Tonight we went to visit the newly reopened La Mamounia Hotel in Marrakesh which after a $170 million renovation, a staggering amount for a hotel that has less than 300 rooms, looks stunning. We were invited by the new management. I can’t say that La Mamounia is especially my taste. I prefer small hotels or Riads as they are called over here, places such as MaisonMK or Villas des Orangers. Still, the work they did at La Mamounia is extraordinary and made me want to stay there next time we come to this wonderful city. Moreover, many events, weddings, parties, conventions, conferences are not suitable for small hotels. La Mamounia is sober for being a luxurious hotel in an Islamic country. It is mostly done in dark tones as you can see in the pictures that I include. The hotel opens to the public as of next week with rooms starting, sorry to say, at $900 a night. I recommend that you visit the Mamounia web site, if anything, just for the music.
These are some pictures of Marrakesh that I took today, a special day as it was Eid Al Adhha, the festival of sacrifice, involving the sacrifice of rams all over town. A pretty shocking site.
And here are some night pictures of La Mamounia.
I am not a VC. I am not an angel (don’t like the term). But I am a business mentor. Most of the times my mentoring is accompanied by an investment. Occasionally I get some shares in exchange for mentoring. If you look at the right side of this blog you will see the companies that I have invested in. Wikio, Netvibes, Plazes, Dopplr, Tumblr, Technorati, Eolia, Seesmic, Vuze (Azureus), Meneame, Joost, Moneytrackin, 23andMe, Aura Biosciences, Sonico, DineroMail, Sevenload, Vpod, and Xing.
As a result of these investments I get many pitches. More than I can handle. So I have two great people helping me look at these investments. One is Eduardo Arcos, the entrepreneur behind Hipertextual, the second largest blog network in Spanish in which I am an investor. The other one is Mahesh Kumar, a brilliant Indian student whose time I share with Result, a company in which I am also an investor. Now, other than that Eduardo and Mahesh are two great analysts, there is another reason I work with them going over pitches. Analysis is such a slow process.
So before getting more pitches, I would like to explain what my ideal format for getting pitches would be like. What I want is to get not the typical Power Point. Instead I want a TALKING Power Point. I want a Power Point in which I hit play and in 5 minutes I hear a presentation of the company narrated by the entrepreneur. I want to hit PLAY when I get a presentation not go over slides that were meant to be narrated but I still get 1999 style without video or sound. And of course it does not need to be in Power Point which I don’t even have (I use open source software to read PP). My ideal pitch could be slides with a small box for the entrepreneur to speak in video, or an alternation of the entrepreneur and slides, or simply slides with a voice over a la web demo. It could also be in stages. It could be 5 minutes and then the choice of… interested? Here’s some more. So if I like it and want to go in depth I can. These 5 minute pitches would make my day. And probably Eduardo’s and Mahesh’s day as well.
I would like to end by saying that my criteria to invest in a company are hardly objective. I only invest my funds, so I don’t need to have committees or fill up forms for liability protection. My criteria are: an entrepreneur with whom I would like to hang out with, a product I would love to use, and a valuation that is reasonable. But I have met some of the entrepreneurs I ended up mentoring through pitches, so I figured I would share my ideal pitch format with my readers.
When I left the USA in 1995 and moved to Europe, the start-up scene on the Continent was pretty dead. But a lot has changed since then, and events like TechTour 09 are further proof that there is great talent, capital and great ideas in Europe too. And in a crisis, surprisingly, these three elements are more likely to ignite into a successful start-up.
Last night I spoke at the TechTour dinner thanks to a kind invitation by fomer Fon European, MD Robert Lang, now at Result (disclosure: I am an investor in Result). Nina and I left Madrid around 4pm and arrived in Lausanne at 7pm, stayed until 10pm and then flew back to Madrid. It was a short stay but in those 3 hours we had enough time both to speak and to learn from some of the 150 entrepreneurs and VCs gathered at the event.
My speech was about how the crisis is negative for most but a boom for entrepreneurs. More concretely, it was about how the unique European system of high severance pay and welfare payments (in Europe stock options are not common but extremely large severance pay packages are) constitute a source of capital that can allow a former executive to become an entrepreneur. Many unemployed European executives find themselves unemployed with enough money to devote, say, a year of their lives to a start up without additional compensation. Also in Europe, some very talented people get laid off because it is cheaper to fire them than less talented but older colleagues. And those people are exactly the ones who may be needed in a start up. Lastly, the crisis reduces the difference between large companies, as providers of stable employment and start ups. As people realize that there’s risk anywhere, being the master of their own destinies becomes more attractive.
