A VC'S VIEWMarc Goldberg is a technology investor with over 20 years of experience. His personal blog (Occam's Razor) can be found in mgoldberg.typepad.com.
CleanTech winds are blowing strong
Last week's Innovate2006 conference in Zaragoza included a pre-conference tour of the region with an interesting visit of Endesa and one of the largest Spanish windmill farms, located just a few miles north off Zaragoza. At the end of 2004, Endesa were involved in operational wind farms delivering 1,124 MW, with a further 250 MW under construction, a 20% share of Spanish wind power.
This visit resonated for me with all the recent interest in cleantech funding, and the slew of IT-CleanTech companies that we at Occam have looked at in the past few months.
Jefferies analyst recently produced a CleanTech industry overview which is very good and can be found here, while the full report can also be found here.
Interesting IT4Cleantech companies to watch:
30 May 2006
Forget technology, focus on attention attractors
I had an interesting meeting with a senior executive in charge of strategy and business development at one of the major European media groups last Friday.
My friend is one of the smartest and most articulate of media executives. I spent one hour telling her about the interesting infrastructure and technology play I was looking at, and she spent one hour telling me that she could not care less for super-encryption technology, or smart-delivery video infrastructure, but was looking for low-tech, mass-market services that would drive customer attention in the key customer segments market where her group was active.
Umair Haque, a blogger on new media at consulting firm Bubblegeneration, made exactly the same point in one of his well articulated posts.
Now, this is an investment thesis that has doomed most VCs to watch a disproportionate number of their highest-geek-quotient investments continue to go sideways - while puzzling over the accelerating success of of largely anti-technological plays like flickr, delicious, Skype, Habbo Hotel and MySpace.
Fox's acquisition (Scout media, Newroo, Ksolo, WhatIfSport, MySpace) thesis is a bit more complicated - but predicated on a much deeper understanding of the new media value chain. Fox invests in domains which are hypersocial (discontinuous shifts in social connectivity) or hypercultural (discontinuous shifts in cultural specificity) - sports, karaoke, music. Further, Fox invests at the edge of the new value chain - at the interface with consumers. Further, Fox invests in the three roughly distinct models which live there : markets, networks, and communities. Why? Because Fox understands the deep economics of new media. Value capture in the new media value chain is a function of market power. And market power is a function of attention. And attention is allocated most efficiently by markets, networks and communities. Consider MySpace. MySpace's success is driven by its proprietary music and now video player - the deepest social widget in the new media world. It is what lets fans connect to bands they might love - it is what allocates their attention hyperefficiently (more efficiently than Top 40 charts, corporatized radio robo-DJs, or even next-gen corporobots, like Pitchfork Media).
Infrastructure driven investments are nearly flawlessly discovering the wrong future. It's the future where infrastructure lays the pipes for scores of generic markets, networks, and communities. Of course, this is the future that already happened, which consumers thought sucked, and so they stopped using the www.
What's different about today is that visionaries like Fox (surprisingly enough) understand that what drives attention allocation is the hypersocial and hypercultural; and what drives the hypersocial and the hypercultural in, for example, music and sports, is marginally, but deeply, different.
...If recent history teaches us anything strategic, it's that the Cambrian Explosion in media is about radically redefining the economic essence of media; redefining media production and consumption for an attention and interaction economy; redefining how media shapes the social and the cultural to allocate attention, exploding value creation and value capture.
Companies to watch in that space:
- VPod.TV (who just announced a €4M A Round last Friday)
- Zilio
- Wikio
22 May 2006
Online, down the line
I had the opportunity to take part as a speaker on an investor panel at the recent Total Telecom World Telecommunications Congress in Geneva. The panel was interesting - a strange dialogue between happy VCs funding disruptive telecommunication technologies (VoIP, IP convergence etc…) and troubled telecom executives.
The key lessons from the conference can be structured as follows (those note are based on the minutes/comments taken by E. Jouanne from Occam Conseil).
Network infrastructure
The industry in experiencing cycles of maturation with similar patterns: “Invest → chase volume → price down → competition eliminated → consolidation”, today the number of “Baby Bells” is down to 2.5.
The price of bandwidth is continues to fall, even if we are now for the first time seeing price stabilisation in some areas.
The “must-haves” in the environment are Service Level Agreements and secure/reliable networks.
Key stats:
- +65% - IP traffic last year
- +100% - forecast for this year’s IP traffic, based on +25% this quarter
Traffic structure
“95% of the traffic is data. Video. Flat rate ”
P2P impact on biz models
- Video bandwidth
- Services entertainment
“5% is voice. VoIP accelerates changes (main driver in Business: to replace PBX)”
- Value-added managed services
Tech to monetise and measure “what customers use”, customer centric measurement.
Access
Evolution in the mid term: Dynamic Frequency Allocation
Convergent networks: Intelligent Management Systems
VoIP
“Voice revenue will disappear for sure. The only question is when will it be 18 months or 5 years?”
In the future three main areas of concern for the customers:
- “Quality of service: pricing will be key”
- Quality for pay: right lane, left lane
- Internet Service Providers will have to be forced by local regulations to disclose any IP delay management (used to slow down VoIP applications)
- “Security issue”
Mobile operators
“Today turnover for mobile is 80% voice, 14% SMS, 6 % data “→ “Ultimately it will be like fixed access turnover”
“There will more Instant Messaging usage (IM is the killer app for teenagers. IM will be bundled with VOIP), therefore more data traffic.”
TV/Quadruple play
Huge potential, could be called not quadruple play, but infinite play
Pricing. Flat rate vs. pay: you need to measure whether you charge or not, because there are costs associated to those events
Video on Demand most disruptive for the content industry and small TV stations
Digital Rights Management, secure network, quality
So what? Three cool innovative companies to watch
- Checkpoint (VoIP security)
- Baracoda (telecom churn management via Bluetooth-based services)
- Zenops (mobile gaming)
18 May 2006
