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, 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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With the “share a little WiFi at home and roam the world for free” formula, FON got to be the largest WiFi network in the world – currently at over 650K FON Spots. Now, with the new Fonera 2.0n (802.11n) WiFi router that gives Foneros (FON members) an auto uploader/downloader built-in, FON should reach well over 1 million FON Spots.

The Fonera 2.0n is described in the video below. In addition to making you a free, lifetime member in the largest WiFi sharing community on the planet, this is what the Fonera 2.0n does when connected to your favorite hard drive:

– downloads torrents on its own so you can arrive home and watch your favorite content (do not download illegal content, there are plenty of legal torrents available, for example You can tell the Fonera 2.0n what you want to download from work or school, from your computer or even from your iPhone or Android.

-downloads from Rapidshare.

-downloads from Megaupload.

-downloads from any site with a file to download, like the latest Ubuntu version.

-uploads videos to YouTube. Send them over WiFi to the Fonera and the Fonera sends those HD monsters to YouTube, freeing up your laptop for the next hours.

-uploads those high quality pictures that take forever to Flickr, or Picasa or even Facebook.

-offers large files for your friends to download.

-prints via WiFi. It sends music to your amplifier via WiFi. It connects to a webcam so you can know what is going on at home. It works with DynDNS.

-converts 3G to WiFi like the MiFi.

-twitters! The fonera is the first gadget to tweet itself. You open an account for your Fonera and the Fonera tells you what it is doing, like “Your video is in Youtube,” or “Somebody connected to your WiFi signal.”

And of course, the Fonera 2.0n is N (802.11n), which means faster WiFi at greater distances. Lastly, if you don’t like to share WiFi and just want to have the Fonera 2.0n all for yourself, or you don’t believe you will make money offering WiFi to others, you can disconnect the FON function altogether…and we will still like you :). But before doing that, you should know that Foneros who share their FON Spot earn on average 6 Euros in revenue (over 8 US Dollars a year), which means your Fonera 2.0n just might end up paying for itself and then some.

More in depth video

I am the CEO and Founder of Fon. Fon has built the largest global WiFi network in the world. We have over 650K WiFi access points distributed in many countries with UK, France and Japan being our best markets. Fon is owned by Ebay, Google, BT, Index Ventures, the management and some other small investors who have invested a total of 36 million euros in the company. The basic idea behind Fon is that “you share a little wifi at home and you roam the world for free connecting to other Fon routers known as Foneras”. Fon´s revenues come from people who do not share wifi at home yet they find Fon WiFi signal and want to use it. Fon operates alone or in partnerships with telcos such as BTFon, or SFRfon and many others. After 3 years of operation Fon is becoming a profitable company in the last quarter of this year.

Now Ubiquisys makes Femto cells. Femto cells are a great idea. Its the same concept as a Fonera meaning a box that is connected to ADSL/Cable/Fiber internet on one side and sends wireless signal on the other. Except that the wireless signal is 3G, not WiFi.

So you can see a match in the making here. And this is what is going on.

Fon and Ubiquisys have entered a strategic partnership to develop the first “Femto Fonera”, which will provide mobile 3G data and voice access from a wireline broadband connection. You can share this 3G signal securely with other Femto Foneros, just like you share your wifi with the other Foneras. Apart from experiencing high quality voice and data connectivity at thousands of community hotspots, Femto Foneros could also enjoy tariff discounts from their mobile operator.

The Femto Fonera is a cost effective way to increase 3G coverage indoors and enable high bandwidth applications which are not possible through the traditional cellular network. It can also be used in public spaces without interfering with the operator’s macro network.

Ubiquisys is currently the number 1 femtocell vendor. Their ZoneGate femtocell offers the best performance of any femtocell, it is the smallest and it consumes very little energy. The Femto Foneras, like the femtocells, will require no setup, they will have no buttons and require no admin software. They will be supplied through a specific mobile operator which would be providing the spectrum. The Femto Foneras will detect the user’s presence, which opens up many possibilities for location based applications and services. This Android app, for example, changes the home screen and the applications available when you enter your home and the phone seamlessly connects to the femtocell. Fon and Ubiquisys are in talks with several mobile operators to evaluate the Femto Fonera concept.

