Fon

Growth at Fon has accelerated so much that we reached one million community members and close to 300K lit routers (this is ten times more routers than T Mobile has on a worldwide basis). Yes, it is true that a lot of the growth from Fon is now coming from operator deals, especially from BTFon, but that is also great news, because Fon is proving that we can work with telecom operators. Fon is showing fixed operators that by adding our shared wifi functionality with their broadband customers they have less churn, a lower cost of customer acquisition and a higher ARPU. We are also beginning to show some wireless operators that, as laptops get smaller and phones get bigger, mobile devices become data hogs and that WiFi is a great complement to 3G. The iPhone, which even though is sold as a 3G device forces you to use WiFi to get downloads from iTunes, is another proof of concept.

Sales of routers and day passes keep growing as we reduce losses. Last year we were loosing more then a million euros per month and this “burn rate” has shrunk to around 300K per month this summer. Our goal of reaching break even by the end of 09, which seemed so distant last summer, now looks within site. And the fundamentals are with us. When we started Fon, back in 2006, 200 million WiFi chips were sold. The number of chips sold this year is expected to reach 1 billion.

And more telecom operator deals are in the pipeline. In July we started Fon in Portugal in partnership with the largest cable operator in that country called Zon. Together we created Zon@Fon to serve their 1.5 million customers plus everyone else in Portugal who would like to enter the network. Next month we will launch Fon in Russia together with Sistema, the largest fixed and mobile operator in the country, and we have 8 such deals in negotiations. Top countries for Fon are the UK, Japan and France. Japan in particular is the country where we sell the most routers. These countries are also some of the three most technologically advanced large countries in the world. To me this means that others will follow.

Regarding our employees, we now have a more international team, reflecting the fact that Spain is less than 10% of our market. I take this opportunity to congratulate the people working at Fon for the great results achieved. Even if the company is not profitable yet, our goal gets closer every day and I personally put my time, money and heart in Fon. I also want to thank our investors at BT, Google, eBay, Index and others. I also thank all Foneros around the world as without their enthusiasm Fon, the largest WiFi network in the world would not exist.

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Most investors who trade stocks and other securities trade frequently. I don´t. I am your average broker´s nightmare. I probably do around 1 trade per month. This year I decided to share my portfolio in my blog. And it has not been a bad year.

In a post I wrote on May 4th I told my readers what I thought was going to happen with the dollar. I said that Europe was in worse conditions then what it looked like at the time, and that the US were in better conditions then what it looked like at the time. That while the dollar was in a seeming freefall that it was going to turn around. For my own portfolio I reversed a 7 year trend and started moving away from the euro into the dollar. And while I haven’t done any oil related transaction, last July I wrote in my Spanish blog that oil prices were absurdly high and they had to fall.

I started sharing what I was doing with my portfolio in early 08 with a post in which I recommended buying Apple stock (on January 23rd). Apple stock had fallen from $202 to $134 per share in less then 60 days and I loved the company, I bought shares and I told my readers I had done so.

So my two trades of the year until now were shifting my liquidity into dollars and buying Apple shares. Other than that my money was mostly in hedge funds that are down around 8% on the average this year. Bad but not as bad as the markets. And here´s another 3 trades I did. I bought TEO (Telecom of Argentina) mainly because I am Argentine and don´t think Argentina is going to hell again. I bought Citigroup and Bank of America because I lived in the States for 18 years and I can´t imagine the two leading US banks going to hell. But if you look at the stock performance of C and BAC you would think that everyone else seems to think they are going to hell. So I bought those shares. I also have bought shares of Cresud (CRESY) a very large landowner in Argentina for the same reasons. They trade as if fertileland will be worthless something that in this world of still very high food prices I don´t think will be the case.

I should also note that my investments are very long term. In 2001 when I switched to the euro I kept with it until 2008. The Apple, Citigroup, Bank of America, Cresud and Telecom of Argentina stock I’ve bought I also plan to keep for quite some time. And overall I don´t own in all these equities combined more than 5% of my net worth so until this year I had no stock exposure and now I have very little.

In this video I argue what you would probably not expect from me the Internet entrepreneur and founder of Educ.ar and that is that television, and I don´t just mean science documentaries but all television series including Sex and the City, Gossip Girl, 24, House, Friends and others, can be a great complement to a child´s education. In other words, I don´t think text books, other books, teacher presence, and the internet are enough for a well rounded education. This is especially true if you are trying to give your children an education in which English plays a very important role but you live, as we do, in a non English speaking country. Spain in this case.