After my speech I was able to speak with some VCs and entrepreneurs that make the European start up ecosystem very lively. There were many VCs of small funds, funds of say less than 100 million euros, generally funded by Family Offices or holding companies of wealthy European families. What distinguishes Europe from America is that institutional funds are less into start-ups, but fortunately wealthy families whose fortunes came from start ups are more active investors in the area. I end with Poken, a Lausanne based start-up that deserves special mention. Poken is a little device that “shakes hands” with other like devices and in so doing exchanges information about their respective owners. Pokens are great for conferences and events as they are time savers for people exchanging information.
Here are some pictures of the event.
People frequently tell me that I should not disclose so much information about myself as it could potentially be used by criminals, kidnappers and the like to harm me or my family. Interestingly, it is mostly my German friends who tend to argue this point. Germans, as Americans, seem to have a skewed allocation of risk, worrying too much about unlikely risks, and being careless about others. I have German friends who seriously speak to me about the danger of being kidnapped and then go on the autobahn and drive 200km/h without worries.
I think differently. I believe that being public about your life, disclosing your address, your location, your habits, and learning a great deal about the habits of others, is not necessarily adding risk to your life. First of all, I should clarify that I live in Spain and that I have not heard of a single recent kidnapping case in Spain. So I don’t worry about kidnappings. If I lived in my native Argentina, for example, I would be writing a different post. But in Spain, as everywhere, there is common crime and being part of the real time web makes it more likely, for example, for criminals to find out where my home is. My home has been published in magazines, appears on Google Earth/Maps and now that I have started taken photography lessons, I have published many pictures of our home as well. So is that a risk? Overall, are we safer or less safe if we frequently blog, use Twitter, Facebook, and Google Latitude? I think that the real time web helps me lead a safer life and I even include Latitude in this. Google Latitude shares my location in real time with others.
Recently, we were debating safety and Latitude with some friends and the comment was “well if you share your location criminals know where to mug you”. But while it is true that sharing your location may add risk to your life, I think that when people speak of dangers in life, they tend to think too highly of criminality as a risk, and not about other more probable risks for which knowing your location is actually a big plus: examples having a heart attack or falling unconscious while being alone. Many people are terrified at the thought of being murdered by a stranger in their own home and sharing their location on Latitude may scare them even more. But it turns out that being murdered is an extremely unlikely event, and that even when it happens, that most people who get murdered at their home are murdered by people they know. So sharing your location, your habits and your pictures may in some cases increase your risk profile, but overall sharing lowers your risk profile if you correlate risk to likelihood.
Sharing is like wearing a seat belt. Yes, in some cases it may strangle you, but overall it lowers your risk profile. Moreover, in Europe, for example, it is much more likely that if anyone murders you it is yourself in the form of suicide or a lethal accident. Acute depression, drunk driving, are much more common than crime or murder and this is self inflicted damage for which location sharing may save your life. And not only sharing your location but simply sharing your anxieties or problems may lower your risk of actually committing suicide. So if we consider risk anything bad that may happen to you think Latitude or sharing your location with friends and work associates does make your life safer. In my case, for example, I do a lot of mountain biking, with friends or alone, and I always take my mobile device with Latitude. Because even if you are with friends on fast descents everyone goes his own way and going back up to search for a friend is a slow process. In 1998 I had a serious accident mountain biking and it took half an hour of me bleeding to find me. Same with skiing, I see Latitude connected to an iPhone/Blackberry/Android with GPS as a real safety tool.
Now in terms of all other risks the real time web does help avoid risks or getting into trouble. Through Facebook you can track diseases real time, you can get medical advise from friends having similar problems, with other social networks that are geared towards medical users like 23andme (I am an investor) you share your most intimate genetic information with friends, but then you can cooperate in avoiding and treating medical conditions. In general terms I have no doubt that leading a life of isolation does make the likelihood that you will have poorly treated medical problems greater than leading a very social life.
Lastly, there is Twitter. While we don’t have kidnappers in Madrid we do have terrorists who occasionally blow things and sometimes people up. Twitter is the fastest way to get news real time on anything related to terrorism. Whenever something bad happens you see it fly through Twitter. Before Twitter you had to call 30 friends to tell them you were spared or you were well. Now it’s just a Tweet away.
Bottom line? If you want to lead a safer life join the real time web.
PS: I do recognize that this is an anecdotal article and I welcome proofs for or against the argument that sharing increases or decreases your risk profile.
