Muni WiFi: escape the Dialup Dark Ages

A few years ago I approached Belfast City Council with the idea of my company putting a large chunk of cash into a Meraki WIFI mesh which would then provide free WiFi to Cathedral Quarter. Cathedral Quarter was and still is plagued by having historic cobbled streets which prevent the laying of new lines – … Continue reading “Muni WiFi: escape the Dialup Dark Ages”

A few years ago I approached Belfast City Council with the idea of my company putting a large chunk of cash into a Meraki WIFI mesh which would then provide free WiFi to Cathedral Quarter. Cathedral Quarter was and still is plagued by having historic cobbled streets which prevent the laying of new lines – but for my business it was an opportunity. If Belfast City Council would pay for two or three ADSL lines in some buildings, we would sink a heap of capital into the network hardware and handle all of the installations. What would we get out of it? A bit of advertising to the Creative Centre of Belfast. That’s all we wanted. The response we got back was that the area already had BTOpenZone, which, if you investigate is notable for it’s absence in the area.

Undeterred I believe that Belfast needs a free-to-access Municipal Wi-Fi network.

There are providers around but the cost and subscription burden of many providers (and lack of basic interoperability, never mind poor user interfaces for mobile travellers) makes the current WiFi subscription set up to be a very unsatisfactory experience for the average traveller.

Belfast allegedly attracted 800,000 people for the Tall Ships event recently.

“Around 800,000 people crowded to the city’s docks for the biggest event ever staged on the island of Ireland. This included 100,000 holiday-makers who visited the city especially for the event – and 250,000 people believed to have watched the magnificent Parade of Sail out of Belfast Lough.”

(Doing the maths: This means there were 200,000 per day. Which means 10,000 per hour or so during the four days the Tall Ships were here. I call bullshit but hey).

Either way – there were thousands of people present and over 1000 crew from those ships. Would a free WiFi service have been useful to them? Of course. Last time I travelled to the US, I had to pay nearly £1000 in data and voice roaming charges and my next trip will likely be as bad if not worse. It is essential to the Tourism economy in Northern Ireland that we have a tourist-friendly environment. Rather than the tourist not using voice or data services (or worse, spending hundreds of pounds on roaming data paid to their home carrier), we should be providing that service free of charge and permitting them to use Skype or other voice services to call home. We need to build Northern Ireland as a progressive traveller-friendly destination.

Recently in the news, San Francisco is pioneering with Solar-Powered WiFi bus stops.

bus-stop-470b-0909

By 2013, San Francisco is planning to construct 360 new Muni bus stops that’ll further the causes of both solar power and blanketed Wi-Fi at the same time.

and Toyota created a bit of a news story with their new Prius advertising campaign:

giant-toyota-flowers-omg-rm-eng

Toyota planted five 18-foot tall “solar flowers” in Boston’s Prudential Plaza and provided free Wi-Fi and electricity that was “partially powered” by the solar panels attached to the petals and stem.

Think of where the roaming charges go. This money is not being used to build the Northern Ireland economy, they’re not being used to upgrade our infrastructure, build our schools or assist local business. The money goes somewhere else.

So, lets unwire Belfast. Let’s break the stranglehold on communications held by the mobile carriers where they can charge £6 per megabyte downloaded or uploaded which, frankly, drags us back to the dialup dark ages.

Kirkisms: Funding by Numbers part 2

Definition of insanity, doing the same thing repeatedly and expecting different results. – @dhkirk A few days ago, David wrote an essay which was called Funding By Numbers (Part 1 of 2) which I posted in it’s entirety here on my blog. Tonight, David sent me Part 2 – talking about markets, products and teams. … Continue reading “Kirkisms: Funding by Numbers part 2”

Definition of insanity,
doing the same thing repeatedly
and expecting different results.
– @dhkirk

A few days ago, David wrote an essay which was called Funding By Numbers (Part 1 of 2) which I posted in it’s entirety here on my blog. Tonight, David sent me Part 2 – talking about markets, products and teams. It’s an interesting insight for those of us who have a company idea – I have lots of ideas but only one that I’m planning to do anything with RealSoonNow® so this has come at an opportune moment.