I was thinking about Sarah Palin and her daughter, and thought of the fact that, at one point, they ask the heroin of Juno, the movie, if she is named after the city in Alaska was a premonition of what was actually coming from Alaska. This is another case of movies anticipating reality in some weird way. And if you Google Juno Palin, you will see that many writers thought of the same comparison.

To me, the sad part about the movie and the present election is that Juno manages to convince you, the viewer, that getting pregnant while being a teen and giving your child up for adoption, can actually be a great thing. From that to believing that the same is true for a Vice Presidential family is a short way. I am beginning to be sorry about the movie.

My hope for a real change in America is fading away.How can we leave the management of the world to American voters, who are simple minded enough to be seduced by Sarah Palin?

My friend Lukasz Gadowski has just announced the launch of Team Europe Ventures, a new home for his large portfolio of Internet companies. Lukasz is a successful entrepreneur who founded Spreadshirt in 2002 and cofounded StudiVZ, Germany’s largest social network (sold to Holtzbrinck last year) and is also an active business angel investing in Internet companies (he invested in more then 50 companies worldwide).

With Team Europe Ventures Lukasz will keep investing in early stage European Internet ventures and will co-invest in later stage rounds (Series A or Series B). In the last twelve months Lukasz was involved in the creation of many Internet companies like Brands4Friends, MisterSpex, Absolventa, Triphunter, Playnik and Käuferportal.

I also invest in very early stage internet companies. The companies that I invested in appear on the right of my blog. But lately I feel what is missing from the internet companies is concrete ways to generate revenues. The Google Ad model, or the advertising model, is mostly broken for anyone but Google. Companies like Fotolog have shown that is not enough to have enormous traffic volumes but that revenues other than Google are needed to be successful. Fon for example would die if it had to survive out of advertising alone and not from selling routers and passes. Another model that has greatly intrigued me lately is a company that David Cantolla, a Spanish acquaintance of mine launch. It is the company with the rights to the child series Pocoyo. In their case as you can see the series themselves which are available in DVDs in many countries are also available in Youtube. But that is because the money in Pocoyo is not in the series itself but in the fanaticism that the series engenders among children who like my son Leo who is younger than 2 then want in merchandising. Internet sites should learn from Pocoyo and find something real that they can sell out of virtual fame. Something like the T Shirts that Lukasz started with.

This traffic analysis shows what I have been saying for years now and that is that streaming will kill P2P as what people want is to see things, not so much to own them. Moreover legal streaming is making a great deal of progress over illegal streaming thanks to sites like Joost or Hulu. People don´t necessarily want to break the law. They want great services. Streaming with a few ads is acceptable.

I recently bought the Panasonic with WiFi. These are my first impressions. The Panasonic Lumix TZ50 is a 9.1 megapixel camera with great optics for its size (8mm wide-angle Leica DC lens, with 10x optical zoom). The camera is actually quite big for not being reflex type, but there is no such thing as good quality pictures in flat, small cameras – it’s a trade off. The camera also takes video in HD quality which is rare. But what really makes me love this camera is its WiFi integration. The best I’ve found so far. Other cameras with similar functionality see WiFi as something akin to Bluetooth, but the Panasonic is different. The TZ50 works with any open or encrypted WiFi network and can also connect to the T-Mobile HotSpot Service which is available in more then 8,800 public locations around the US. Once connected to the Internet, this camera can upload your pictures to your Picasa Web Albums account (here is mine), so you can share them with your friends and family or the general public while you’re still travelling and not days later when you come back home. This is a whole different experience to photosharing, something more similar to a photo diary or to Twitxr. You can also register an email address and get a link to your photo album just after it’s uploaded, so you can simply forward the URL to your friends using a smartphone. One drawback though is it doesn’t work with Flickr.

During my stay in the US I’ve discovered two great ways to pay less for mobile calls when travelling. The first is T-Mobile’s Blackberry 8320 with WiFi, which is incredible. It’s just like my Blackberry from Vodafone, except this has WiFi in addition to EDGE. T-Mobile (the fourth largest mobile carrier in the US) offers it with a global plan for EDGE traffic, meaning that they won’t charge you any roaming fee when you’re outside the country. So you can go to the US, buy this BlackBerry with WiFi and when you’re back in Europe you keep paying 40 euros per month (60 dollars) for the Blackberry service and voice minutes and you don’t pay for roaming. This of course is a great deal for those who travel a lot.

