Facebook is launching on Sony Ericsson’s hot new super phone, Xperia X-1. Continue »
Facebook is launching on Sony Ericsson’s hot new super phone, Xperia X-1. Continue »
I’ve spent the past few days pretty immersed in the SC 08 conference here in Austin, Texas, but I’m still embarrassed that I missed the formation of a new lobbying organization think tank called The Future of Privacy that’s being funded by AT&T. The group hopes to help policy makers and business leaders figure out how to manage online privacy.
A big source of irony from the group, other than its purported focus on online privacy to benefit consumers and the industry alike, is that Co-chair Christopher Wolf also headed up one of my favorite astroturfing efforts, Hands Off The Internet, the phone company think tank dedicated to Net Neutrality. Somehow, that connection isn’t mentioned in his FOP bio Continue »
This week’s $250 million funding for vacation home rental listing company HomeAway Inc. was the largest web-related venture capital investment since the bubble days at the turn of the millennium. But it also contained a provision that signals how the lack of venture exits may be causing some entrepreneurs to ask for cash now, rather than waiting for an initial public offering or sale that may never come.
As part of the HomeAway financing, a portion of the money will go toward repurchasing some of the shares held by employees and early investors in the Austin, Texas-based company. CEO Brian Sharples wouldn’t disclose how much money, or what percentage of shares, affected employees would be able to exchange for cash, but traditionally such deals are fairly rare. However, in the last few months I’ve talked to a growing number of entrepreneurs who have negotiated such deals. The fact that they’re becoming more common, especially in younger companies, shows how for some, the economic downturn is spurring a lack of faith in the venture model.
That model is one that rewards entrepreneurs and investors for building up a solid business over a 5- to 10-year period, then selling it, either to the public through a stock offering, or to an acquirer for a sum that makes those years of work worthwhile. It’s the American dream, Silicon Valley-style. But what if entrepreneurs aren’t willing to wait that long? And what if the exit markets aren’t open?
As deals like HomeAway’s show, that’s precisely the environment we’re in now. When a venture-backed company does such a deal it’s generally because employees who have taken a lot of equity in it want to exchange that equity for cash. Usually equity holders get cash after a company exits, via either an IPO, merger or acquisition. With the IPO window shut (so far the total number of IPOs are down by 81 percent this year), and M&A slowing, that’s looking less likely.
Sharples explained the decision to offer shareholders the ability to cash out as a reward for the work employees have put in. The company had planned to go public in 2008, but given the appetite for IPOs, have shelved the idea for at least two more years. This would disappoint any shareholder, but HomeAway is only three years old. For early investors or founders to expect an exit in three years is ridiculous. Other than back in the bubble years, most venture-backed startups don’t achieve an exit for seven years, and in some cases, such as with clean technology, investors are looking at 10 years before a payday.
HomeAway is more of a private equity business model (the company is buying up Internet properties that list vacation homes available for rent in the U.S. and potentially worldwide cities), so perhaps that explains the short time to a planned exit. But HomeAway isn’t alone. Facebook has allowed its early employees and shareholders to sell some of their shares for cash, despite being only four years old. Digg, the news ranking and aggregation service founded by Jay Adelson and Kevin Rose, raised $28.7 million in September, a deal that rumored to have involved Rose taking some cash.
It’s a win when employees can cash out, especially in such dismal times, but raising money in order to buy back shares has the potential to set a lower fair market value for the startup, as well as to dilute the value of shares held by existing shareholders. These sorts of deals are a sign of stress in the venture model, and we’re likely to see more of them if it remains difficult to take a company public in the coming year.
This article also appeared on Businessweek.com.
They say good things come in small packages. That certainly is true of the new INQ Social Mobile phone from INQ, a subsidiary of Hutchinson Whampoa, a global wireless company that runs 3G networks in eight countries around the world, including the UK and Australia. INQ’s new triband-with-3G phone is diminutive — 110 g (3.9 oz) — but it packs a powerful punch. It is smaller than a bar of Baby Ruth chocolate and is likely to cost about $50 a pop. INQ’s new phone will make a debut on the 3 network in the UK later this week, and it should raise some eyebrows and impress many.
Hutchinson’s 3 network caused a sensation last year when it released a phone that was designed around Skype and Skype’s communication abilities. The phone proved to be a commercial and critical success. Encouraged by its success, Hutchinson decided to spin out its handset operations into a standalone company to sell phones to carriers other than 3.

The result is a new phone — the first of many — that is chasing what is going to be the biggest trend in the mobile industry: application-specific mobile phones. Frank Meehan, CEO of INQ, last month said that while “iPhone and BlackBerry Storm are sensational devices,” the fact remains that carriers need more lower cost devices with great UI. “INQ isn’t meant to compete with those top end devices, but instead is designed to get the core Internet comms services easy to use for the mass market,” Meehan said. I agree, and after using the phone for less than a day on a slower EDGE network, I can only imagine how good a device it will be on faster networks. And its sole purpose is to keep the data usage growing on the mobile networks so that carriers can recoup the money they spent building their 3G networks.
