My life in the center of the world -- musings on my family, community (local, global, physical and virtual), people and more. Oh and of course, a few words on tech related start-ups, within the context of living in the ulimate start-up with humble goal of repairing the world. Venture backed by over 3,000 years of history, thought, culture, and angst.
By Jacob Ner-David
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.
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!).
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...
We all know the rule of "Silence is Golden," but like all good rules there are exceptions. I will highlight a few here, feel free to send suggestions of more...
1. VC Guy/Angel: Whether as manager of a fund of other people's money or as Angel investor, it is NOT OK to meet with an entrepreneur and simply not get back with clear answer (yes/no, and if no best is to actually say why). I am still guilty of this, both because of email lag (a malady defined by my good friend Jeff Pulver) and plain old procrastination. But we VC guys and gals need to remember back to when we were entrepreneurs (for those of us who were) or even when we were raising money for our funds. No one appreciates investing time in a meeting and never getting a response. At Jerusalem Capital we are trying to do a better job of getting back to people promptly. If you have met with us and did not receive an answer, let me know! Sometimes emails get lost (trust me, it really does happen, digital does not mean perfect).
2. Philanthropic Appeals: So this even more important (this reveals something about me...I love start-ups, but I enjoy philanthropy even more. One helps enable the other!). If you get spam, obviously ignore. But if you receive a direct appeal, but for whatever reason you choose to not contribute (your time and/or money), at least respond. I introduced an acquaintance of mine to an educational project, and did not receive a response. When I saw that same person at a board meeting of another non-profit, and asked him directly if he received my email, he said with a smile: "yes, but I chose to ignore it." I did not accept that behavior, and that night wrote him the following: "I expect more. I expect you to at least take the 10-20 seconds to hit reply and say not interested." Obviously would be great to understand why, but like above, some response is better than being ignored.
3. When Something is Really Wrong: Certainly in a start-up, when time (and cash) is precious, if things are going Really Wrong, no matter where you on within the organization, you need to speak up. Do not wait for the "right moment," because it probably will not come. There should exist an environment in all start-ups where everyone is a stakeholder and feels that way -- that their voice counts. There are no prizes given out in start-up life for "not bothering anyone." The Dilbert cubicle life is the nightmare, nameless employees praying that the "Corporation" forgets they exist. In start-up life everyone counts, and everyone should feel impelled to speak their mind, especially if things are Really Wrong.
As a veteran of the VoIP (Voice over Internet Protocol) industry (for more on that, see www.pulver.com), it is not often that I come across what I consider to be an interesting new product or service, but I think the guys at Jaxtr are on to something. While I just started playing with it a few minutes ago, I am impressed enough to post this widget...and see if anyone makes a call. Try it...
We are in the final days of the contest on Network2.TV , run by my good friend Jeff Pulver. Nothing like a contest to get the creative juices flowing, especially as this one has a $25K first place prize attached to it...nobody can top Jeff for boldness (and generosity).
Browse through the entries...some of them are real works of art (for all the entries see here). For completely sentimental reasons, my favorite is from a series called "FeedMeBubbe." But they are all wonderful, and just a small taste of what entertainment will be like as we move further along in the revolution of networked TV....for good and for bad. I think mostly for good.
A few days ago I was lamenting to my friend Elie Wurtman that I still have not managed to get into a regular schedule with my new life as venture capitalist, and that one of the things suffering was this blog. Elie answered immediately: "It's Quality, Not Quantity." Elie was one the people who inspired me to start writing at all, so his comment was very important to me, and I have been giving a lot of thought to it.
Meanwhile, I continue to meet with dealflow, negotiate potential partnerships with start-ups, and try to keep up with the blistering pace of change in Web 3.0 and beyond. More and more I think we are seeing the value of Elie's comment, that quality, rather than quantity, is really what counts.
Take a look at almost any area of life, and the Quality v. Quantity rule holds (of course, there are exceptions, but as this is a family blog, leave that to you). Can we shoot for both? Yes, but focus on quality.