At Fon,we run the largest, global, WiFi network in the world. It is a network built by the people. Fon is a clever piece of software that makes two WiFi networks out of the normally just one from your WiFi router. One network is encrypted, very safe and for you alone, with 100% of the bandwidth for your use except when a passer-by connects. Then its still 80% for you, and the other 20% becomes part of a public open network called “Fon Free Internet”. When others connect to your WiFi, you have a choice of allowing them to do it for free or to make them pay. If you make them pay you can reduce the costs of your ADSL or Cable bill or sometimes subsidize it. To join Fon, the only thing that our users have to do is buy a Fonera Router, there are no monthly fees. Members can then surf for free on any other Fonera for as long as they share. So our motto is “you share a little wifi at home and roam the world for free”. We now have over 700,000 people around the world sharing WiFi. In some countries, like the UK, you can find Fon practically everywhere. But because of its nature, Fon tends to be more common in residential areas. For public areas, such as airports, train stations or points of interest, Fon advocates Open WiFi. It is for this reason that we are very happy to report that our investors, Google, have decided to gift paid WiFi to everyone at busy US airports in the form of free WiFi this holiday season. We also congratulate Yahoo for doing the same in Times Square.
Our home in Madrid is called Casavars. It was designed by the Spanish Architects Acebo y Alonso. I recently started photography lessons. I am on to my second class. My teacher is Spanish photographer Mauro Fuentes who is also Spain´s number one photography blogger. His blog is called Fotomaf. I have a detailed post in Spanish on my latest lesson and what I learned about using tripods, developing with Lightroom and overall handling of my camera, a Canon 50D (not yet the 5D) with two lenses: a fixed 1.2 85mm and a 24-70 2.8 Zoom.
Here are my pictures:
And here are Mauro´s pictures:
My investors at Fon include most of the people and companies that were involved in the recent sale of Skype. At Fon we have eBay, Janus Friis and Niklas Zennstrom personally as investors and board members, Mike Volpi personally as an investor and board member, Danny Rimer as a board member and Index Ventures as an investor, and Marc Andreessen as an investor. So for me to talk about Skype after the recent dispute for the control of this company could be dangerous. But there´s no need to be concerned. This post is not about my opinions on what just happened at Skype as those are irrelevant here. Personally I think that Janus, Niklas, Mike, Danny and Marc are all awesome guys, amazing investors and board members. So what I will speak about is how I see the future of Skype and the dangers it may face and the opportunities it may have.
Before getting started I would like to say that I have been a user of Skype from the very beginning, from way before I actually met and became partners with Janus and Niklas, that I think that Skype is a remarkable product that is way ahead of the competition and that while not yet a highly profitable company, Skype has certainly been a gift to humanity. Now having sent my thank you note, let’s talk business.
Most communication on Skype as we all know, is totally free, only occasional calls to non Skype parties are the ones that generate the $740 million revenue run rate that allows Skype to make a living. The rest is love. And those revenues are under threat from three rivals.
The first one is called Facebook. While my friends inside Facebook have not disclosed anything to me, I think it is obvious that Facebook will soon have its own Skype. And what´s amazing about Facebook is that even though its pictures apps is mediocre in comparison to Flickr, its email pales in comparison to Gmail and its chat is way worse than that of Skype (no file attachments, no this, no this no that), the growth of those apps in Facebook is explosive. While I have been in Skype since 2004, on a recent check I had around 30 people I knew on Skype and 144 on Facebook chat. When Facebook incorporates a Skype like product, how many people will go on using Skype? Facebook is getting so big that soon there will be no Facebook Out. The threat that was Skype’s threat, namely how do you make money if everyone is on Skype and there is no Skype Out, is now being transferred to Facebook. But the thing is that Facebook, another gift to humanity, has a different business model, advertising, and they could really hurt Skype.
The second threat to Skype is flat rate pricing from telcos around the world. Why would anyone use Skype Out if they have an all you can eat tariff on their phone? And all you can eat tariffs are more and more frequent. In Europe all ADSL plans come with flat rates to all fixed lines, and in USA flat plans to fixed and mobile plans are more and more common. There are also community plans like calling anyone on AT&T for free that turns AT&T mobile into a Skype. It is remarkable that these plans are available to visitors such as myself and my family. We are six and when we go to USA everyone gets a phone with an AT&T card and we all call each other for free on prepaid! And telcos have one big advantage and that is that you don’t need a computer to make a phone call 🙂
The third threat is Google Voice. Google voice is interesting because it came out of the Google Talk fiasco and it shows how relentless Google is when it gets its mind set on something (disclosure Google is also an investor in Fon). What Google Voice is doing with the free phone calls attacks the very livelihood of Skype and that is Skype out. And the integration with Gmail and Gmail contacts is amazing. Skype is weak at that, it has no email. Google first copied Skype with Gtalk and it took off but not really. Google Voice is the second derivative of the Skype attack, and is going well. The $50 million acquisition of Grand Central that resulted in Google Voice stands up there with the acquisition of Keyhole that resulted in Google Earth as two of the best M&A moves of Google so far.
