My Mobile Data Usage!

iPad and iPhone do 60% of US mobile browsing and 8.2% of US web browsing is from mobile devices. These are pretty high percentages compare to five years ago. Then I looked at my mobile phone bills and statistics and I found out why. I was a Blackberry user since 2000; virtually hooks to it. This January I decided to switch to iPhone and rest is history! This is from my ATT monthly bill. I am glad I have an unlimited data plan; I am not sure about ATT though 

Clearwire Wasted Money Early On

I was reading Sprint’s CFO comments regarding Clearwire wasted money early on and remembered one of my old posts; Too Much Money and Ego; If you want to kill a Start-up! Successful companies stick to their fundamentals from the beginning. Although a company can and should evolve from an early stage start up mode into a more solid and robust operations, brings different caliber of managers in different stages and gradually morph into a “corporate” mind set; successful companies stick with their roots even in the later stages. This includes operating under tight-cash flow and careful spending and expansion to maintain their margins. With huge amount of money at the beginning and big corporate mentality from day one, there will be no “fundamental” to build the company culture around it.  Also, building a “green field” nation-wide wireless operator does not make sense; anymore. You build the network without customers; increase your OpEx dramatically without increasing your revenue at the same time. That is why Clearwire’s net loss more than doubled in the Q1 to $267 million, compared to a net loss of $94.1 million during the same period last year.

Nokia; General Motors of Mobile Industry

Olli-Pekka Kallasvuo took over the world’s largest mobile phone manufacturer in the summer of 2006. Six months later Steve Jobs unveiled the iPhone, and it has been downhill ever since. Nokia’s shares have tumbled by nearly two-thirds. Its profit margins have withered from 15% to 7%. And the firm has all but imploded in America, despite Mr Kallasvuo’s pledge to conquer the region. Since 2005, experts in mobile industry started to predict a very gloomy future for the dying giant. While they stick to their legacy phones and are happy with major penetration in the developing countries; read it as high volume low margin domains, other competitors started to target higher margin products including smatphones. Developing countries will be all using smartphones within the next five years anyway.
Although people think Nokia’s most obvious problem is being squeezed out of the smartphone market, its biggest mistake was lack of vision for much higher margin products that come with them; applications! Smartphones are not only lucrative in themselves; they are the gateway to the even juicier market for services and “apps”. Apple’s iPhone and Google’s Android range compete on “cool”. BlackBerry is synonymous with business. But what does Nokia stand for? As usual Nokia still chases the pack. Mr Kallasvuo argues that the forthcoming N8—an all-singing-and-dancing handset that is due to hit the stores in October after several delays—will “mark the beginning of our renewal”; I guess this the fifth or sixth time they are waiting for such a product in the past five years. But previews suggest that the phone is more about catching up than setting the pace. Nokia’s ads tout its “revolutionary” touch-screen technology, built-in camera and GPS. Yet such baubles are already commonplace. It is time for Nokia board to wake up and consider a new direction. GM was once dominating car industry, but lack of innovation forced them to bankruptcy. Nokia should learn its lessons; things are changed!

Kleiner’s Laws

Eugene Kleiner was always my favorite VC! My fascination started when I was doing my MBA and read his famous ten laws:

1. Make sure the dog wants to eat the dog food. No matter how ground-breaking a new technology, how large a potential market, make certain customers actually want it.
2. Build one business at a time. Most business plans are overly ambitious. Concentrate on being successful in one endeavor first.
3. The time to take the tarts is when they’re being passed. If an environment is right for funding, go for it. Eugene, more than anyone, knew that venture capital goes in cycles.
4. The problem with most companies is they don’t know what business they’re in.
5. Even turkeys can fly in a high wind. In times of strong economies, even bad companies can look good.
6. It’s easier to get a piece of an existing market than to create a new one.
7. It’s difficult to see the picture when you’re inside the frame.
8. After learning some of the tricks of the trade, some people think they know the trade. This reflected some of Eugene’s own humility; he recognized that many venture capitalists thought they were experts when they had just a bit of knowledge.
9. Venture capitalists will stop at nothing to copy success.
10. Invest in people, not just products. Eugene always respected founding entrepreneurs. He wanted to build companies with them not just with their ideas.