The phone is based on Qualcomm’s 6260 chipset and uses the Brew OS. The device’s whole experience is optimized for a few web applications — Skype (obviously), Facebook, Google, instant messaging and other apps like Last.fm. All the apps show up at the bottom of screen, reminiscent of Apple’s App Dock, which makes it easy to navigate through many apps. (I wonder when Nokia will buy some clues and make navigating through apps easy.)
The apps themselves have been optimized for the tiny screen experience, and worked flawlessly over a T-Mobile 2.5G EDGE connection. The Facebook app, for instance, was easy to use: I could snap pictures with the 3.2 megapixel camera and post them to Facebook with relative ease. I was suitably impressed with the way INQ has integrated Skype, Facebook and IM into the phone’s address book and developed a next generation communication experience. The phone has a decent browser (Netfront 3.4) that can handle Flash, and the screen, while tiny at 2.2 inches, is good enough to use the web applications effectively.
I wish I could have tested the phone on a 3G network and not been limited by the slower EDGE connection. Being on a slow connection, I couldn’t really use Skype effectively, and I find doing messaging (IM) or replying to emails using a 12-key dialpad impossible. But I am sure there are folks who are not challenged by big thumbs and advancing years.
Now, this device isn’t going to work in the U.S. — which is a shame because I really love this tiny-yet-simple device. It is like the Toyota Scion of the mobile world — well designed, cool, functional and inexpensive.
Maybe Larry Ellison was right — maybe cloud computing has been so overhyped that the term now applies to pretty much anything. A perfect example: Salesforce.com’s Dreamforce event. After riding the SasS wave to a market capitalization of $3.7 billion, it seems co-founder and CEO Marc Benioff and his minions have jumped on the cloud computing bandwagon. Salesforce.com is now calling itself a cloud computing company. And you shouldn’t expect any less from Benioff, the master marketer. Continue »
Wink, a Mountain View, Calif., people search site is merging with Reunion, a Santa Monica, Calif., social networking site. Continue »
Since Google pays News Corp millions of dollars to be its friend, it is no surprise that MySpace, the elder social networking service, would be one of the first companies to release an Android-version of MySpace Mobile just ahead of the commercial release of the Google Phone tomorrow. It looks remarkably like the iPhone version on Facebook. (Check out my review in case you are interested in buying the phone.)
MySpace Mobile for Android will join its Sidekick and iPhone brethren and a BlackBerry version is in the works. MySpace has made music a central feature of this application and has also integrated with Shazam, a London-based music discovery startup that I wrote about earlier this week. Facebook, however, has no plans to release its app for the Android platform. At least for now. No surprise: There is no love lost between Facebook and Google. In response to my query about their Android plans, a Facebook spokesperson send back this reply: Continue »
Social Line Connect is a simple iPhone game with a cross-platform backbone. The free app, which looks similar to Connect Four, was added to the App Store over the weekend. The real point of the no-frills game is playing it with friends — even if they don’t own an iPhone. To that end, it’s a also proof-of-concept title for SocialDeck, a new middleware startup that’s created a server architecture for people to play games across several platforms.
Based on the premise that “social interaction is much more important than the actual game play,” as co-founder Anish Acharya put it to me during a recent demo at the GigaOM office, SocialDeck’s games can be played between people using an iPhone and on the web via Facebook, with a Blackberry version said to be on the way as well. Continue »
For the mobile social networking panel, I thought it might be helpful to condense the various remarks each speaker made to sum up their particular social network’s take on mobile. Not to say the panelists weren’t talking to each other as well, but I think their individual insights are valuable aside from the conversation.
Noelia Amoedo, VP Mobile, hi5: General take: Mobile is about self-expression. “For many of our users, mobile is not an option, it’s a need.” Mobile browser penetration in the U.S. is 16 — there’s a lot of things that need to happen before mobile web reaches mass market and we reach the (global) 49 percent of users that have mobile phones… Monetization: Many times to get adoption need to offer things for free. Users are very used to mobile billing — there were $50 billion in Q1 mobile content revenues. There’s an easy way for users to pay so it’s about creating an application users want to pay for…Product insights: Too early because we just launched our mobile site three weeks ago. The first version focused on what would be quick to do on the phone when you’re on the move. Didn’t even think about including video in the first version.
At the GigaOM Mobilize conference just now, Chamath Palihapitiya of Facebook just gave a little indication of what’s next on the company’s product roadmap. Palihapitiya, Facebook’s VP of Growth, Mobile and International was serving on a panel about mobile social networking, when an audience member commented that a phone’s address book is essentially its owner’s social network, Palihapitiya replied, “That’s a great observation. Stay tuned.”
Facebook PR wasn’t going to let him say more than that, but I for one think this is a splendid idea that could be revolutionary if implemented correctly. Facebook has all along said it wants to mirror real-world relationships. When you throw mobile into the mix, there’s no reason to even have to separate so-called offline and online contacts. The site already has a vast repository of cell numbers on its member profiles, as well as many mobile users through downloads of its applications for platforms like BlackBerry and iPhone as well as mobile browser access. I think this integration would be so useful — Facebook could even go so far as to co-launch a phone with a handset maker.
But anyway, I’ll post the full write-up of the session in a moment.