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Where’s the money for telcos? Mobile broadband and cloud, says Ovum

David Meyer — Thu, 03 Jan 2013 18:17:26 +0000

How are the next few years looking for telcos? Not so hot overall, according to a new forecast from Ovum. That said, the analysts do highlight one or two silver linings – the main one, by far, being mobile broadband.

First, a look at the overall picture. Ovum estimates that telecom industry revenues for 2012 will have totalled more than $2 trillion, which is up marginally from 2011′s $1.96 trillion, and capital expenditures should also be up from $314 billion in 2011 to more than $330 billion last year. Not stellar – that revenue growth is two percent, down from seven in 2011 – and in fact, the analyst house is warning that growth may flatline over the next five years.

However, Ovum also reckons that there’s significant growth to be had in specific sectors. Number one for the operators is mobile broadband – here, Ovum predicts a very healthy 19.2 percent compound annual growth rate between now and 2016, generating $123 billion in incremental revenue during that period.

This is important stuff to bear in mind as it colors the behavior of telcos, particularly when it comes to subjects such as net neutrality. A top-level chart of those forecasts:

We already know full well that mobile broadband revenues are in the growth phase. However, as Chetan Sharma pointed out last year, this too shall pass, and operators really need to lay the groundwork for the next stage. A stage that should really entail so-called over-the-top services.

Here’s where Ovum sounds a pretty big warning, albeit a mixed one:

“Over-the-top services such as digital music and mobile gaming are not compelling revenue opportunities for telcos. However, they are important for strategic reasons.”

Those strategic reasons appear to be around capturing market share, rather than actually, you know, making more money. Do the telcos really stand a chance in competing with nimbler upstarts such as WhatsApp and giants such as Apple that dominate other parts of the industry? I’ve expressed my skepticism pretty clearly on that one a number of times.

Another interesting growth area, Ovum suggests, is that of telcos’ public cloud services. Check out this chart:

Software-as-a-service is the biggest opportunity – there, Ovum calculates $19 billion in revenues during 2012 and more than $40 billion in 2016. Remember that when we talk telco SaaS, we’re talking mostly enterprise-focused services such as unified communications, where the extra draw is the telco’s ability to provide private, secure access. Some service providers are also offering CRM applications and the like, often through partnerships.

Infrastructure-as-a-service and platform-as-a-service are smaller but growing faster. Overall, the analysts peg cloud as the fastest-growing new revenue opportunity for service providers, if smaller than mobile broadband. Exciting times, if the telcos manage to grab that opportunity.

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Is Groupon a bubble stock or the new Amazon?

Mathew Ingram — Wed, 07 Sep 2011 04:25:01 +0000

Ever since it emerged from Chicago’s small startup community in 2008, Groupon has had nothing short of a spectacular story in terms of its growth: With estimated annual revenues of more than $4 billion after just three years of existence, the poster child for the “group buying” phenomenon is now one of the fastest-growing companies in recent memory. But with the company now reconsidering its IPO and its security filings raising questions, whether or not Groupon’s business model will ever become profitable remains an unknown.

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CafePress files for IPO, looks to raise up to $80M

Colleen Taylor — Fri, 10 Jun 2011 23:00:33 +0000

The tech industry’s initial public offering wave is showing no signs of slowing.

CafePress filed its S-1 with the Securities and Exchange Commission on Friday. The San Mateo, Calif.-based company is looking to raise up to $80 million in an IPO to be underwritten by J.P. Morgan, Cowen and Company, and Jefferies, according to the filing.

CafePress was founded in 1999 and sells user-customized products such as clothing, accessories, posters, stickers, and housewares through its flagship website CafePress.com. The company also owns a portfolio of other sites, such as CanvasOnDemand, which turns photographs into canvas artwork, and Imagekind.com, which sells artwork from independent artists.

CafePress is profitable and apparently growing. According to the filing, the company made $2.7 million in net income on $128 million in revenues in 2010. In the first three months of 2011, CafePress made $32 million in revenues, about 45 percent more than the $22 million it made in the first quarter of 2010. Last year, the company posted adjusted earnings before interest, taxes, debt and amortization (EBITDA) of $14.5 million.