David begins:
Knowing VC arithmetic and fund metrics is only half of the equation. The numbers in your business plan’s financial forecasts need to positively answer the question “Can I make money with this deal?”

I have three questions, which help me answer that.

“Is this a big market?”

“Is this a hot product?”

“Is this the team that can deliver?”

But what is a “big” market and a “hot” product? It used to be we looked for a $100M of revenue in year-5 in a $1B market. Interesting how that $100M looks strangely similar to the year-5 revenue for exit valuation? It all comes down to “returns”.

Remember to scale down according to your investment needs and the returns needed by the VC. But even if you scale down, the ratio here is interesting. Basically it projects a 10% market share of the available market [I’ll return to available market later.] That’s a good market share target. Greater than 20% market share and you’ll see eyebrows raised and eyes rolling back. Less that 5% and you don’t have the ambition to get a “yes” to question three above.

OK. Available market. This is important, but skip this section of you already understand this.

There are three elements of market size; total market (TM), total available market (TAM) and total serviceable market (TSM). For starters and simplicity I’m going to ignore Total market – I can almost hear that sharp intakes of breath by countless business school professors! The other two are meaningful:

Total Available Market = size of the market that would buy your product
Total Serviceable Market = size of market that you will be selling to.

By way of example, lets say you have a product that disables a laptop if it is stolen.

The Total Market (which is meaningless) is the total number of PC’s in the world.

But this product only runs of Win XP, so the Total Addressable Market is the total number of PC’s, worldwide, running WinXP. This is the count of your potential pipeline of customers. The target customer. Note, you may also segment this further by identifying further target customer attributes, e.g. English speaking.

And, if you only ever plan to sell in Europe, then your Total Serviceable Marketable is the total number of PC’s, in Europe, running WinXP. Now you have a basis for projecting market share and strategic growth.

Without expanding your territory or adding additional OS support to your product, your market share is projected sales/Total Serviceable Market. You can increase your market, both available and serviceable, by expanding your product and your territories. That’s your business decision. As a potential investor, I just want to know I can make money whichever.

Welcome back to those you knew all that.

Now for your financial projections. The old rule of “no hockey sticks” is still relevant. And year-over-year growth is follows the laws of operational physics. I’ve never seen a $10B company double [outside of acquisition], but I have seen a company quintuple its revenues in the early years. Whilst there is no pro forma for revenue growth, I like to apply an operational realistic growth curve to the first five years of financial projections.

If year-1 is N, then
Year-2 over Year-1 can be 500%, giving a projection of 5N
Year-3 over Year-2 can be 300%, giving a projection of 15N
Year-4 over Year-3 can be 200%, giving a projection of 30N
Year-5 over Year-4 can be 180%, giving a projection of 54N

Year-1 MUST be a bottoms up calculation, showing that you know the operational reality of the sales channel for your product, and the channel MUST be scalable. Then just make sure that 54N is between 5% and 15% of your addressable/serviceable market!

Just a truism on business plan financial projections.

Revenue NEVER comes as fast as you think.

Cost are ALWAYS greater than you planned.

I expect that, its not a negative the first time, possibly even the second time … stuff happens, but lets hope the error is on the side of planning, verses execution.

And that brings me back to the final question … “Is this the team that can deliver”. At the end of the day, we invest in PEOPLE. There are LOTS of great ideas, big markets and hot products, but the road to financial nirvana is paved with teams of people that just couldn’t deliver.

I rate the management team as:

A … past champions (serial entrepreneurs), they’ve been up the hill before and just need a sounding board

C … first time in the game, need adult supervision
 think Bosack & Lerner and Morgridge [Cisco]
Case and Kimsey [AOL]
Andreessen and Clark [Netscape]
Page & Brin and Schmidt [Google]

B… played in a few games, but never scored

In all cases, with the right VC, you get the operational experience you need.

And that is the first 1% of what it takes to get a company funded and make a bucket load of money.

