Reblogging from USV.com today:

Union Square Ventures has made a substantial investment in Tucows, a 23 year old company company that has been publicly traded for over 15 years. Since we have never before invested in a public company, that requires a bit of an explanation.

All of us at USV feel fortunate to have participated in the wave of innovation unleashed by the open Internet. That innovation is now threatened by consolidation at the application layer and the access layer. Watching football over the weekend and seeing every carrier advertise video and music services on national television that don’t count against your data cap punctuated, for me, the end of the era of permissionless innovation that gave rise to Twitter, Tumblr, Etsy, and Kickstarter. As Fred pointed out  when large companies can pay to play, start-ups ability to reach consumers has been seriously compromised.

We are investing in Tucows because we believe they have built a great business, but also because they have been a stalwart defender of the open Internet. We are excited to be working with them now because they are challenging the incumbent access providers and the conventional wisdom, by building modern fiber networks in local communities across the U.S.. They are doing this at a time when telephone and cable companies are exploiting their natural monopolies in these communities, underinvesting in their outdated networks, raising prices and using the excess profits to buy back their stock, and buy their way into global entertainment businesses, pleasing shareholders but doing nothing for the communities they serve.

Tucows is doing the exact opposite. They are using hard won profits from the competitive wholesale domain name business to invest in modern fiber networks in cities like Charlottesville VA, Holly Springs, NC, and Centennial, CO. They believe, as we do, that, a modern communications infrastructure is the most important investment any community can make to expedite the transition from a 20th century economy based on undifferentiated manufacturing to a 21st century economy based on highly specialized manufacturing and services.

While they are at it, Tucows is exploding the myth propagated by the cable and telephone companies that the only way to finance a fiber network is to return to the gatekeeper model of the cable industry where the network build is subsidized by fees extracted from content providers in exchange for access to consumers. Tucows is committed building open networks that offer unfiltered, unthrottled, and unfettered access to consumers.  Open networks preserve the defining feature of the open Internet, permissionless innovation. It is that feature that ensures applications layer services have the freedom to innovate. More importantly, without open access to the Internet, no community can protect the economic, political, or personal freedom of their citizens. And without those freedoms, communities will have little chance to successfully manage the transition to a modern 21st century economy. Individuals in these communities will need unfettered access to knowledge to retool their skills for the new opportunities. Gig workers will need to access multiple platforms to optimize the return on their labor. Specialized manufacturers will need to fit seamlessly into global supply chains. All of this will need to happen quickly if we are to minimize the economic dislocation these communities are already grappling with. None of this will happen, if access to the Internet is mediated by vertically integrated global conglomerates.

The cable and telephone companies would like us to believe the open Internet is threatened by over reaching government regulation. In fact, it is threatened by crony capitalism. Instead of investing in local communities, the incumbents deploy thousands of lobbyists to argue that communities should not be able to invest in their own future. We are thrilled to be working with Tucows, because instead of lobbying Washington, to prevent competition, they are actively investing in fiber networks, the critical 21st century community infrastructure, and while they are at it, proving that investing in community fiber networks is a great business.


Comments (Archived):

  1. William Mougayar

    I’ll sound like a broken record, but the monopoly situation you depicted is copy cat in Canada, and I’m going to start being more vocal about it. This cannot go on.Tucows is a Toronto-based company, but they are quite focused on the US market.

    1. Girish Mehta

      William, worth reading “The Master Switch” by Tim Wu if you haven’t. Also he has a couple of talks online..https://www.amazon.com/Mast

      1. William Mougayar

        Thanks! Will check it out.

  2. kenberger

    (channeling @JimHirshfield):Very moooving, clearly a chance to milk this.

    1. JimHirshfield

      Churn them out like butter.

  3. awaldstein

    Good on you and the team!

  4. Rob Larson

    Good luck! On both this investment and the broader goal you are trying to accomplish. Wishing you success on both counts. Glad to see you’re not taking the shifting industry landscape lying down.

  5. jason wright

    what’s the story behind the ‘Tucows’ name?

  6. Roger Chabra

    very nice, a longstanding Toronto company 🙂 quick quiz – do you know what TUCOWS is an acronym for???? THAT will take you back 😉

    1. kenberger

      see my other comment, googled it since then, and it’s “The Ultimate Collection Of Winsock Software”

      1. jason wright


  7. Ali

    Wow, If I understand the situation correctly, this is putting your money where your mouth is. Must have required a lot of courage.

  8. kenberger

    I remember the service in early days, very fondly. It was THE place to go for Windows / winsock downloadables, which was essential to my work then as a webmaster / Sr. Dev.In fact, if i remember correctly, TUCOWS is an acronym for something like The Ultimate Collection of Windows Software (I haven’t googled this, maybe i’m off).Here is the site as it looked in the mid-90’s:http://web.archive.org/web/

    1. Girish Mehta

      Close. “The Ultimate Collection of Winsock Software”. (not windows software).