But while the company’s financials are certainly solid, one could argue they’re not exactly spectacular. CafePress’ average order size has hovered around $47 for the past three years. The company’s top-line annual revenues have see-sawed recently, from $120 million in 2008, down to $103 million in 2009, and back up to $128 million in 2010. In the filing, CafePress blamed the 2009 dip on “macro-economic conditions in our primary markets that reduced discretionary spending by our customers coupled with the absence of election year sales.”

CafePress is just the latest in a recent series of Internet companies making moves toward the public markets. In the past month, LinkedIn, Yandex and Fusion-io have gone public, Groupon filed an S-1, and Kayak and Pandora have issued optimistic S-1 updates. Whether the activity represents another tech bubble or just a healthy and growing economy, it’s certainly shaping up to be a very busy summer for Silicon Valley.

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Weekly App Store Roundup: Dec. 13th, 2008

Olly Farshi — Sat, 13 Dec 2008 21:00:31 +0000

The world slows down for another couple of days as we hit the weekend and take a few moments to catch our breath. It’s been another hectic week here at TAB, we considered the potential arrival of a Nintendo Wii-style iPhone, rejoiced at the release of a multi-touch Firefox Beta, extolled the virtues of Mac-augmented exercise regimes and explained how you can make your Mac even cooler (it’s a poor pun and yet I’m not apologizing for it).

Now it’s that special moment that happens ever Saturday at TAB where, after a week of trawling through the latest App Store releases, I hand-pick a few interesting specimens especially for your perusal.

This week I’m looking at Songbird Remote, Slydial, TED and DTESS Aphid Attack.

Songbird Remote (free)
TAB’s Bob Rudis gave the most recent release of Songbird a thumbs-up not so long ago. The desktop app is an alternative to iTunes, managing your music, video and all that entertaining jazz. This app adds to Songbird’s already impressive functionality, incorporating remote control via iPhone. I’m well aware we already have a very robust remote app for iTunes, but choice is a good thing and this certainly makes swapping to Songbird more-so appealing.

Slydial (free)
Ever have one of those moments where you’re calling someone and would really rather go straight to voicemail, cunningly avoiding some kind of an awkward and poorly-worded explanation? For folk are lacking in, or too lazy to use, social skills and tact, comes Slydial – a tool that sends you straight to voicemail when calling someone (U.S. only). There’s something unscrupulous and horridly calculating about this app, nevertheless it’s an interesting (and free) addition to the App Store which some people may find to be an invaluable tool.

TED (free)
The TEDtalks are a wonderful series of live recordings – available on iTunes – from TED, a conference for the world’s brightest and most brilliant minds. The talks themselves are a meeting place for über-smart folk to discuss, deliberate and schmooze everything from arts and entertainment to world politics and artifical intelligence. The TED app takes it all a step further than the podcast subscription, with searching and bookmarking through their vast back-catalogue.

DTESS Aphid Attack (free)
The new Keanu Reeves vehicle, The Day The Earth Stood Still, is currently hitting cinema-houses here in the UK. It’s a remake, where this time the entire world faces off against Reeves as a calm but irate humanoid alien. This is a game promoting the movie where you send nasty aphids (in this case, big alien bugs) to destroy global iconic landmarks. Yes, it’s in ever-so-slightly bad taste. But no, it’s not so great — it could be good fun, but it’s got as much depth as Reeves’s acting. Woah.

Like an iPhone-toting Columbo, I’ve brought you some exciting leads to follow up on, but before I hurry on my way, there’s just one more thing. There have been some exciting developments for iPhone owners this week, one is officially sanctioned by Apple and the other, while not official, is a step in the right direction.

Starting with the former, in yesterday’s Daily Apple post, our very own Darrell Etherington mentioned Apple’s changes to the App Store layout. Setting aside the developers for a moment, the big question for consumers is, “What does that actually mean for us?”

Perhaps the most noticeable and useful change is that the listing of most popular apps has been split in two, resulting in a separate paid and free top ten charts. This is a welcome step in the right direction for highlighting which apps we should shell out for a few bucks for.

