KT_logo_2011We’re happy to announce today that we’ve just signed an agreement with KT, the leading South Korean telco!

Starting today, Fon members who visit the country will gain free access to KT’s WiFi network throughout South Korea. In return, select KT customers will also get free access to our 13-million hotspot network!

This is our first step in a joint plan to extend our WiFi network in Korea, one of the most technologically-advanced countries in the world. Ultimately our goal is to expand the partnership to the entire KT customer base and provide the best WiFi experience in South Korea.

This adds to our already extensive Fon WiFi network in South Korea, making it the country with the second best Fon coverage in Asia after Japan.

We are very excited about this new agreement and we can’t wait to continue bringing Asia access to the largest WiFi network in the world!

Today, I am happy to announce that the company I started just over six years ago, Fon, has just passed the important milestone of five million hotspots.

Why is this important? Because while many have tried to build a large and global WiFi network, Fon has been the only company in the world to actually achieve this. No other network even comes close to us. Fon is everywhere, even in residential locations, where no other WiFi hotspots can be found.  Brussels, Lisbon, London and Tokyo are completely covered with Fon WiFi.

We are growing so fast, that in 2011 alone we added two million new hotspots. This year, I predict that Fon will grow its number of hotspots by at least 50 percent, so there is lots of work ahead to make sure this happens.

I am proud of Fon and its large, global WiFi network. I started this company with a goal to create a truly global WiFi community, where everyone sharing a little bit of their connection gets free WiFi anywhere in the world in return.

Every day, I feel that we’re getting closer to this goal. The WiFi revolution continues.

Published in Techcrunch 

Belgacom (powered by Fon) has created an awesome campaign to advertise its fonspots. A dog called Fifi whose innate talent is to smell wifi hotspots.  In the middle of 2011, we announced the agreement between Fon and Belgacom and two months ago we reached 100.000 hotspots. Nowadays, we have 300.000,.

Here you can see the video. The story would be as follows: Jean has a dog called Fifi that barks when she finds a wifi hotspot, because of Fon and its agreement with Belgacom, this virtue has turned out to be his worst nightmare as she never stops barking.

In addition, Belgacom also created a game which consists of finding Fifi in one of the 300.000 hotspots Fon has in Belgium through Google Streetview.

Joining the ranks of Belgacom, BT, Softbank of Japan,SFR of France, Comstar of Russia and Zon of Portugal, I would like to welcome Fon’s newest partner: Oi of Brazil.

Today we’re officially launching our partnership with Oi, the largest telco in Brazil and the second largest telco in Latin America. This means that as of today, Fon has entered the Latin American market.  With Fon you share a little WiFi at home and you roam the world for free connecting to other community members.  Fon grows its membership directly by people buying Fon wifi routers known as Foneras at our shop or by becoming ADSL/Cable/Fiber customers of our telecom partners who deliver their routers with Fon inside.

After our partnership announcement with Belgacom in June, this continues to be a successful year for Fon in terms of partnerships, and it is only the beginning of many more partnerships to come that will soon be announced.

Despite the fact that we just launched today, we already have over 100 active Fon Oi hotspots in key locations in Rio de Janeiro’s popular districts, Ipanema and Leblon (which you can find on our hotspot map), giving Brazilians and visitors a flavor of what Oi-Fon will be as it is deployed all over Brazil.

Brazil, and especially Rio, is a great place to start. Just this month I came across this article saying that Brazilians are the world’s most intensive mobile internet users. And smartphone sales are also growing quickly. In addition to that, the millions of tourists visiting Rio each year will find our Oi-Fon hotspot network very useful to stay connected while avoiding to pay high roaming costs. This will come in especially handy in the future, with Brazil hosting important events like the FIFA World Cup in 2014 or the 2016 Summer Olympics. And maybe even the Pope will connect to our network when he visits Rio in 2013 :)

Our global footprint is increasing at a faster pace every day. We hit our 4 millionth hotspot in May of this year, and now we already have more than 4.5 million hotspots worldwide. And Brazil is only the first step we are taking to spread our hotspot network over many more Latin American countries.  We hope to have more news about partnerships in Latin America soon, a region very dear to my heart as I was born in Argentina and as many Argentines spent many of my childhood vacations in Brazil.