Open Data

After not travelling long-distance for around 15 years, I found myself in San Francisco twice this year. San Francisco has many similarities to Belfast – a plethora of neighbourhoods, a strong history of civil rights activity and the majority of economic activity being firmly in the ‘S’ part of SME. San Francisco also has an … Continue reading “Open Data”

After not travelling long-distance for around 15 years, I found myself in San Francisco twice this year. San Francisco has many similarities to Belfast – a plethora of neighbourhoods, a strong history of civil rights activity and the majority of economic activity being firmly in the ‘S’ part of SME.

San Francisco also has an initiative to open City data such as crime statistics, restaurant health codes and municipal recycling information. This will be stored at DataSF.org. Northern Ireland’s equivalent is the recently launched OpenDataNI initiaitve.

These efforts are aimed at the citizen as well as the entrepreneur. There’s nothing stopping a smart developer/designer from building and marketing a service that uses open data in a new and interesting way. Whether that’s directing individuals to recycling spots around the city or mixing school and crime data together with a property rental service (something I’m guessing we’ll see coming out of Propertypal judging by some of their recent tweets – smart guys!)

We already have some innovators in this arena and Momentum / Digital Circle is working to foster additional development. I’ve been working to develop the already exciting iPhone development community in Northern Ireland. DevDays in April attracted 155 people and Refresh Belfast last Monday got 90 people through the door focusing on iPhone Design despite a literally last minute venue mishap due to double-booking.

Momentum / Digital Circle are launching a Mobile Application Challenge in the coming weeks. The premise is to get folk out there displaying some of the work they are doing in Mobile Applications (featuring but not limited to iPhone development) and getting them in front of potential investors and also a potential audience. By focusing on the areas of Consumer, Health & Wellbeing, Public Service Value and Enterprise, we’re showing off some of the excellent work that goes on behind closed doors or under license to other companies in other countries. We’re putting together a series of workshops – highlighting design, Connected Health, applications which use the Cellular network and assistance in protection and exploitation of intellectual property.

For open data the possibilities are still yet to be realised and the OpenDataNI staff would love to hear more suggestions on data sources which would benefit the general public. What have we, the public, paid for and yet we don’t have access to?

Knowledge Navigator +22 years

In 1987, Apple made this video. ComputerWorld showed off some demo shots of the new OLPC. With everyone freaking out about what Apple may do for the Tablet form factor – and even some manufacturers holding off releasing devices until they see what Apple is up to, I’d say that this market is probably going … Continue reading “Knowledge Navigator +22 years”

In 1987, Apple made this video.

ComputerWorld showed off some demo shots of the new OLPC.

olpc_4fotos

With everyone freaking out about what Apple may do for the Tablet form factor – and even some manufacturers holding off releasing devices until they see what Apple is up to, I’d say that this market is probably going to change rapidly. We’ve already seen the impact of the iPhone and iPod touch to the portable computer/mobile phone market so that it now has carriers, manufacturers and OS-vendors scrabbling to catch up – but what does the future bring.

Is the world ready for a new tablet, whether that’s an Apple tablet or a OLPC? Frankly – looking at the OLPC – I’d buy one (or more) for my kids.

NISW, MATRIX, HORIZON, ITASKFORCE – overload!

From the Irish Times: IN RECENT months, The Irish Times has published a number of articles defending the €8.2 billion science budget in the current National Development Plan, but its striking that the practitioners of the hard sciences present few hard facts in its defence. Dreams of finding a new Nokia are fine but critics … Continue reading “NISW, MATRIX, HORIZON, ITASKFORCE – overload!”

From the Irish Times:

IN RECENT months, The Irish Times has published a number of articles defending the €8.2 billion science budget in the current National Development Plan, but its striking that the practitioners of the hard sciences present few hard facts in its defence. Dreams of finding a new Nokia are fine but critics question the over-reliance of a small country like Ireland, on university-driven basic research.

The Oireachtas has given little attention to reviewing the planned expenditure of €8.2 billion over the period 2007-2013, and last June, Taoiseach Brian Cowen announced a 28-strong innovation taskforce, packed with insider members from the universities and State agencies.