On the unofficial front, another solution for the lack of Copy-Paste on iPhone has arrived. Pastebud is our savior’s name and it works, not as a downloadable app, but a series of Safari-based javascript bookmarklets. It’s a clever solution indeed and we’ll follow this up with a proper posting explaining the intricacies of using Pastebud.

That’s all for this week, I’ll return next Saturday with a cavalcade of new apps to tell you about, in the meantime drop by the comments and let me know which apps you’ve been downloading this week.

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My 8 Commandments for Marketing Your Startup

Jon Miller — Fri, 09 May 2008 16:00:20 +0000

I’m one of the co-founders of two-year-old startup Marketo, a marketing automation company serving B2B companies. I’m also VP of marketing, meaning I’m under constant pressure to take Marketo’s own messaging to new heights. After all, if we can’t market ourselves like a world-class company — and make it look easy — why would customers ask us to help them do it?

The challenge: How to do all this with a limited budget and limited resources. At Marketo, we’ve had our share of ups and downs, but I’ve learned important rules about how to be a better marketer that I think will help you, too.

The 8 Commandments of Startup Marketing

1. Use free distribution. Our early goal was to extend as many online tentacles as possible so anyone searching for a solution like ours would “come across” us. Since we didn’t have a lot of money, we focused on low-cost tactics like my blog and search engine optimization. This helped us generate search rankings and free site traffic.

2. Date your prospects. Like all companies, most of the prospects on our site are just researching and don’t want to talk to sales, so we needed to excel at lead management. We’ve put in place automated processes that synchronize our marketing with the prospect’s research and buying stages, allowing us to build relationships over time.

3. Test it – but not too much. We test everything — offers, copy, forms — you name it. Testing removes debate over what works and what doesn’t. But one thing we’ve learned is that too many variables yield insignificant results, so we’ve created a free online test calculator that shows how many tests you can run on your site.

4. Seed a community. Provide a good customer experience. Besides investing in customer support, build a marketing success community where customers, employees, prospects, partners, and other influencers can share ideas and best practices. It’s hard to get a community started – if nobody participates, what’s the point? So, we “seeded” our community with content and some initial friendly users to get the ball rolling.

5. Don’t talk ‘in costs.’ The most common marketing metric is “cost per lead,” but framing the discussion in terms of activities, rather than results, perpetuates the perception that marketing is a cost center. Instead, demonstrate your product’s impact on sales and growth. By using the financial language that other executives use, you will establish marketing as a revenue generator, not a cost.

6. Train sales people. When we launched, I focused too much on the marketing aspects of our product, leaving it to the salespeople to figure out how to sell. But selling today is really hard, so be sure to train your salespeople to craft a compelling message that telegraphs your differentiators. It’s worth the investment.

7. Balance. At startups you must do a lot at once. Just yesterday I had to review a press release, prepare a webinar, update our lead-scoring rules, give a demo, and interview a job candidate. Take a cue from yoga and let go of anything unnecessary. And each day, do one task to address each of these four goals: build awareness, manage leads, create sales support and build the product.

8. Build in stages. When we started, just naming the company and getting our web site launched felt like a victory. Then we added an AdWords campaign; after that we captured our first lead. There are destinations along the way, but each is just a step up a big staircase, so focus on building one marketing capability at a time.

Jon Miller is a co-founder of Marketo, a maker of marketing automation software funded by InterWest Partners.

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Preparing for the Recession: 'Mahalo' for Tips on How to Save $$

Carleen Hawn — Mon, 10 Mar 2008 16:16:33 +0000

Founders can never get enough advice on how to save money. Last week Weblogs founder Jason Calacanis wrote a handy post about how he’s done this over at Mahalo, where he is currently CEO. Jason took some TechCrunch flak for one tip in particular (“fire non-workaholics!”), but his post still makes a nice addition to our new series on How to Prepare for the Recession. (See also: Preparing for the Recession: How to Market Your Way Through It, and How to Turn Your Revenues Up As Economy Goes Down.

I should’ve put Jason’s post, How to save money running a startup (17 really good tips), in Found|LINKS over the weekend — but you’re more likely to read it on a Monday anyway! A few highlights follow. Read the whole thing at Jason’s blog.