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At Fon: we have partnered with Nintendo in Portugal, giving owners of 3DS consoles internet connectivity through our Zon@Fon hotspot network. With our more than 450,000 hotspots, this means users gain access to the largest WiFi network in Portugal. Thanks to Zon@Fon, Portugal is the country with the highest public WiFi density in the world. On average, about 1 out of every 10 Portuguese households has a Zon@Fon hotspot.

These are good news for Nintendo users, who now thanks to Zon@Fon will be able to access the internet at every Fon hotspot in Portugal. The 3DS console with Nintendo’s new SpotPass service will allow users to seamlessly receive push content including movies, cartoons and other exclusive content from Nintendo automatically, even while in sleep mode. Sharing Foneros will enjoy full internet connectivity with their 3DS.

The increasing popularity of  iOS and Android devices is a challenge for game console manufacturers like Nintendo, so this kind of partnership enables them to offer internet connectivity on the go even without a 3G card and to develop a new dimension of interaction with their users.

This offer will only be available in Portugal initially, but we plan to roll it out to other countries as well. This cooperation demonstrates the true value of a dense WiFi network not only for users, but also for gadget manufacturers and other businesses, who can offer a whole new dimension of user-experience by partnering with Fon. We will develop more partnerships of this kind in the future.

Today I am in Belgium to announce Fon’s partnership with Belgacom, a great company with fixed and mobile operations in a country of 11 million people. Together with the largest telco company in Belgium we will build the largest WiFi community in Belgium and extend Fon’s WiFi footprint, currently with more than 4 million hotspots all over the world. But this is not only an important day for Belgacom’s customers and Foneros. It’s an important day for Fon as it shows the world again that some of the leading telcos in the world realize that Fon can help them to provide a better mobile user experience for their customers if they join our WiFi community.

This partnership is also more proof that, as I explain in this post from 2010, operators are increasingly realizing the power of WiFi in order to provide a better user experience and to offload the enormous amount of data traffic that is congesting their mobile networks. The growth in demand for mobile bandwidth is far outpacing the growth in capacity, with people now spending more time using mobile apps than surfing the web.

Since our first partnership with BT in the UK in 2007, interest in Fon from fixed and mobile telcos and hardware manufacturers has ballooned. In the past years we have demonstrated what we knew all along – that we can help our partners to provide a service which their subscribers appreciate… and thereby help them to reduce CAPEX, decrease churn, attract new customers, differentiate and freshen up their brand image. And today, six years after starting from scratch, we are talking to big telco incumbents in different countries. We’re thrilled to now be working with Belgacom, and though I can’t say specifically with whom Fon will partner next, I can say that this probably won’t be the last partnership we get to announce this year.

Update: here’s what the media is saying about our new partnership:

http://eu.techcrunch.com/2011/06/28/fon-creates-largest-wifi-network-in-belgium-heres-an-awesome-graphic-to-explain-why/

http://www.dw-world.de/dw/article/0,,15194360,00.html

http://www.zdnet.be/news/129013/belgacom-rolt-4g-uit/ for my Belgian readers :)

Image representing Fon as depicted in CrunchBase
Image via CrunchBase

At Fon we have an amazing board: Anil Hansjee of Google, Danny Rimer and Mike Volpi of Index Ventures, Janus Friis and Niklas Zennstrom of Atomico (formerly of Skype) and Chris Smith of Coral Ventures. We also have investors from Sequoia CapitalEbay, BT, Digital Garage, Excite Japan, Marc Andreessen, Joanna Rees, and of course myself, CEO and Founder. All of us together have invested 36 million euros in Fon. All of us a little crazy of course, because the basic idea of Fon, “share a little WiFi at home and roam the world for free” is a far fetched, improbable concept. And it has not been a smooth ride. We have made significant mistakes, among them losing two thirds of our funds subsidizing foneras many of which ended in some lost closet around the globe. It was a year ago in the midst of the crisis and, recognizing these mistakes, that I started to personally finance the losses of the company. I felt it was my turn to show that I was willing to risk it for Fon. But losing around a million dollars a month it really seemed that Fon was going to sink. But this post is the story of how it did not. Most likely because I had been through this before.