After being around startups for more than ten years and dealing with couple of them I know how true they are! “Build one business at a time. Most business plans are overly ambitious. Concentrate on being successful in one endeavor first”. Let focus and be successful in one technology/product and then jump to the new one. For the first four to five years, your product is your technology and your technology is your product. Your CTO is your VP of engineering and your VP of engineering is your CTO! When you have not delivered your first product, there is no need for future technologies and products. Even if you have the best portfolio of patents, without a solid product and revenue they are worthless! Do not believe me, ask Irvine Jacobs from Qualcomm.
“Even turkeys can fly in a high wind. In times of strong economies, even bad companies can look good”.  This is the story for early 2000 and 2007! When companies were out to raise money and no one vet them based on “their” value and what they have and not based on what is the hype out there. Companies with positive cash flow can go through the present storm and come out more solid and successful. Companies need cash and looking for investors to come out of this storm; will come out diluted and weak!
“It’s easier to get a piece of an existing market than to create a new one”. If market does not exist and you plan for a “potential” product for a “potential” market; good luck!
And my favorite; “Invest in people, not just products. Eugene always respected founding entrepreneurs. He wanted to build companies with them not just with their ideas”. Guys, if you think the founders are not right people to run the company for first five to six years, you do not have a company! DOS was not successful; it was the combination of Bill Gates and DOS which was a success. Apple Computer was not successful; it was combination of Steve Jobs and Apple Computer which was successful. Intel RAMs/Processors were not successful; it was combination of Noyce/Moore/Grove and their RAMs/Processors which was successful.

Selling the Spectrum Would be a last-ditch Effort for Clearwire to raise money

Clearwire CEO Bill Morrow said at an investor conference in September that Clearwire hoped to secure more money via an investment by a company like T-Mobile or an auction of its unneeded spectrum. Looks like after all; selling the spectrum would be a last-ditch effort to raise money. Clearwire has long argued its vast spectrum holdings help set it apart from rivals like Verizon and AT&T, which are building LTE networks. Clearwire has around 120 MHz of spectrum in the 2.5-2.6 GHz band in most of its markets. Bloomberg reported Clearwire is looking to sell of 40 MHz of spectrum in its markets.
It is a strange world; your parent company gives you the valuable spectrum, you raise more money based on having this spectrum, you ran out of cash and can not raise more money, so you sell the spectrum that brought the money at the first place! What a strange business plan.

What Has Happened to Our Startup Culture?

What has happened to our “startup culture”? We are hearing about how greed and focus on short term profit brought world’s financial system into the verge of a complete collapse but heard nothing about other financial institutions misbehavior. Although large banks and their bosses blamed for the problem and punished; better to say singled out, we see same symptoms in all other sectors of investment and business related echo system like VCs. As I mentioned before, VC world is also about to change. From early 2000 until mid 2008, VC industry transformed from a real vibrant business into a fat and blind profit driven industry. VCs were just throwing money into “potential” companies/ideas and wait outside the ring to see what is going to happen. It was not 80s or 90s and they were not Kleiner or Moritz who build the company with entrepreneurs. VCs were the real force behind exploding job creation during 80s and 90s, by supporting real entrepreneurs and creating real companies. Time is passed for partners who use pre-IPO family and friends options and huge bonuses to milk their own baby. It is time for LPs to take a close look at the VCs and really vet them. Clearly something went wrong in the last ten year in the VC industry, let’s fix it for the next ten years.

Verizon Wireless iPhone; Challenges its Data Network and Android

This month Fortune cover shows an iPhone and referring to launch of Verizon iPhone as “get ready for the dream phone”. People familiar with the case speculate Verizon will launch iPhone in early 2011. Lots of US mobile phone users were praying for this news for years. As the largest US mobile operator; by number of subscriber, Verizon was always preferred choice for consumers as the ‘more reliable” service provider. Its CDMA based 2G network, better coverage and call quality in general in the first part of this decade made it preferred choice for voice users.
For the past couple of years, smartphones start to challenge data network capacity. While early 2000 was the hype of wireless data networks deployment, there was no real data traffic until couple of years ago. Operator’s huge investment on mobile data upgrade was sitting idle for years before iPhone shows the art of smartphone development to other vendors and flooding the market with its clones. ATT launch of iPhone in 2007 was smooth until the huge amount of data traffic starts to cripple its network in dense markets, including New York and San Francisco. ATT executives claims the dream of a better iPhone experience on Verizon network will shattered as soon as operator stats to sell and distribute iPhone across its networks. Although Driod and other Andriod based phones were very popular, their popularity and traffic load would not be even close to after iPhone launch. This points to another question; if Verizon starts to sell iPhone, does Andriod based phones continue to growth (at least in the US)? Lots of Verizon geeky data users were forced to buy Android phones because they didn’t have other choices. By introducing iPhone, Verizon introduces a real competitor for its Andriod phones.