Here is the full press release.

My good friend Hans Peter Brondmo just told me that he sold Plum, his start up to Nokia and he is moving from San Francisco to Berlin to run it. Nokia seems to be on a quiet buying spree. They already bought a company I invested in Plazes of Felix Petersen and are looking at many other players in related areas.

Nokia has also made another move that makes sense and is to concentrate social media activities in Berlin. I don´t know if Europe will ever have its Silicon Valley but if it does Berlin will be a contender. It is a fascinating city with a multilingual population in a country that from what I have seen produces the best programmers in Europe and some of the best in the world. Without offending anybody else who works at our company, whenever something really complicated goes wrongly at Fon it is a German programmer who gets us out of the problem. And Berlin is extremely affordable as a city. Living there costs less than in Madrid or any other major European capital. And while the weather sucks if you come from Spain for Nokia´s employees moving South from Helsinki has to be seen as a promotion, at least weather wise.

I hope the censors at Youtube who freak out when they see some nudity leave this ad because whatever you may think of it, it is worth seeing.


Verizon plus Fon plus Boingo would be a killer combination

Published by in General with Comments Off on Verizon plus Fon plus Boingo would be a killer combination

Now that Verizon made a deal with Boingo, a deal with Fon in which Fon is installed in their ADSL and fiber connections would be great for Verizon as a company.

First of all, it would lower churn for Verizon as people who have Fon and find Fon when they travel (as it happens in the UK for example with BTFon) tend to continue paying for their broadband even when they mostly travel. Not being at home much is often cited as a reason to interrupt broadband service. Secondly, it would increase ARPU for Verizon because when ATT, Comcast and Time Warner cable users connect to the second SSID of the Verizon WiFi routers, they would make more revenues per ADSL/fiber line as carriers who team up with Fon do. Thirdly it would slow price erosion for their broadband offering as value perception increases in customers who can pay at home and connect everywhere. Other advantages are that the coverage of Fon’s mostly residential wifi network (coming out of residential boxes) would be complementary to Boingo´s commercial network, and Verizon would have an incredible WiFi offering to compete with ATT´s in mobile.

An increasing number of powerful, affordable mobile devices are entering the market and allowing users to run increasingly data intensive applications. 3G makes sense for light data applications such as email and web browsing, but it is not commercially viable for applications requiring large data transfers such as watching movies on smartphones when customers are on flat data plans. Mobile operators can reduce capex on 3G networks and overcome their speed and throughput limitations by offloading data traffic onto wifi networks. This is one of the advantages that E-Plus, the 18 million subscriber German mobile operator, saw in partnering with Fon. Also as an example,  AT&T has quickly seen the importance of wifi as part of a good user experience with smartphones, having sold the pioneering iPhone. In general carriers who sell the iPhone see the future of smartphones and it is a very, very data focused future.

This just appeared in the Huffington Post

Iraq, Afghanistan: lessons from the Pros

The Iraqi and Afghan military interventions have caused the death of over a million people, have cost trillions of dollars, have greatly weakened the US military, have increased the budget deficit, have hurt the dollar, have resulted in much greater terrorism in the Middle East (now expanding into Pakistan), have fortified Iran’s position as the strongest regional power determined on its quest for an atomic bomb. In short it´s been a disaster. As a result while calling to an end of the intervention was the home of “the weak” (i.e. the Dems according to the Republicans) now “the brave” as well are asking for withdrawals. As criticism of the US and European policies in the Middle East grows this article looks at how the failed policies in the region could be reshaped by learning from those who have managed to do suprisingly well for themselves in this troubled part of the world: the Israelis, the Iranians and the Afghan drug lords.