I saw Viatel sinking for 9 years until my original 200K, and those of my then key investors like George Soros, ended up being worth over a billion. I saw Jazztel lose large amounts of money as well, but because of the strategic value of its network it was then worth 900 million when I left and my investors Advent, Apax, Spectrum Equity cashed out nicely. I also saw Ya.com, a company that we built with 55 million euros and sold for 750 million dollars, lose tons of money. And we sold it way before it was profitable again because of its strategic value. Both Deutsche Telekom and France Telecom wanted to own the second largest portal/ISP after Terra. And I saw defeat as well. I personally lost 52 million dollars in Einsteinet, a German cloud computing company managed by a remarkable group of people in Munich, but 5 years ahead of the boom of cloud computing. It was a terrible blow for me and my investors, but, if anything, it taught me a simple lesson, not to give up too soon. Cloud computing did make it in the end and Google, my investor in Fon, would have probably bought Einsteinet. This background may explain why last year I decided to insist with Fon.

19 years in technology have trained me to expect the unexpected, to “hang in there”. What the 3 companies that I started and got to be worth over $700 million dollars by the time I sold have in common, is that they were strategic assets that huge telcos wanted to buy. But I still could not make them profitable. I guess it did not matter. In the right markets you can get away with this. But what was true in 2000 was not true in 2003, when I threw in the towel on Einsteinet. Presently the world is like 2003, except that what happened to technology then is happening to everything else now. So last year when I became the only investor covering the losses of Fon I knew that for us it was profits or death. I went for profits.

And a year later I am happy to announce, a la Facebook, that the last quarter of 09 will be our first profitable quarter. And I mean not just EBITDA positive but profitable. I can also share with you that we will probably do around 2.5 million dollars in revenues up from 400k in the first quarter (all figures are in dollars). Currently growth is phenomenal, costs are low and margins are high in our two lines of business; selling foneras, selling wifi access passes alone or with our partners which include some of the largest telcos in the world (BT, SFRComstarZon and others).

Of course I don’t know precisely where do we go from here at Fon. But since we are not a public company I can share with you at least where I would like to see Fon in 2010. By next summer I would love to be doing around 1 million in profits per month. And for all of 2011 I would be very happy if we did around 20 million in profit. This is not unreasonable but we have to get from here to there. Growth is tremendous but we could stall. To reach these objectives we have to continue making telco deals and make the launch of our Fonera 2.0n a success. I am personally very excited by how well the Fon team has worked to come up with the Fonera 2.0n, a router that not only shares a little wifi at home and roams the world for free, but it is also your “internet assistant”. The Fonera 2.0n is really a PC hidden inside a WiFi router. When you connect it to a hard drive of your choice it downloads torrents, Megaupload, Rapidshare, uploads to Youtube, Picasa, Facebook, Flickr. It also converts 3G to WiFi like the MiFi. It tweets itself so you can follow it away from home and it has a few other tricks such as making money for its owner. We think that for 79 euros or 99 dollars it will be a hit. Or at least we hope so because whatever people in business say, they never really know how successful or not something will be.

Granted, we could lose momentum and be not at 1 million but at something like 300K a month in profits by next summer, in which case recovering the 36 million euros invested will mostly depend on what got me and my partners off the hook in the past, a strategic sale to large players. Telcos who want to own the biggest and fastest growing wifi network in the world. Another source of value may be the partnership with Ubiquisys, the FemtoFonera, which expands the Fonera model to the 3G world. This is unproven value but it could very well materialize. In urban areas it is ugly and absurd to continue to build huge antennas in roof tops when small elegant cells like the ones Ubiquisys makes can give both 3G and WiFi to people in the block. This is especially useful in underground areas, garages, malls, where 3G coverage is very costly and inefficient.

