"

As someone who back in 1996 founded one of the first commercial VoIP providers (Delta Three, still alive and kicking [NASDAQ:DDDC] although no one remembers me there), it took me time to see past my excitement at new uses of technology to fully understand what my grandfather was telling me -- which is that if you offer the same exact service as existed before, it's just not that interesting, at least to the end user. The "big deal" then may be some back office savings, making the delivery of the "same old" service just a little bit cheaper, which in volume could be a nice business. But exciting it isn't.

Today we mourn the loss of SunRocket, a VoIP service provider that burned through $60 MILLION in venture funding. Yes folks, you heard right, that was $60 million. Just as a comparison, as of the day Delta Three went public, we had spent less than $10 million (and inflation hasn't been that much since 1999). What were the VC funds investing in? I was not sure when I first read of SunRocket's success at raising money, and certainly could not explain today. SunRocket offered no innovation, simply copied the same service a myriad of other companies had out there-- and even worse, came to market as the big guys (Comcast, Verizon, etc) finally started to offer the same package ($25 a month unlimited domestic calling, etc)...except backed by billions of dollars in real value, not (relatively speaking) fly-by-night venture backing. 

At the end of the day, SunRocket was trying to sell the same minute FOR THE SAME PRICE, and that simply will not work, and they did not have any magic to sell that minute any more profitably than the next guy.

Can Vonage be far behind? Well, they have more subs (2 million, versus the 200K SunRocket claimed). That means more cash flow, but as we saw with SunRocket, sometimes companies take a year in advance and then go out of business, leaving customers high and dry. Vonage also HAD more cash, but is burning it rapidly, especially as it fights the patent battles with Verizon (which Verizon will lose, but will take time).

The guru of VoIP, Jeff Pulver, realized sometime ago the newness of cheap minutes was not there anymore, which is why he switched his attention to video.

There are a few companies still trying to peddle cheap minutes on mobile phones as a new thing (VoIP over GPRS or 3G, not a recipe for success). I highly doubt they will be able to beat the mobile network operators at the minutes business -- that's how Amp'd Mobile got into trouble. The newness is not cheap, unless you are so far ahead of the curve, as we were back in 1996, or as Skype did two years ago (by the way, Skype now is stalled, see latest Ebay financial reports...).

A minute is a minute is a minute. Give it a fancy name, it's still a minute. 

Jerusalem in my Heart and Soul

Yeah, yeah, I know, I have been slipping again at the blog thing--but I have wonderful excuses.

First of all, between five children, 4 portfolio companies (yup, we've been busy at Jerusalem Capital!), who has time for blogging, especially when I am on "vacation" (anyway in the parenting or start-up world knows there is no real vacation...). But so much is actually going on in my life and my world.

We have been in Aspen the past few weeks, far physically from our home in Jerusalem but not emotionally. Every day we are asked, so where are you from, and when we answer Jerusalem, always the eyes widen, the interest level goes up.

Sitting in the Music Tent yesterday, listening to a showcase from the American Academy of Conducting at Aspen, I thought how global our lives are...in the span of two hours we heard music from Dvorak, Bach, Handel, Tchaikovsky, Weber, Strauss, and Copeland, composers from so many different countries, being played by the Aspen Symphony Orchestra, made up of top musicians from dozens of countries.

Reminded me how small the world is, and how music can bring it all together.

Which brings me to Jerusalem ROCKS!, a huge project I have been blessed to be a partner in the creation of, together with my good friends and soul mates Jeff Pulver  and Carmi Wurtman. To join the buzz appropriately, according to Jeff, need to be part of the Facebook group, which you can join by going here. Of course you need to be a Facebook user, but I assume if you are alive and reading this you already are...(the new neurosis...not having enough "friends" on Facebook...).

I will be writing more about Jerusalem ROCKS! in the weeks to come, but simply put, it is using music to remind us all that Jerusalem is alive and well as a symbol of peace, pluralism and diversity in this crazy world we live in.

It all culminates September 9, 2007, for the first of what we hope to be an annual event, designed to keep Jerusalem of today in all of our hearts and souls, no matter if we are in Aspen, New York, Paris, London, or Chicago (no reason for those places, just what came to mind!).

The Facebook Explosion

So when something viral reaches me, it's really viral! While I follow the industry, unlike some of my friends I do not Twitter, rarely look at LinkedIn, IM limited to my very close business colleagues (ok, and sometimes my 14 year old daughter Michal), etc etc.

I know my widgets from my gadgets, my blogs from my blooks, and my avatars from my gizmoz. But a real user? Not really. When I am on downtime, I sit back with a good book (after reading the printed versions of the daily newspapers we receive on our front doorstep every morning).

Recently I started to see several "Facebook" invitations  in  my Inbox every day...a  phenomenon  my friend Jeff Pulver commented on as well. The main reason I have heard for Facebook's sudden surge is a new API, that has made easier than ever for people to connect various social networking platforms to Facebook. Or maybe simply Facebook passed the tipping point, and the viral vortex finally started to suck me in.

Whatever the reason, compelled me to take a look at Facebook...and I walked away [virtually] scratching my head...I cannot understand why this particular platform has caught on in such a big way. The interface is not intuitive or graphically pleasing.

But I will knock my head against the wall, but rather will embrace. See you soon on Facebook. We don't always need to understand everything, and we never will...