Lessons from Israel

First allied forces should emulate the strategy of Israel to deal with terrorism by ending occupation in South Lebanon and Gaza, by ending occupation in Afghanistan and Irak while keeping key bases in the region from which to retaliate should it be necessary. Israel tried and failed with occupation. It found it too costly, inhumane and inefficient. In the end it withdrew or separated with a wall from all occupied territories. Israel’s new strategy is to stay away from areas where terrorists are but to always stand ready to retaliate when attacked from them. As controversial as it is, retaliatory, short lived invasions as the ones of Lebanon and Gaza, rather than permanent occupation, work best at deterring Hamas and Hezbollah. Israel has not solved the conflict with Hamas and Hezbollah but the death toll has dwindled to the lowest levels ever on both sides in 09. History has shown again that military interventions are much easier than occupations. Why insist?

Lessons from Iran

Secondly US/EU should learn from Iran and emulate their tactics but of course, in favor of peace. What Iran does best is to influence Middle Eastern nations by proxy. Iran provides key donations and training in areas that improve people’s lifestyles and wins their approval for their own objectives which unfortunately are not peaceful. Many Lebanese and most Palestinians now love the Iranians for the help they receive for schools, hospitals, job creation and a vision for the future. We should emulate the Iranians but finance an alternative Muslim lifestyle that is compatible with peace. We should also fund better schooling, housing, jobs and health but along the proposals of Jordan not Iran. Our opportunity here is to work with the very able King Abdullah II and Queen Rania of Jordan. If we only endowed a foundation led by the King and Queen with a fraction of what we are spending in the war efforts we could outspend and outsmart the Iranians at their own strategy and win good will for a future based on cooperation. The GDP of Iran is a third of that of Spain. We can do much better if we help our allies in the region help everyone else.

Lessons from the Drug Lords

Lastly and sadly, in Afghanistan we must learn from the Afghan drug lords who are the only ones who seem to thrive in this horrible conflict. Allied forces in Afghanistan must understand that the war in that country is mainly about drugs which make 1/3 of the country´s GDP. We should also accept the unfortunate truth that if it were not for Europe and USA drug consumerism, drug lords would have no income. It is our mental health problems that finance their drug traffic. We are mainly responsible for it. Drug lords finance their wars against us with our money. How? They buy drug crops at very low prices and collect market prices from our consumers of drugs in Europe and USA through their mafias. What is the solution? What we should do is buy all the drug crops from Afghan peasants directly from them outbidding drug lords and cutting them out of the value chain. After we have the crops we should simply destroy them. Interestingly peasants in drug producing nations such as Colombia or Afghanistan get a tiny fraction of the end value of drugs, drug lords make a living by collecting the spread between what they buy the crops at and what they sell them for as drugs in our markets. But we must get in that market and neutralize their income without hurting the peasants. Another similar solution that is costly but “very European” is to imitate the Common European Agricultural Policy of subsidies to Afghanistan. By paying a surplus for each Afghan sheep and cow we will make it more profitable for Afghans to raise cattle than growing drug crops. This would have the appeal of ending the drug crops altogether. But whatever we do we can’t fight the livelihood of most of the population if we want to stabilize the country. People must make a living and the drug lords provide one.

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I have been reading about the H1N1 flu since it was first reported in Mexico and most likely, so have you. I have been worrying about it since them and to some extent, so have you. But now I have it and you probably don´t and that´s why you may be interested in knowing what is like.

How is it to have “swine flu”? Well in my case it started as a cold but in a few hours it degenerated into a nasty flu with high fever and all sort of aches throughout the body, especially in the chest. When I called my doctor in Madrid and told him what was going on, he advised me not to come to the hospital as they are concerned about patients like me going into the hospital and making others sick. While I could understand the policy of keeping sick people at home, the “have somebody pick up the Tamiflu” proposition left me somewhat surprised. Especially since I wanted to get a confirmation that I did have H1N1. My offer to send him some saliva a la 23andme fashion was politely refused. Flu I learned, it´s a social disease. You do not have one person with flu and flu is always part of an epidemic. And right now, still in the summer, the little flu there is H1N1, especially considering that in the last week I have been flying through the world´s busiest airports. So no going to the hospital and no test. Testing was done on patients that were in bad enough shape to end up at the hospital (a policy that probably leads to tremendous under reporting of the disease). I was also confused about the other piece of advise “if things get out of hand do come and check in at the hospital”. Out of hand in what sense I asked? Not being able to breath was one example. Mmmm. Not being able to breathe, I wonder how I could make it to the hospital in that condition. But whatever I decided to follow my doctor´s advise and hope for the best.