As a start up with 3 years of life, breaking even makes you, first of all, a sustainable company and that we will be… very profitable? That remains to be seen. But turning the corner is huge for us. I would like to end this post thanking all the foneros we have around the world, our partners the telcos who realized how happy customers who pay at home and roam the world for free can be with their service, to our investors who trusted us with a nutty idea and to all of those who have worked and now work for Fon.  I would like to thank my now wife Nina, who I met working at Fon, who still works with me at Fon, and who put up with me during the worst moments of this venture.

Muchas gracias a todos!

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Germany is Europe’s largest economy and a key market for FON. People in Germany love FON and the Fonero community there is very active. However, FON’s WiFi footprint in Germany is smaller than in other European countries, like the UK and France, where our Telco partners have helped us grow. Fon´s partnership with E-Plus, is about to change that. Today FON is announcing a partnership with the E-Plus group in Germany. With more than 18 million subscribers and annual revenues of 3.2 billion Euros, the E-Plus group is Germany’s third largest mobile operator. E-Plus is part of KPN group and is considered an innovator in the German mobile Telco market. E-Plus will help the FON community grow in Germany with a planned series of joint activities starting this year. For example, E-Plus will install Foneras in more than 300 E-Plus stores in prime locations throughout Germany.  Together, FON and E-plus will target cafes and other public places where we will install FON Spots as part of the “City FON” initiative – similar to the “Chueca WiFi” and “Shoreditch” density projects in Spain and England. E-Plus will promote FON to their 18 Million subscribers and will help us to encourage them to become Foneros. E-Plus customers who register for the collaboration will be eligible for discounts on Foneras and will get free trial access to the FON WiFi network and once they installed their Fon routers they will be able to roam the world for free connecting to other Foneros.

The FON E-Plus partnership is great for two reasons. E-Plus has great marketing power that will increase FON awareness and help the German FON community grow faster. E-Plus is the first pure mobile operator to partner with FON. Initially journalists and bloggers had argued that Fon would be stopped by fixed and mobile operators. Some of these experts confused Fon with a P2P telco network. But the difference here is that while P2P networks destroy value for the music labels, Fon increases value to telcos. How? Well, as our partnership with BT, known as BTfon, and others have shown, Fon generates value both for consumers and telcos. For consumers the proposition is clear, you share some extra, limited, bandwidth at home in a secure way with a second SSID or WiFi signal, and in return you roam the world for free. For fixed telcos, Fon increases customer loyalty, reduces churn, reduces customer acquisition costs. Fon enabled fixed operators can also resist price decreases as their customers have WiFi at home and everywhere else.

Now, for mobile operators, the one big benefit of Fon is reduced capex (investment in the network). 3G is a phenomenal service because of its coverage and frankly no matter how many hotspots we put, Fon will never compete with 3G in terms of coverage. So customers who want to have Internet in a car or to find it no matter where they are will always have to use 3G. But when there is WiFi, there are now tons of mobile phones that have a WiFi option, including the iPhone, Nokias, Samsungs, HTCs and others. And use of WiFi is advantageous to operators because: customers are happy with the speeds, they pay their monthly service anyway and they don´t use the much costlier 3G infrastructure. 3G is great for operators for voice and light data. But when people start downloading 300MB movies and TV series to watch in their mobile devices, operators either have to charge for that bandwidth making movies expensive, or prefer that people use WiFi. Moreover, some of the most popular gadgets in the world, such as the Nintendo DS, the PSP and so on, only come with WiFi. In this way, E-Plus can now service its customers on all of their connected devices.

All in all, this proves a point I have been making for a long time. FON and Mobile Telcos make great partners. WiFi is a complement to 3G. Moreover, we are very excited that this announcement coincides with the launch of the Fonera 2.0. The Fonera 2.0 has just been introduced in Germany (not yet in the UK) and it is a router that not only gives you free roaming but also manages your transfers to the Internet. Fonera 2.0 on its own sends your videos to Youtube, your pictures to Flickr, downloads your files from Rapidshare or Megaupload, or Bittorrent (disclosure this app is working poorly at the moment) and it is especially good for converting 3G signal from HSDPA modules to WiFi.