US venture capital-backed businesses use different people and procedures than the typical laboratory high-level research: they employ a much smaller proportion of PhDs in their technical staff, and their overall workforces contain a larger proportion of managers and sales and marketing staff – people who are close to users.

It would be foolish for Ireland to bank its future on a university lab or unquestionably accept the position of the various vested interests involved.

The first question I had while reading this was “Where’s our innovation task force?

Over the last months, I have toyed with the idea that Northern Ireland needs some strong, non-aligned leadership in a future digital economy and that should come in the form of a technocrat-think-tank. This is the independent body that our Ministers should be talking to when talking about the future of the Northern Ireland economy. They should come from all walks of life – biotech, greentech, digital content, software.

(And yes, I’d love to be part of that but I’m humble enough to know that my technical smarts are probably not up to scratch for this kind of thing.)

We do have the HORIZON panels – but since the report was published what’s happened. And if grassroots initiatives like NISW are going to find any traction with government, surely it’s going to need to include buy-in from groups like the HORIZON panel on ICT.

So…where do we go from here?

We start lighting fires.

Ideas are cheap. Enthusiasm is priceless

Back in 2008, Y-Combinator threw out a list of startup ideas they thought would be interesting to see and followed up with a more formal request for startups in a few key areas. A few days ago I recounted a list from May 2009 where a VC listed areas he could see room for innovation. … Continue reading “Ideas are cheap. Enthusiasm is priceless”

Back in 2008, Y-Combinator threw out a list of startup ideas they thought would be interesting to see and followed up with a more formal request for startups in a few key areas. A few days ago I recounted a list from May 2009 where a VC listed areas he could see room for innovation. Earlier this year, not long after we got back from WWDC, I posted a forum called Ideas Café to a group of friends who were on the WWDC trip and populated it with a few ideas that I’d come up with, simply in order to see what could come out of it. I’m not a developer (and likely will never be) but I have plenty of ideas.

Earlier today ReadWriteWeb came up with 6 Awesome Apps Begging to Be Developed.

I know there are developers out there in my community who have said to me, “Yeah, I can write code, but I don’t have an ideas on what to write.” or something similar. There’s a gazillion ideas out there – if you’re not sure about something, ask.

Back in the nineties when I was writing my books, I remember having to sit and pitch the story to a friend of mine who, at hearing the tagline, wasn’t interested. For two minutes I explained the premise and at the end created a fan who not only promoted the book at every turn but wrote an incredible amount of supporting material.

There will be ideas like that out there. Concepts that when you first read them they’ll be kinda wooly. So talk to people about them. Talk to me. Turn up at one of the many OpenCoffeeClub meetings in your region (we have around 6 different OCC geographies in Northern Ireland alone). Maybe someone can give you that two minute pitch to make you insanely enthusiastic?

Kirkisms: Funding by Numbers part 1

“US VC’s will give you a “no” in 20 mins, NI VC’s will give you a perpetual “come back when … “ I feel very privileged to say David Kirk is my friend. We’ve shared laughs and commiserations, broken bread at the two best Italian restaurants I have ever eaten in and talked family almost … Continue reading “Kirkisms: Funding by Numbers part 1”

“US VC’s will give you a “no” in 20 mins, NI VC’s will give you a perpetual “come back when … “

I feel very privileged to say David Kirk is my friend. We’ve shared laughs and commiserations, broken bread at the two best Italian restaurants I have ever eaten in and talked family almost as much as finance. He’s encouraged me in my latest inane scheme of owning a boat (by showing my pictures of his yacht) and tempted me with boozy cocktails in arid climates.

In this case, I’m giving him kudos not only because of his history of being a senior executive in companies like AOL and Cisco but because he’s also now a seasoned business advisor and serial investor. David sent me this, a part one of two, which attempts to explain how the Venture Capital system is meant to work from his point of view.