After talking to the doctor yesterday my fever kept rising, all the way up to 38.5C in spite of the heavy dosis of Paracetamol I was taking. And I couldn´t stop coughing. During the early afternoon I started taking cold medication and Tamiflu. Now a day and a half later, the good news, is that I am doing considerably better. Fever is around 37.5C and all symptoms are back to what I would call a normal flu. I am in bad shape but no worse than you have been in the past when you had any flu.

Was it the Tamiflu that made it turn around so quickly or my own immune system? Frankly I don´t know but whatever it is it is nice to be able to say a few words without coughing, a novelty of the last few hours.

Interestingly nobody around me got the flu so far. Nor Leo, Tom, Isa, Nina who were all with me. Nor people who work with me. In any case I am now keeping considerable distance from the few people I see. Wash my hands frequently and where a special 3M mask when others are around.

Update at 10pm: now the symptoms have gone from being severe and nasty, to being those of a normal flu, to being those of a normal cold. I am doing much better than last night. If this is all there is to the “swine flu” I would summarize it as 12 very tough hours. Hopefully the rest will be a quick recovery.

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…is that in America you can´t sell health care reform by telling the truth. The truth would be something like this.

“We live in a country that has 50 million people without insurance. This is unfair and immoral. The right thing to do is for all of those who have insurance to get slightly worse medical care, so everyone can be insured. And that is what people do in other countries. And that is what we should do here.”

But solidarity does not sell well in a country where the 80% of people who have insurance don´t really care about the 20% who don´t. To use a public transport analysis what is going on here is that as 20% more passengers board the train some people may have to ride standing up. But the passengers in the train don´t want more passengers. They don´t care if the others have to walk. So then, aware of this Obama paints the plan in a too optimistic fashion, by telling the 80% who are insured that everything will be the same for them. And the vested interests in the status quo nail him because that´s just no the case.

In democracies it is very hard to pass measures that improve things for minorities because democracies are the rule of the majority and if the majority is better off, they just don´t care enough about the minority.

Ok, I am not an expert on this matter. And maybe reading my post is a waste of time as I am sure many other people have given more thought than I have to the issue of drunk driving. But governments around the world spend fortunes trying to find out if people are driving drunk by randomly stopping them and testing them. This leads to enormous amounts of lawsuits and all sorts of miseries. And while I think the intentions are excellent and drunk driving is the cause of an incredible amount of death maybe some of their efforts are misguided. What society should really want to know is not if a person is a dangerous driver. And the two are not exactly related. Take my case. I am a terrible drinker. I rarely drink. When I do is a glass of wine. The few times I have had 3 glasses of wine during dinner I got drunk, silly smiles, poor coordination and all. And wine is all I drink, no beer which I dislike, nor hard liquor that except when greatly diluted in fruit juice, I also dislike. Gin? Ron? Tequila? Vodka? Not for me. My body seems to have very little tolerance for alcohol. So what I am trying to say here is that while I could pass alcohol tests better than my friends as I drink much less, I know that my friends can drive much better than I can after drinking, say, 2 glasses of wine. I am very sensitive to alcohol. The point of drinking and driving is not to find out how much you drink but how well you can drive. If that is the case how about testing THAT. For example my neighborhood in Madrid is full of speed bumps. How about replacing those with serpentines that not only would slow you down but also be very hard to navigate when drunk? Or how about having cars make you do a simple coordination test in order to turn on? What we would like to know is not how much people drink but if their reflexes and ability to drive is still there. And this could be tested for all drivers in 30 seconds before they get going. In that sense the tests they used to do in the States when I live there made more sense. They did not test you for alcohol but made you walk tight rope style on the road dividing line. At least they were testing coordination and that relates more to driving than alcohol itself.

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