If you would like to interview me about this announcement please use the contact form of this blog and I will be happy to answer questions.

I would like to share what’s been said in blogs and media since we announced the Fonera 2.0 launch. The reviews are very positive and early sales are strong. But selling a lot of hardware without advertising is close to a miracle. Especially in the midst of a global crisis. So let´s hope the word of mouth after our first deliveries is enough to sustain the sales. The articles are in the languages I understand.

Wired, boing boing, PR News, Gearlog, dv-depot, pc mag, Endgadget, Gizmologia, Gizmología again, Zdnet, Canard WiFi, Hoy Teconología, Oss Blog, UNIVERS FREEBOX, Mac4Ever, Harakiwi, Planet Sansfil, Francofon, Minitosh, MacBidouille, Presence-PC, LordPhoenix’s Blog, i974, Infracom Online, ICWS, keneto.net, Perfil.com, Frageek, Clubic, Francofon, Harakiwi, mrboo, Fredzone, Brico-WiFi, Couleur Geek, Gonzague, GreenIT, Zicmama’s Blog, Netbook 3G, Webtuga, yebo blog, TooLinux, Soy Plastic, Il Bloggatore, BandaAncha, Xataca, País Cambiante

We are now facing the toughest environment that I have ever seen for start ups. We have gone from financial markets and VCs willing to finance dreams to a “show me the money” reality that will force start ups to close their doors if they can´t delivere. Fearing this new scenario and warned ahead of time by our investors at Allen and Co, I started cutting costs at Fon during early 08. The cutting was severe, we let go around half of our people, we shrank from around 90 employees around the world to 40 now. Moreover we stopped subsidizing our hardware. But surprisingly the combination of employee reductions with subsidy ends was still accompanied with tremendous revenue growth and now it is almost sure that Fon will start making money this year.

Fon earns margin out of two different sources, telecom sales, meaning people who are not WiFi donors but require WiFi and pay per hour, day or 5 days, and buyers of our hardware, the Fon WiFi routers, our social routers known as La Fonera or Foneras in plural.

In terms of telco sales last week was FON’s best week ever. After a tough winter in which both hardware and telco sales were shrinking, telco sales turned around and grew from 30K to 47K euros per week in the last 4 weeks alone: this is 50% revenue growth over the average winter week. Revenues and hotspot growth is mainly coming from BT and Zon in Portugal but it is also coming from many countries around the world. Our best countries are UK, France, Japan, Portugal, and Germany. Why was the winter so bad for us? I think that the global crisis “froze” people for a while and now they are relaxing their spending again. Also WiFi is partly an outdoor product and the winter is bad for us in general. We were also hit by the pound´s collapse against the euro which fortunately is now reversing.

On the hardware side FON’s outlook is bright. We have over 3000 pre ordered Fonera 2.0. We will start selling the Fonera 2.0 in Europe on April 21st. Due to cash conservation we have been very cautious in ordering stocks of the Fonera 2.0, but now it looks like we have been overly cautious. If you google Fonera 2.0 you will see that we are getting a lot of pre release reviews and that not a single one is negative. Tech bloggers and journalists appreciates a router that not only has the basic Fon functionality of free WiFi roaming and allowing its owner to make money from it but the more advance functionality of taking care of your uploading and downloading while your computer is off. They also like the 3G to WiFi conversion capability as many gadgets, especially gaming gadgets come with WiFi but not with 3G.

So now that we have shrank our monthly expenditures from 700K in Jan 08 to 210K euros per month now and are growing revenues so fast, it looks like we will break even this summer. If we do we will be a sustainable, profitable company which is the only guarantee of survival in an environment of cash starvation.

Bottom line is that we are not out of the desert yet, but we are getting close.

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