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Summary:

Is wireless mail worth $250 million in venture funding? Analyst-turned-VC and one of the few Silicon Valley skeptics, Bill Burnham thinks not really, and goes on to outline why it might be a bubble that would hurt a lot of people. In “A Microcosm of VC […]

Is wireless mail worth $250 million in venture funding? Analyst-turned-VC and one of the few Silicon Valley skeptics, Bill Burnham thinks not really, and goes on to outline why it might be a bubble that would hurt a lot of people. In “A Microcosm of VC Madness: $250M for Wireless E-Mail” he writes:

Last week, Good Technology announced that they had raised another $45.8M bringing their total paid-in-capital to a whopping $146M. This announcement came just about a month after one of Good’s main competitors, Visto, announced that they had also closed a new round taking their total funding to a staggering $160M. If you add in competitor Seven Networks’ $55M in funding that means that over a quarter of billion dollars has been invested in just 3 software firms, each pursuing largely the same market.

While $250 million may not seem like a lot of money to some (especially when you are investing other people’s money), but it is important to point out that software start-ups normally take between $10-to-$25 million to grow. Triple digit amounts are reserved for mostly chip or optical networking start-ups, and there aren’t too many of those around.

Now if Good et. al. were working on some kind of massive world-changing software platform I suppose I could see investing $250M in the sector, but as far as I can tell Good and the others appear to simply be building middleware that enables corporate employees to access their e-mail (and other applications) via hand-held devices. A worthy pursuit no doubt, but not an earth shattering opportunity for software value creation on par with PC operating systems, App Servers or RDBMSs.

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  1. Charlie Sierra Tuesday, June 15, 2004

    The future of wireless mail can be completely described by just two words:
    Google and Yahoo.

    The wireless carriers are sooo clueless and provide such poor service that I wonder why they’ve yet been relagated to wholesaler status only by the FCC.

    I pay $85/mo to Sprint for 2000 anytime MOUs on two phones and the silly bastards in KC struggle to provide browser based access to my vision email account.

    re:VC follys
    Heck I read one VC’s blog where he gleefully recounts how out of touch he is with the real (online) world, and what a joy it is to discover habits and technologies that are already well ingrained. So I’m not surprised that they’ve flushed $200m down the drain. BFD. ROTFLMAO.

    PS. Om, bounce over to http://www.mini-itx.com, and check out the silent PC revolution.

    The VIA mobo guys are producing low power, low heat, fanless x86 compatible PC components with >1Ghz horsepower for chump change. This stuff is perfect for the “always-on” home megaplex multi-function personal internet server. And after a long day in the office, my ears don’t ring, like after a Metallica concert, anymore.

  2. charlie … welcome back. we missed you buddy and you are back in good form. well you bring up great points, and i have been meaning to write about mini-itx forever. somehow what happens is that there is always something new to deal with on a daily basis.

    sprint is not the only one which is about bad service and web cluelessness. all of them are pretty shoddy in terms of getting things right.

  3. I am really amazed. What is this? Isn’t this just software or am I missing something? VCs complain all the time that there aren’t any companies out there worth funding, that the quality of enterpreneurship has declined since the 1990s, then they go out and blow money on something like this. It seems to me there are two kinds of VC funding: one where they fund a company that they think will make products a lot of people will find useful right away (and spend money on) and another where they think some big stupid company will buy it for hundreds of millions. This might be the latter — the flip model of investing.

  4. Charlie Sierra Tuesday, June 15, 2004

    Title this one: VCs run amok !

    How about the SV VC firm that has just hired(?) Bono for its media fund.

    So are the other guys going to have to get themselves some letterhead rockstars just to keep up with the Jones?

    If we think the tone of political campaigns in the greatest nation on earth is an insult to all of its citizens, then what do the pension funds and other apathetic wealth stewards think of the nature of the VC business.

    VC’s are just slimmy record producers with Italian suits.

    Popularity contest? Us? Well never.

  5. hey charlie – i completely agree with you on Bono’s new media fund partnership status. i think this is such an utter piece of crap and there is nothing being said about it. ahhh!

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