      1. kenberger

        thanks! that’s more precisely what I used it for in 1995.

    2. gorbachev

      I remember using TUCOWS quite a bit in the “good old days”. I honestly had no idea they were still around.The story of how they pivoted to what they’re doing now would probably be a very interesting one.

  9. Rob Underwood

    Anything that 1) addresses crony capitalism and 2) increases the chances that I never have to hear or see one of those horrid, nauseating “Bright House Networks is Now Spectrum” spots (which bring to mind this classic, https://vimeo.com/89527215) I am all for.

  10. Will Saborio

    I’ve been thinking a lot about how the telco/networking is going to be redefined in the next few years (some writing here if you’re curious: https://medium.com/salsa-si….Many people assume the monopoly power is too high to be supporting little guys (of which there are quite a few, as I point out here https://medium.com/salsa-si… and that a VC investment is tilting at windmills. Very, very exciting to see USV enter the space.

  11. Dan Epstein

    Tweeted at Andy, but I’ll add it here. We love Ting in Charlottesville. People put signs in their front yard after install.

    1. fredwilson


    2. Jess Bachman

      There are few companies I have more respect for and promote more than Ting. Love em. 3 lines, with data, about $70 a month.

    3. aweissman

      great story

  12. Gadi Shamia

    So happy for Tucows! One of Talkdesk’s favorite customers!

  13. Steve_Dodd

    Yes!!!! In fact, it is threatened by crony capitalism.Well said. Good luck with Tucows, they are fantastic.

  14. Donna Brewington White

    I hope that this principled investment will reap huge profit for USV.

    1. karen_e

      The way they think (and act) is principled as well as quite cowboy, don’t you think? To the benefit of many.

      1. Donna Brewington White

        Very well put, Karen. Oh, right, marketer.

  15. Humberto

    Mesh networks. We desperately need mesh networks.That and a few public backbones. And devices with batteries to support all this.I’d even Go back to the original iPhone’s capabilities just to save all the battery for a better, more leveled playing field.The carriers failed us. The wifi failed us. All we have is dreams!

  16. Itay Rotem

    Encouraging! thanks.

  17. JamesHRH

    Not often that the right thing is also a massive market opportunity.

  18. JorgePedraza1

    Thank you for sharing and for the comments.

  19. Shawn Chittle

    I co-founded TUCOWS in 1994 with Scott. Haven’t looked much into them in recent years, and this was sent to me. Very proud of what they’ve become and what they’re doing!

  20. leapy

    Very pleased to see this. I have very happy memories of their domain service and software downloads. And they had a self – managed DNS service . They were ubiquitous in the early days.I used to manage my domains with them until they decided that I wasn’t a wholesaler and moved me off.I really hope this works.

    1. Ben Lucier

      They have a fantastic retail arm called Hover.com. They’re not the cheapest, but the service and support is amazing.

      1. leapy

        Thanks. I will check them out. I get no service at all from my current registrar.

        1. Ben Lucier

          If you have more than a few domains, they’ll offer a valet transfer service where one of their staff will do all the work of transferring your domains from wherever they live today.

  21. howardlindzon

    I grew up with Elliot in toronto. Just sent him a note. Very cool. He has been at it forever I think Mark Cuban is an early investor.

    1. fredwilson

      I think this is our fourth investment in Toronto. It’s a great place to invest

      1. Mike Cautillo

        And to live:)

  22. James Newell

    The new FTC leadership may try to use Tucows to deny monopolies exist or demonstrate that they don’t stifle competition…

  23. Frank W. Miller

    An alternative view. When they try to change protocols, the openness of the Internet is threatened. When they change pricing schemes for how much bandwidth you get, it is not. Its been a part of the Internet business model since the beginning.The only businesses that would be affected by this would be those that serve video since thats the only app that challenges bandwidth usage in a broadband environment. So you’re arugment boils down to I can’t start another Netflix because of the disadvantage a startup would have with bandwidth caps.But as usual the economics take care of themselves. If the startup is small, none of this matters, there’s not enuff bandwidth to argue about so just let the user’s pay for it. You could make the argument this is a disadvantage but its also an advantage because the startup doesn’t pay for any bandwidth. If the startup starts to get big, it goes and negotiates with Verizon or whomever to do the same thing Netflix does and pays Verizon. At that point they reach parity so any competitive difference goes away. This is a business argument, not a fundamental threat to the Internet.

    1. pointsnfigures

      Logically understand your argument. But, Verizon then has pricing power. They might have an incentive to favor Netflix, so the playing field may not be level. BTW, I wasn’t a fan of net neutrality for precisely the reasons outlined in the post. It coagulated competition and caused telco’s to buy back stock (i detest companies that do this) underinvest in infrastructure.I’d like to see more spectrum released, and a lot of competition.