On top of this you get this phone’s incredible WiFi implementation, better then the iPhone’s. Not only you’ll never want to get back to EDGE for any kind of data transfer (pictures, attachments, web browsing), since download and upload speeds are way better with WiFi, but when you’re connected to a WiFi network (which happens automatically for any open network or, for free, for any T-Mobile WiFi hotspot) your voice calls and text messages are routed via WiFi too. This means that if you’re in Spain or wherever else you get access to a WiFi network, you can call like you are in the US, at US tariffs, using your plan’s minutes and with no roaming fees. I know there are other mobile VoIP solutions available for Nokia phones and other platforms but T-Mobile’s UMA service gives you seamless switching from the mobile network to WiFi and you can keep your number, while the WiFi connection manager on most Nokia smartphones is pretty bad, making the whole process a lot less immediate and practical.

When connected using WiFi with this Blackberry from T-Mobile, for example, you can call the US from Spain or China for 10 cents and calling Spain from China will cost you 54 cents (US->Spain tariff), still better then what Movistar, Orange or Vodafone charge you with roaming. Buying a T-Mobile Blackberry if you live in the US is a no-brainer, and if you live in Europe and travel a lot it’s a no-brainer as well. I spent 153 euros in July with my Blackberry from Vodafone just to download a few emails. And it has no WiFi.

The second great offer I found in the US is prepaid plans from AT&T, which give you free calls to anybody who’s on the AT&T network (something like a third of all US mobile users). With such a plan if you travel to the US with your family, like I do, and you have to give a phone to all your family members (I need 5), you can talk for free if you all have an AT&T prepaid plan. You get to the US, buy 5 SIM cards and talk for free with anybody who has AT&T, for just 20 euros per person. Calls to Europe cost you something like 1 euro per minute and calls to people in the US who are not on the AT&T network cost you 10c per minute plus $1 per day you use the phone. A family travelling to the US from Spain (or most European countries) with Movistar or Vodafone will be charged international rates to call and receive. Last year I spent 2300 euros for my vacations in the US. This year I just spent 150. And if you don’t have an unlocked phone you can get one with your prepaid card for nearly free.

Talking about unlocking, I just unlocked my iPhone using the 2.02 firmware. The process is a bit complicated but totally worth it. You don’t just get Installer, like with the old firmware, you get Installer, Cydia (an alternative to the Installer) and Apple’s Appstore. You can unlock any iPhone except the iPhone 3G which still can’t be unlocked to allow use with any SIM cards. I still have the EDGE model, since I always use my iPhone with Wifi and many functionalities are not allowed over 3G anyway (unbelievable you buy a 3G iPhone and you can’t download music over 3G, isn’t it?).

So I’m now in the US using an unlocked iPhone with a prepaid AT&T card (AT&T has much better coverage compared to T-Mobile) that I use for talking, music, photos and browsing via WiFi (data traffic is very expensive with AT&T prepaid plans), while I use the Blackberry for email, PINs and Google Talk.

Following last week’s announcement of FON’s partnership with Sony PSP we received a few negative comments from Foneros wondering why we would give PSP users access to FON’s network, even if they don’t share their connections like Foneros do. The reason is simple: this partnership helps us grow the network and promote FON, which ultimately is extremely positive for Foneros.

How does Sony PSP help FON? Simple, Sony is marketing FON to over 10 million PSP users. They find out about FON, understand how practical it is for them, learn how to enjoy it, and join FON.  Sony is telling them what we already know: that FON is good. Sony will promote La Fonera and encourage PSP users to buy one to get full access to FON Spots. The announcement has already shown significant impact on Fonera sales in Japan, and it has been only a week.

PSP owners who will connect to FON Spots thanks to this partnership won’t have full access to the Internet nor will they be able to play online games, unless they become Foneros. With this deal they can only access the official PSP site and download custom themes, wallpapers, special characters only available at FON Spots (this only accounts for extremely minimal traffic). What a PSP owner wants to do online is to play online games, and for that he will need to buy a Fonera and share his Internet connection as any other Fonero.

The majority of the Foneros understand that this is great and we haven’t received a single complaint from our fellow Japaneses Foneros, quite the opposite. So far this agreement is only for Japan, but we’re working to extend it to other countries. It helps growing the network of FON Spots and we are sure that the success of the deal in terms of FON exposure, new Foneros and new FON Spots will be replicated in every country.

Now that the web has discovered that people get together according to affinities. How about seating people in airplanes according to affinity? For example long intercontinental flights with 400 passengers on a plane we could create 4 zones. One could be for singles who want to party and flirt at the back of the plane, with music and all. One called Zen for people who want peace and quiet library style far from the singles. One for families with little kids and kids in general who can have a good time among themselves and parents not get this guilt trips that they are bothering everyone. And lastly and one for networkers, people who dream getting on a plane with a business plan and getting off with an investor. I can´t imagine anyone who would get on a plane and would not find one of those airplanehoods.

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