We are currently seeing a re-emegence of the eyeballs phenomenon of the late 90s. More is more, we are told, whether that be users, dollars invested, valuations, headcount, etc. Take a look at many blogs, and it is difficult to find the actual content, given the myriad tagging services, links, widgets and doodads pasted all over the pages. Do we really need all of that?
500 channels and nothing to watch sound familiar? Now try 5,000 or more channels available on the Web today, and it doesn't get any better. (Thus the need for Jeff Pulver's TV Guide for web television, Network2.TV).
So together with Quality over Quantity, we need to add that sometimes Less is More. And as a small fund, with limited resouces, we need to say: Show Me the Money.
Does that mean I don't want to be told about the billions....NO! I want to dream and work with dreamers, but need to see the path between here and there. Given that we are a small fund, we have the flexibility to do deals that will not be multi-billion dollar acquisitions. A 2X return for us on a $500K investment makes a difference (whereas for a mega-fund a 2x return on a $5 or $10 million investment simply is not interesting...).
In general, like my blog entries have become, we are looking for quality over quantity in our venture fund, but I also think its a good rule in general. Just think how different the world would be if there were fewer non-governmental organizations but of much higher quality. If there were fewer peace summits but real peace. And so on...
OK, so this was my first CES. I had attended Comdex many times (what do you say about a dead trade show -- May It Rest In Peace?), and for many years was a regular speaker at the VON conferences hosted by my friend Jeff Pulver. But this was first time at the fabled CES -- where all the latest gadgets and doodads get released, and in the demise of Comdex and E3 everybody was supposed to converge on Las Vegas.
And so they did. For three days we (remember, was there with the mPortico team) ran from meeting to meeting, which made the trip well worth it. But what of CES itself, you ask -- did I learn anything new? Did I see any extraordinary developments coming down the pike for the technology industry? I am sad to say, no. What I saw was same old same old. On every level. Down to worst aspects of trade shows -- yes, the "booth babes." No, I am not referring to the Adult Entertainment Expo happening literally next door (that's a whole other subject), but rather to the need for seemingly self-respecting serious companies to feel the need to bring themselves down to the lowest level -- mainly because for most, in this day of instant journalism and constant communication, there really isn't anything new to say. Even the iPhone from Mr. Jobs had been blogged to death before the "unveiling" at CES.
To use one example close to my heart, which is the current best known VoIP company, Vonage. These guys have spent hundreds of millions to let everyone know who they are, and they succeeded in generating over 1 million subscribers (paying!). But Vonage does not have a new story to tell -- they are about making phone calls. Lets analyze their booth:
For a better view of the Vonage Vixens, click on the thumbnail. Now what do dancing girls in short minidresses have to do with Internet based communications? Please enlighten me. In addition, if you enlarge the photo, you will see the tag line of Vonage on the booth: "A Better Way to Phone for Less." It seems that VoIP companies like Vonage are still focused, ten years after the first commercialized VoIP efforts (I was blessed to be among that pioneering generation) on cheap phone calls. Even ten years ago we said it was NOT about cheaper phone calls, but something else (because we were pioneers no one expected us to actually say what else...;-)). The best thing I can say about the Vonage booth at CES is that they had nice giveaways for my kids (VON trucks for my three year old, playing cards for the others).
There were some interesting plays on mobile television, unfortunately most of those companies could not say when their demos would be really commercialized. Sling Media had a huge booth, very slick materials, (no booth babes -- I guess they have confidence in their product) and were always crowded with people. Sling are first movers in place shifting, but when you think about it they are a backhanded hack -- redirecting data from my house, for use when I am traveling. Now, if I want to get HBO while traveling, why have it stream to my house and then be redirected....seems like a waste of perfectly good bandwidth. If I want to get HBO when in Singapore, why not just subscribe to HBO directly (for beginning of this idea, see Network2.tv initiative). Of course HBO doesn't let you subscribe to it directly as RSS or some other form of direct subscription...but its only a matter of time.
I guess my real problem is that I just don't like Las Vegas -- I don't gamble and hate the smell of cigarettes, which meant going in and out of buildings in Vegas a torture. In general, I found Vegas to be a sad and depressing place. But to each their own.