      1. PhilipSugar

        I don’t understand why if you think your stock is undervalued you don’t buy it back.As a matter of fact I think this is what drives management to crazy “growth strategies” because they think they cannot “milk a cash cow”I totally disagree.

        1. pointsnfigures

          Who is right? The market or the individuals in the management? Usually it’s the market. The only reason they buyback stock is the tax code. If dividends weren’t triple taxed, the money would be better off going to individuals to reinvest than a centralized bureaucracy inside a corporation that simply wants to get out of its options.

          1. PhilipSugar

            Yes, I agree. But as a business person you do what you have to do.In my mind some of the worst corporate behavior is not maximizing for profit.My poster child? Yahoo.Everybody says growth, growth, growth!!! Not profit, profit, profit. (When you are not growing. Look at the rule of 40) It is why so much wealth is destroyed.

    2. Michael Elling

      That’s utter nonsense. Monopoly or oligopoly forces start with physical rights of way and/or frequency allocations. Those feed into the business model. The internet scaled in the US precisely because of pricing forces (flat-rate dial and low cost WAN connections) that resulted from equal access policies in the US. Part 15 (shared) wireless has become the biggest form of access out there and is the primary reason the smartphone revolution happened. Number portability was a huge aspect to generative, competitive markets coinciding with enormous demand elasticity. None of that has been translated into the internet or media markets. Settlement free peering actually stifles competition and generativity. The ad exchanges are effect monopolies. Content monopolies exist everywhere. There is no address portability. A lot of people simply do not understand network effects and supply/demand clearing forces in inter-networked (digital) ecosystems.

      1. Frank W. Miller

        There have always been many ways to connect to the Internet. When dialup was king there was also ISDN and T1’s. You get what you pay for when it comes to speed. Deal.

        1. Michael Elling

          In Europe and RoW access was metered, not flat rate, since no other country resorted to a vertical or logical separation of the monopoly. That, along with commoditized WAN, were the real commercial underpinnings for the Internet scaling in the US faster than anywhere else. So it very much was a policy issue that shaped market forces and business models.We should learn from history’s (real, not distorted or misunderstood) lessons. Screw with the edge and you stifle things at the core (and vice versa).

  24. Pascal Aschwanden

    Just wanted to mention it here: Don’t forget about http://www.usmobile.com It runs on the t-mobile network, but you can pick a plan that is affordably by only selecting what you will use. Currently, I’m pay 9$/ mon for 100mb of data, 100 messages, and 100 minutes!

    1. jason wright

      100 mb of data – was that enough to write your comment? 🙂

  25. Anon Techie

    I have used Ting (on sprint network). I must say, its a carrier thats unlike any other (in US). I feel their way of charging for usage is the right way to do it. non heavy users wont feel ripped off.Something other than their mobile service that impressed me : Their customer service.Easy to stop using Ting. Easy to start again. If its difficult to do it online by yourself, chat is super helpful. And on top of that the phone support I called a few times, was answered by an actual human, after a ring or two. I took a moment to realize that its not a recording thats saying “Hi …. “If Ting is available with more reliable networks, I’ll move whole family plan to Ting.If Ting Fiber is available in my area, even if it is slightly expensive, I’ll go for it.I cant stop talking about how awesome my Ting experience has been :)I didn’t know that Ting was a Tucows brand, until I read this post!

  26. daryn

    I owned Tucows stock about 16 years ago, if memory serves me correctly. It was in the heat of domain names market (which I was in at the time), but I always had a fondness for their brand from the old shareware distribution website days.Glad you finally caught up, USV :)Seriously though, I haven’t heard about the company in years – super cool to hear about their involvement in community fiber (something I’m hoping for in town where I live), and glad they’ve got you all as supporters.

  27. pointsnfigures

    Movin into Warren Buffett territory buying public stocks : ) (this is a joke)

  28. PhilipSugar

    This goes to show you why you need regulation in companies that have huge networks of scale issue because they will inevitably have the tragedy of the commons problem. https://en.wikipedia.org/wi…Don’t get me wrong what is good for the goose is good for the gander. But I could not agree more. Can’t charge extra??? Make certain traffic free. Same difference.Totally agree.

  29. Elia Freedman

    Have used Hover for all my domains for years. They are awesome.

  30. Steven Kane


  31. Michael Elling

    Interconnection as far out to the edge and bottom as possible (but remember address directories at the core are huge monopoly levers) with mandated settlements between the layers and boundaries. Very few understand this, but it’s the only way for sustainable and generative digital networked ecosystems to occur in a market system. Every other policy leads to silos at the edge and core. For what it’s worth, net neutrality is a contrived fiction to avoid dealing with the interconnection issues that can exist anywhere in the informational stack. That’s simply because no one has the right framework within which to model these issues.