Posts from 2011

I use wifi a lot on my android phone. I use it in my office, my home, my beach house, cafes I frequent, and offices of companies I frequent. I save the profiles for all of these locations and replace my carrier’s data service with wifi when I am in these locations.

But I don’t like to leave wifi on all the time on my phone. It eats the battery and it auto connects to weak wifi access points with generic names like linksys, netgear, etc. The latter situation can be particularly frustrating when I’m streaming audio or doing something important. It causes a lost connection and a broken session.

I’ve looked in the android marketplace for an app that solves this problem and can’t find it. Here’s what I am looking for:

I’d like to keep wifi off by default on my mobile phone. I’d like an app that wakes up the wifi every so often (user configurable but defaults to every 30 mins). The app then looks for a wifi access point that I have in my “whitelist” which would be the locations where I normally switch on wifi. The whitelist would be different from my saved profiles because I have saved profiles for names like linksys, netgear, etc. If the app finds one of these wifi access points with a good signal, it connects and leaves wifi on. If it doesn’t find a whitelisted wifi access point, it shuts down wifi.

The app would also check every so often to see that the phone is still connected to a whitelisted access point. If it is no longer connected, it would shut the wifi off on the phone.

As I said, I’ve looked in the android marketplace for an app that does this. I couldn’t find one. If one exists, I’d love to know the name of it so I can get it. If not, I’d love for someone to build this. There are quite a few apps that help manage wifi (quick switching on and off, etc). Maybe one of those apps can add this feature.

The wireless carrier’s data networks are congested and getting more so with the explosion of smartphones and bandwidth heavy applications. If phone users can efficiently and reliably switch on wifi when they have it, it will offload data traffic from the carrier’s networks and help reduce congestion. Mobile phone operating systems don’t do a great job of assisting with this stuff today. Over time I expect they’ll get better at it. But until then, I hope third party app developers can come in and fill the void.

UPDATE: I’ve downloaded three apps that were suggested in the comments; Tasker, Y5, and Locale. I’ve set up two of them, Y5 and Locale, and both seem to solve this problem. I think Locale does it in a more sophisticated way. But I am running both of them right now. I will let everyone know what works best for me in a future post.

For the past three or four years, I'd look at Twitter's numbers on comScore, or Alexa, or Quantcast, or some other third party measurement service and I'd wonder "what would they be if they included mobile devices like phones and tablets"? Twitter was one of the first companies to have this issue as so much of its usage is on mobile. But now, there are many companies that have this issue. So looking at third party measurement data is becoming harder and harder.

Yesterday, comScore (a company I was on the board of for ten years but no longer am involved with) announced the Total Universe Report, "which provides audience measurement for 100 percent of a site’s traffic, including usage via mobile phones, apps, tablets and shared computers such as Internet cafes". Websites must run comScore's UDM tag to participate in the Total Universe Report. You can learn more about the UDM tag here.

I think this is a big deal. I'm eager to see the numbers for companies with large mobile user bases when the first numbers are out as part of comScore's April reporting (usually around the 10th of the following month). The internet has moved beyond the web onto mobile devices and that trend is only accelerating. I'm happy to see the measurement marketplace adapting and I am not surprised to see comScore leading the way.

Over the past week, I've had several conversations with friends in various parts of the music business and there are a number of recurring themes that I thought I'd blog about. This post is about the recorded music part of the business, not publishing, not touring, not movie or video game soundtracks.

Physical distribution (ie buying CDs in stores) is still more than 50% of the recorded music business but it won't be long before digital revenues will eclipse physical. It might happen this year. Physical revenues won't decline on a straight line. They will collapse at some point as retailers start to take away shelf space. Within five years, physical distribution will likely be history.

Digital distribution is largely files (mp3 and aac) sold via iTunes and to a lesser extent Amazon and a few others. Digital also includes streaming license revenues, both compulsory license revenue from Internet Radio (Pandora, radio.com, etc) and licenses from on demand services like Rhapsody, rdio, Spotify, Napster, etc.