I’ve got a bunch of tips on how to [save money] for business. Among them:

1. Buy Macintosh computers, save money on an IT department
2. Buy second monitors for everyone, they will save at least 30 minutes a day, which is 100 hours a year… which is at least $2,000 a year….
3. Buy everyone lunch four days a week and establish a no-meetings policy.
4. Buy cheap tables and expensive chairs…
5. Don’t buy a phone system. No one will use it…
6. Rent out your extra space…
7. Outsource accounting and HR…
8. Don’t [use] Microsoft Office. [Do] use Google Docs.

and for tip #11, the one that got Jason into trouble,
and which he’s tried to amend on his blog (unsuccessfully) …

11. Fire people who are not workaholics. don’t love their work… come on folks, this is startup life, it’s not a game. don’t work at a startup if you’re not into it–go work at the post office or starbucks if you’re not into it you want balance in your life. For realz.

I don’t agree with this one, only because positive reinforcement is more effective than negative reinforcement.

When you fire people for not working hard enough, other of your employees will grow nervous, even fearful, and quit. Maybe not right away, but they will begin to leave — guaranteed. When reward people for working well and others will be encouraged and mimic the behavior. So I’d break with Jason here, and say: reward, rather than punish, whenever possible. This will make you feel better, too.

For more on this topic, also see Mark Cuban’s related post, which followed Jason’s:
A Couple of My Rules for Startups, and this nice digest, on Tom Altman’s blog, Wedia Conversation: Rules for Start-ups
.

Do you have tips for how to prepare for the recession? Send ‘em our way!

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Cost of Customer Acquisition – What Is It?

Aruni Gunasegaram — Tue, 19 Feb 2008 20:17:54 +0000

Editor’s Note: Contributor and serial founder Aruni Gunasegaram has written recently about her experiences fundraising for her current startup, BabbleSoft, in My Funding Toolkit and A Founder’s Tale: Angels vs. VCs. Today Aruni shares with us her insights on another major founder’s challenge: the cost of acquiring customers.

One of the interesting things about fundraising is the different perspectives you get from potential investors. If they spend enough time to really understand what you are trying to do, they offer great feedback, suggestions, and advice. They also sometimes ask a tough question or two.

I officially started the fundraising process a couple of weeks ago and have had a couple of meetings and a few more set up in the coming weeks. Since many of these angel investors are really busy, getting on their calendar can take weeks!

One question I was asked had to do with the cost of customer acquisition. It’s so hard to tell what that might be, given the uncertainty and newness of many business concepts out there (including mine) today. I searched and searched and oddly only found very dated ancient info (i.e., 1999 – 2001) figures for sites like Amazon.com. At a high-level, the cost of customer acquisition is how much it costs to get a customer/visitor to your site.

My guess is for sites with successful viral uptake like facebook the cost is in the cents (i.e. [total marketing and some R&D costs]/number of unique visitors). On the other hand I’ve heard that customer acquisition costs for companies like Vonage are in the hundreds of dollars. Anyone who has seen their mailers and expensive TV commercials can see why that number is so high. Last I heard I think it takes them at least 2 years to break-even on each customer they get.

I even had the MBA student who helped me create the financial model search his resources and no such luck. I would be happy to get information on even what the amount that a magazine like O Magazine or Pregnancy Magazine spends getting one customer to sign up. You’d think that as much has been written about facebook, that their cost per visitor would be somewhere on the Internet, but for some strange reason that information is not readily available. Go figure!

In my quest, I happened upon the following links that might be useful for any other entrepreneurs looking for the same information.

Calculating Customer Acquisition Costs (an online calculator)

Customer Retention and Acquisition (definition and 1999 info on Amazon.com)

On Measuring The Cost of Customer Acquisition (a 1999 Entrepreneur.com article)

There may not be a satisfactory answer (or more likely I don’t have access to the money or resources to help me find it) but at least being aware that there could be an answer is probably not a bad thing. I ended up backing into some numbers using the information in our financial model which to me, the ever optimistic entrepreneur, seemed reasonable enough.

For more of Aruni’s posts, including the original texts for all her Found|READ contributions, see her founder’s blog, entrepreMusings.

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