Congratulations to Fotolog for their pending sale to French company Hi-Media for $90mm. This is a great event for the company as John Borthwick, current CEO, helped stabilize the infrastructure and prepare the company for further growth. It was John who also first introduced me to the company in July of 2004 when I decided to participate in their angel round. At that time the company had around 300k or 400k members and did not have the backend technology to scale further. The company had 3 full time employees and had a nice problem on its hands-it had to limit its growth because it needed more capital to scale and meet user demand. Yes, there was no revenue model at the time but it was quite clear how engaged the audience was and we knew that we could eventually layer in contextual advertising and other sources of revenue. Strategically, what the company did well was go with the flow and recognize that most of its audience was global and that one day down the line, having a global, engaged audience would be worth some real dollars. Rather than try to make it more US oriented, the company stuck to its core user base and ultimately realized a nice exit having grown the registered accounts in 3 years to over 10 million! Once again, great work to John and to two of the cofounders, Adam Seifer and Scott Heiferman, for recognizing where the value was and creating a nice return for all of the shareholders.
I am sure there are alot of you who are frustrated Skype users since the service has been done over 24 hours. To be fair, the company has done a great job leading the marketplace with user signup and an incredible job with uptime of its network. Yes, this has been a pretty huge outage which is not fixed yet, but they were up for the last four years with very few problems. As an investor in Sipphone, creators of Gizmo Project, I have always believed that our opportunity was to create a next generation carrier for VOIP and IM traffic leveraging open standards like SIP and Jabber to allow any device (mobile, Palm Treo, computer, etc.) or web application to easily integrate our service. To that end, we have put alot more emphasis over the last 18 months on the mobile opportunity as you can see from our client that works with Nokia devices and Palm Treos. I assure you that we will have more to come in the next couple weeks with respect to our mobile strategy and expansion of our device support. Despite the fact that our emphasis has not been on the desktop, Om Malik points out that Skype’s problems, have been Sipphone’s gains:
The company saw a 400% increase in traffic this morning, with 4 times increase in sales, calls and downloads of its Gizmo Project software. “It is interesting to see that voice callers are transitory,” Michael Robertson, founder, SIPphone wrote in an email.
So if you are still a frustrated Skype user, give Gizmo Project a try on your desktop or mobile device where you can not only communicate with any SIP or Jabber user but also do metaIM with AOL, Yahoo, Gooogle, and MSN users as well.
As I have said before, Nokia’s biggest competitor in the future may be Google. If Nokia doesn’t offer value added services and software on its phones, Google, Yahoo, and Microsoft will. In a world of shrinking margins on handset hardware sales, finding every valuable cent per user per ad or selling services for monthyl revenue is incredibly important. Where is Motorola in all of this? Take a look at this article and excerpt from the Wall Street Journal about the pending Google phone:
Now it is drafting specifications for phones that can display all of Google’s mobile applications at their best, and it is developing new software to run on them. The company is conducting much of the development work at a facility in Boston, and is working on a sophisticated new Web browser for cellphones, people familiar with the plans say.
The prize for Google: the potential to broker ads on the mobile phones, complementing the huge ad business it has built online. Google even envisions a phone service one day that is free of monthly subscription charges and supported entirely through ad revenue, people familiar with the matter say.
I’d say Nokia is still in pole position right now – the stock is up 7.7% after it sold 100mm handsets in Q2.
"Though sales grew more slowly in mobile phones (+1 percent), and much faster in multimedia (+42 percent) and enterprise (+94 percent) than we expected, margins were way ahead in each case," he wrote.
Notice the phenomenal growth in the multimedia division – that is where the n-series phones, many with wifi and other computer-like capabilities are situated. This is also the division that will reap the many benfits of their software/Internet services acquisitions like Twango and Gate5.
I wrote about Club Penguin a few times in the past (here and here) and it looks like Mike Montgomery at Montgomery and Co was able to find an even better buyer than Sony, DIsney for $350mm in cash and potentially $350mm more in an earnout (see Paidcontent for more). That is pretty impressive for a company that raised money from friends, family, and angels and would not take any venture money despite my best efforts and many other VCs. It is amazing that Lane and team were able to ramp the business up in 24 months to over $60mm in projected revenue and $30mm in projected 2007 profits. That is one capital efficient business and goes to show that many times spending your way to success is not the answer. Anyway, my children seem to be on to some pretty big ideas as they pointed this out to me awhile back. Given that they have been spending more and more time on Webkinz, I wonder what Ganz will do with that property – potential spinout and IPO or rollup strategy or just outright sale?
How about getting a QA job in Bangalore? Take a look at this line on a Saturday afternoon. There are over 1000 people in front of Xora’s (a fund investment) office. Sanjay Shirole, CEO of Xora, definitely runs a hot company in the wireless GPS space, but when I saw this picture I couldn’t have imagined that the people had come to do walk-in interviews for a couple of QA positions and not for autographs. Not only is it incredibly competitive and tough to get a job in India as there are lots of candidates, but Sanjay pointed out the tremendous strain it puts on Xora to find and qualify the right person. By the way, Xora did end up finding a couple of strong candidates from the crowd so it was well worth the effort. Hat tip to Sanjay and my partner Ned Carlson for sharing this with me.