Digital revenue today breaks down as 95% files, 5% streaming. And within the 95% that is files, iTunes is 80% or more. But iTunes is not growing that much. It was flat last year and is growing only slightly this year. Amazon is still growing nicely but from a much smaller base. File based digital revenues are maturing and are not likely to make up the loss in revenue from physical distribution.

Streaming is growing very nicely and has the potential to develop into a large business but the companies that provide streaming services are struggling under the weight of the license fees.

The average iTunes customer purchases music that generates roughly $50 to $60/year to the record companies after Apple takes its cut. So the record companies want to get $50 to $60/year from the on demand services. The on demand services have not been able to make that model work for them yet as it requires a $100 to $120/year subscription to breakeven. And worse, the record companies are reluctant to support freemium models out of fear that they canibalize file based revenues.

I've long said that music listening is going to move into the cloud and that the dominant model will be streaming via free ad supported Internet Radio and paid subscription services. If that is to come to pass, the record companies will need to take some risks to grow this market. Converting user behavior takes time and requires free trials, subsidized offers, and a concerted marketing effort by the entire industry.

I'd advise the record companies to partner with the innovators in the digital music sector, something that they have largely been unwilling to do as long as physical distribution pays the bills. But the end is near for CDs and iTunes isn't going to replace physical at the rate it is growing. So it is high time to invest to build the streaming market. And for the record companies, that investment means subsidies and attractive license terms so that innovators can profitably build the services of the future. You have to invest in new businesses to grow them. That's what I do all day long. And I'd love to see the music industry do the same.

Our best investments have emergent use cases that the founders never considered when they launched them. Kickstarter is showing that in spades right now. When Perry initially imagined Kickstarter almost ten years ago now as a way to raise money for a music festival, he certainly never thought a golf pro would use Kickstarter to raise the sponsorship money he needs to play a season on the pro tour. And yet that is exactly what is happening right now.

I just contributed to Mike D's campaign to raise enough money to spend a year playing professional golf (and make a documentary about it). The rewards are particularly interesting and include golf lessons, a round with Mike D, and even an entire corporate outing. In a sense, Mike is taking the classic big brand sponsorship model and crowdsourcing it with Kickstarter. Awesome.

One of my all time favorite blog posts about entrepreneurship is the Disappearing Into The Fire post written by my former partner Jerry Colonna. If you haven't read it, do yourself a favor and go read it.

Jerry has been a highly successful VC, then disappeared into the fire himself, and emerged as a fantastic CEO coach who I recommend so much he can't take any more clients right now. So he's responding to that problem by cloning himself. Well actually not quite.

Jerry is starting to do workshops so he can help more entrepreneurs and CEOs. And on Saturday May 14th at General Assembly, he's doing a Disappearing Into The Fire workshop from 10am to 4pm ($200 for the session). I am sure this will sell out quickly so if you are breathing a little fast these days, try six hours with Jerry and a bunch of fellow entrepreneurs. I am sure it will be very helpful. Eventbrite ticket is here.

Last week in MBA Mondays we talked about margins, which I defined as:

Margin is the amount of money you make on each incremental sale or unit of revenue before factoring in the "fixed costs" of your business.

That led Amish Shah to leave me this comment:

While you focused this post on margin from "incremental sale" (gross margin), I think it's important to acknowledge that there are other margins in the business. And they shouldn't be ignored.

Operating Margin, for example, is another one I like to look at (and you have previously mentioned it is the most interesting line in a P&L). There's a lot of info in there… Salesforce's gross margin looks great at 80% but operating margin is a lot less glamorous at 0-10%, depending on which quarter you look at.

As Amish points out there are other kinds of margins in a business. I like to focus on "gross margin" because I think it tells you a lot about the scalability of a business (as I detailed in last week's post). But operating margin which is gross margin less all the operating costs is another really important metric.

There are relatively low gross margin business (like Apple which has gross margings of 38.5%) which have relatively high operating margins (Apple has operating margins of 29.2%). And as Amish points out, you can have a relatively high gross margin business like Salesforce have relatively low operating margins.

It is important to pay attention to these metrics. You might have two businesses with identical operating margins but one has high gross margins and high operating costs (like Salesforce) and the other has low gross margins and low operating costs (like Apple). The businesses will be very different to manage and will require different teams, strategies, and financing requirements.