So considering that Skype is under attack from Facebook, the largest telcos in the world and Google how can it be a good business to buy Skype?
Well the key here for the new investors in Skype is not whether Skype will rule the world but whether it will be worth more than what the investors paid for it. And after giving you the cons here are some arguments and strategies in favor of the acquisition.
Skype is simple. Michael Arrington and all of Silicon Valley may find Google Voice amazing but is the average global citizen ready to use it? Massively use it? You download Skype, you find your friends on Skype, you talk. And if you don’t find them you Skype out. And when you talk you can also do video. I LOVE video calls on Skype. I used to use them for people I really cared about, relatives, close friends. Now I even do business calls on video with Skype. It just gives you more of a sense of what is going through the other person´s mind. And Skype is the leader on video quality. So simplicity plus video may be a good way to beat flat plans from telcos and avoid being Tivoed. If the video services can migrate to mobile phones Skype is on to something.
Skype can include advertising. If Gmail reads your emails and places ads why can´t Skype do the same thing on their chat or even their voice channels? How far are we from systems that listen to what you say and just as you finish saying “let´s go to Ibiza for the weekend” they start showing you cheap flights to Ibiza. Gmail proved that if you give people a great service they don’t care if you spy on them. That could be an enormous revenue source. So far Google has been kind to Skype even including it in the Google pack. Maybe a Google deal for advertising is in the making.
Facebook is not the only community in the world, there is Linked In, Xing and other business networks. Those “business types” work best with Skype. I believe that as Facebook squeezes everybody in its quest to Microsoft the world (Mark Zuckerberg told me that Microsoft is his model) a few Apples will emerge. Skype could be one of them. Apple has a tiny fraction of the PC market, Dell dwarfs it in revenues. But Apple dominates the over $1000 PC segment. Skype could position itself as the communicator of choice for businesses. And that has tremendous value.
This post is only directed at Europeans and is based on the possibility to bring Peek to Europe. This is not an announcement and the Peek may or may not come to Europe. Now here´s the question. Peek is basically an email machine. You can study the product here. It is like a bare bones Blackberry. It only does email, no sms, no twitter (there is another model that does Twitter but this post is not about that model), no browsing, no telephone calls, just email. Now here´s the question. If you could buy a Peek device for 20 euros and pay then 15 euros per month to get your email anywhere in Europe and the USA without any roaming charges and contracts. Would you get one?
I already have a poll in my Spanish blog for this issue. It generated many votes and comments in only one hour. Some people like the opportunity but I see that many commentators say that they get their Blackberry service for only 19 euros a month so why do they need a Peek. But the issue here is that operators force you to pay 59 euros a month and stay 18 months so you cannot get a plain stand alone Blackberry service and a Blackberry for 19 euros. Blackberry contracts have minimum commitments of over 1000 euros when you add them up. The Peek as you can see, in USA has no minimum commitment. But when you compete with giants with enormous advertising budgets people get brainwashed so if people believe the comparison is Blackberry for 19 euros or Peek for 15 euros Peek apples to apples, Peek does not have a chance even with free roaming around Europe and USA. Or it has a very limited niche. Because a Blackberry does a lot of things and the Peek just email.
In the future Peek may also come with browsing and sms capability for say 50 for the device and 19 per month with unlimited texting in your own country and browsing all over Europe and USA. I also included that possibility in the poll.
I don´t know if many people do this. But personally I can´t live without my “cloud” in my pocket. I have different Macs. At home I have a big iMac. At work I have another one. I also have a MacBookPro that I carry around sometimes but I find it very heavy and with a horrible tendency to overheat. But even though I use 3 different Macs I have a system by which they are constantly cloned. Whenever I use a Mac I use an external bootable 500GB HP hardrive. I use the same HD whatever Mac I use. Whenever I start with a new Mac I boot off my HD by pressing Power and ALT at the same time. So in the end I always have the same info whatever Mac I use. So what I take around is a HD in my pocket, not a laptop, my pocket cloud. I have not found a way to do this with Linux, nor with Windows.
As most of my readers are not Americans I would like to share what Halloween in USA, in Miami of all places can look like.
Here’s a video of a transvestite competition for the best costume. I am sorry I could not capture the MC saying his favorite line which he repeated all evening and it was this one “I need a volunteer to cut my penis off”.
And here are the pictures a few taken with a Canon D50 with a 24/70 2.8 zoom and most with the new Canon G11.