David begins:
Whether you are an entrepreneur or a VC – I like to think I have a foot in each camp – we live in interesting times. Barely a month goes by without a new report showing some “interesting” aspect of investment in 2008/2009, whether it be valuation multiples, return multiples, shift in investment stage focus or just the consolidation of funds out there.

While there is, and always will be, market specific conditions that free or freeze funds, the basics of investing in technology companies, remains somewhat constant, and should always be considered as the backdrop to any specific funding strategy.

When a company seeks funding, they are selling themselves and the investment opportunity that their business represents to the investor. I’m of the opinion that selling, whether it be ice cream or cars, is always much more effective when you really know your potential “customer” – their needs, their wants, what they look for, hot buttons, turn offs. Its no different with VC’s. It’s a business. We need to make money, just like you.

So how does it work?

The returns on any investment is governed by its risk. The riskier the investment, the higher the returns expected. Investing in technology startup companies is very risky. Failure rates of up to 90% are quoted. VC’s expect and plan for 60-70% of their portfolio companies to fail or limp along. Similarly, investors in venture funds – the Limited Partners – expect a corresponding higher return than safer investments. The US ten-year average returns (IRR) on all venture funds in ~17%.

At this point, the discerning reader has all the information needed to determine every ratio and “rule-of-thumb” that will follow. But there is need for a great big caveat. Presented here will be pro-forma numbers. I have never seen, nor heard of any business, investment opportunity or fund that mirrors exactly what is given here. The exactly numbers and ratios are somewhat interesting, more – much more – importantly are the ideas behind the numbers. Grasp these, and you’ll be able to apply the principles to any, real-world situation.

Right. Now that’s out of the way, back to arithmetic.

I’m a fund manager. I have ten portfolio companies. Being smart (i.e. I’ve lost money in the past) I’m planning for three of those companies to fail without returning anything, and three or four to “go nowhere” returning, perhaps, the money that was invested. That leaves three “winners” in the portfolio to generate all the returns for the limited partners, the “carry” for the General Partners, and to cover the management fees. That means that each of these “winners” has to return x10 – x15 the investment, to cover the “losers” and the “going nowhere”.

My personal rule of thumb is that an investment needs to return x7 – x10 my investment in 3-5 years.

OK. Next we need some discussion on how to calculate “return”. On one hand its very easy to calculate, but the simplicity in calculation, belies an ocean of “art” and “judgment” surrounding it. If my investment in a company buys me x% of equity, then my return is x% of the exit valuation $y. At this point, given two variables, it could almost appear that we can plug in whatever values for x and y we like, to come up with our investment multiple. Not quite. I look for 20%-25% equity in a company (but, full disclosure here, every investor and VC has their own perspective on this). Less and you lose “influence”, more and you risk demotivating the founders. But be very careful here, you’ll hear many times the argument, “would you like 80% of $1M business or 20% of a $100M business.”

Equity understood. Check!

What about valuation. This is where you will need to do your own analysis, based on industry, business model, geography, etc. In general, the exit valuate is based on a multiple of either revenue or profit. As an interesting sidebar, in the absence of both – as we experienced in 1999 – valuation of those dotcom darlings was $1M per developer. Science? Nay, magic eight ball. Over the past 15 years, predominantly in software, I’ve used smaller and smaller multiples. In the mid-90’s, x5 revenue seemed to fly with trade sales. Today I use x2, and even that is appearing to be generous. Exit or investment valuation is 90% art, 10% science and 100% negotiation. You need to understand this.

OK. At this point you should be able to answer the last question a VC asks “is this a good deal for me?” But there is one big variable that will depend upon whether you are looking for investment from a $1B fund or a $10M fund. That is scale and bandwidth. An individual VC can only adequately manage a handful (or two) of portfolio companies. If there are n VC’s in a $1B fund, then the average deal size is likely ($1B/10n)*.60 (where 60% is ration of funds invested initially). Calculate that out. Perhaps their sweet spot is $5M – and likely you can find this on the home page of their website. So now you have a very simple litmus test.