The Gotham Gal and I have been fortunate to accumulate signficant capital over the past fifteen years. And the vast majority of it is invested in startups. We get distributions from a sale of one company and within months that capital (after taxes) is invested in more startups (including non profit startups). This has caused a few liquidity issues over the years. The Gotham Gal is always saying that we'll set aside a bunch of cash next time and then we go and do the same thing. I guess we can't help ourselves. Investing in startups is more appealing to us than leaving cash in the bank or putting capital into the bond market or the stock market.

When I think about the history of silicon valley and startup ecosystems in general, this is the pattern I see. Entrepreneurs, angel investors, and VCs take the profits from one deal and turn around an invest in more deals. They recycle capital back into the startup economy. If you look at silicon valley right now, particularly in the early stage/angel/angel list market, this is what is going on. Early employees of Google, Facebook, and a bunch of other succcessful tech companies have taken a considerable part of their paydays and become angels. And it makes sense. They work in the startup economy. They understand the technology, the market, and the gestalt of startup life. They are allocating capital to the startup ecosystem.

I bumped into a friend last week who sold his company a few years ago. He spent the required time with the buyer and then left. He's been spending his time since starting a family with his wife and investing in startups. He told me he's not sure he'll make a lot of money angel investing, but he's hoping to at least breakeven. So he's not doing it soley for the returns. He's doing it to stay connected to startups and support other entrepreneurs. I am certain he's not alone in his approach to angel investing.

I've been told that the US venture capital and startup system is the envy of the world. If so, then I think the rest of the world should pay as much attention to the way entrepreneurs recycle their capital as anything else. Yes, the institutional venture capital system is a big part of the success of our tech startup economy. But it starts with entrepreneurs and angels. Most VCs don't supply capital in the first year or so of a company's life. So startups need to get their initial capital elsewhere and that early money is where the real special sauce is. Think about Andy Bechtolsheim's $100k check to Google or Peter Theil, Mark Pincus, Reid Hoffman, and Sean Parker's early angel investment in Facebook. These entrepreneurs were recycling their capital back into the startup economy. Yes, those investments have paid off bigtime. But they also supplied capital when the company needed it the most.

The Gotham Gal and I allocate most of our capital to startups for many reasons. We do think we are going to generate good returns over the long run doing this. We have generated almost all of our capital over the years by investing in startups. But we also do it for the psychic benefits of investing in startups. When you back an entrepreneur early on, it is like making a large gift to a good cause. It feels really good. And when that entrepreneur uses your early support to create something important and valuable, it feels even better. You can't get that kind of feeling earning interest from a bank or trading stocks and bonds. And that's a good thing. Because capital formation for entrepreneurs and startups is the key to a healthy economy. And for all the problems we face in our country, we have a startup financing culture that is the envy of the world. And I'm really happy and fortunate to be part of it.

joanne wilson, mark suster, the gotham gal

I talk a lot about the Gotham Gal on this blog but most members of this community haven't had the opportunity to see her in action. She spent last week in LA and dropped in on This Week In Venture Capital and had an hourlong chat with our friend Mark Suster. They covered a lot of ground, including sales as a key ingredient to entrepreneurship, women in tech, and what it was like to work with Jason Calacanis. It's long, just over an hour, and the audio isn't as loud as I'd like. But if you've got an hour to kill this weekend and are curious about my better half, its a good one.

We arrived in Palm Springs really late last night and I woke up too early (I always have trouble adjusting to new time zones). So I got up and went out looking for a good espresso. I'm not a fan of Starbucks coffee and since I only have one cup of coffee a day, I try to make it a really good one.

So I pulled out my phone and launched Foursquare and selected the Explore tab and typed in espresso. It looks sort of like this (I pulled this image off the internet):

I was directed to a place called Just Java where I was able to get a very nice macchiato.

I don't use the explore tab when I'm in NYC because I know where I want to go. But whenever I find myself in a new place looking for something in particular, I've been using the explore tab in Foursquare. And it works pretty well.

And as I checkin more, my friends checkin more, and the places I like to frequent get more checkins, the explore tab will get better and better. This is the power of social metadata at work.