With a $5M investment (ignoring follow-on money), a 25% equity position, and an exit value of x2 revenue – the revenue in year 5 should be at least $100M.

Big gulp!!!

Part 2 will go into the first three things a VC looks for in an investment opportunity; a big market, a hot product, and a team that can deliver.

Sling, Skype, now Qik – no mojo on iPhone

Qik for iPhone has arrived. (iTunes link) Engadget says: The good news is that Qik for iPhone 3GS is now available, and it’s completely gratis to download. The bad news is that it probably won’t do exactly what you want it to. You see, those on Symbian S60 have grown used to a Qik that … Continue reading “Sling, Skype, now Qik – no mojo on iPhone”

Qik for iPhone has arrived. (iTunes link)

Engadget says: The good news is that Qik for iPhone 3GS is now available, and it’s completely gratis to download. The bad news is that it probably won’t do exactly what you want it to. You see, those on Symbian S60 have grown used to a Qik that can actually stream live video to the internet, whereas this app is currently just a “capture and upload” piece. Moreover, it only works via WiFi, so if you’re not near a hotspot once your video is done, you’ll have to wait until you wander back over to one before it automatically begins uploading.

Why is Apple doing this?

It’s very simple. It’s because of this graph from Flickr.

popularCameraphones

Now, that’s for Flickr. For still images. The Carriers are TERRIFIED that people like you and I will start to do the same with our videos. Our videos which can be many, many megabytes in size, heading up to Qik for immediate streaming down again to dozens or even hundreds of users.

This is exactly why Sling was also ‘disabled’ and limited to WiFi and it’s why Skype has had it’s mojo removed as well – it’s the carriers. They’re as afraid of losing revenue (for voice minutes) as they are about their networks falling over as their hollow promises are realised.

This is why we need rree, muni WiFi everywhere.

Global, social, open, mobile, playful, intelligent and instantaneous

TechCrunch writes: Venture Capitalist (Union Square Ventures) and blogger Fred Wilson gave a talk a few days ago at Google’s headquarters in Mountain View. The key point of his talk was about disruption. The talk includes his six words to live by on the Internet: Global, social, open, mobile, playful, intelligent — and a bonus … Continue reading “Global, social, open, mobile, playful, intelligent and instantaneous”

TechCrunch writes:

Venture Capitalist (Union Square Ventures) and blogger Fred Wilson gave a talk a few days ago at Google’s headquarters in Mountain View. The key point of his talk was about disruption.
The talk includes his six words to live by on the Internet: Global, social, open, mobile, playful, intelligent — and a bonus seventh one: instantaneous.
Google has just posted the video of the talk on YouTube

As ‘media’ has become disruptive – are there other industries that can be end-to-end digital: created, distributed and consumed – without every becoming atoms.

Fred suggests:
Consumer Finance – money is already just bits. Why do we still use cash?
Education – education is interactivity, media, straight to the brain. The web as a textbook.
Energy – smart power in the home, renewable energy creating peer-produced micro-grids
Healthcare – self-care reporting, digital doctors, sharing data worldwide about pandemics?
Government – procurement, defence, law enforcement, entitlement, planning, crowd-sourcing?

Think about these areas: they’re incredibly disruptive to large organisations. To banks, schools and universities, power companies, hospitals and health trusts and, of course, the government itself.

Creative Sandbox: Show and Tell for Techies

Creative Sandbox was designed to spark the imagination of agencies by showing the best uses of Google products and creative possibilities in a high energy environment. The more I think about it, the more we need to have more ‘show and tell’ of what we’re doing in Northern Ireland. There are risks – those of … Continue reading “Creative Sandbox: Show and Tell for Techies”

Creative Sandbox was designed to spark the imagination of agencies by showing the best uses of Google products and creative possibilities in a high energy environment.

The more I think about it, the more we need to have more ‘show and tell’ of what we’re doing in Northern Ireland. There are risks – those of disclosure of unprotected IP – but there is a lot to be gained from showing and telling, not only the Venture Capitalists and Business Angels, but also the everyman, the tourist, the would-be entrepreneur (wantrepreneur).