post

SVASE VC Breakfast with Will Price, Blogger, Hummer Winblad Principal

Posted on May 15, 2006 ·

The SVASE  VC Breakfast Club session I’ll be moderating on Thursday, May 25th in San Francisco will be somewhat exceptional: this will be the first time pitching entrepreneurs get to know the VC closely prior to the event.  That’s because Will Price, Principal at Hummer Winblad Venture Partners is an active blogger himself.  His recent post Questions to Ask is a must-read – but I really don’t want  to pick one post only: if you plan to attend the session, do yourself a favor and check out his blog (and if you don’t come to our breakfast, it’s still worth reading)

That said, my standard pitch:  The VC Breakfast is an informal round-table where up to 10 Entrepreneurs get to deliver a pitch, then answer questions and get critiqued by a VC Partner. We’ve had VC’s from Draper Fisher, Hummer Winblad, Kleiner Perkins, Mayfield, Norwest,  Trinity, Mohr Davidow, Emergence Capital …etc.

These sessions are an incredible opportunity for Entrepreneurs, most of whom would probably have a hard time getting through the door to a VC Partners.   Since I’ve been through quite a few of these sessions, both as Entrepreneur and Moderator, let me share a few thoughts:

       

  • It’s a pressure-free environment, with no Powerpoint presentations, Business Plans…etc,  just casual conversation – but it does not mean you should come unprepared!   
  • Bring an Executive Summary –  some VC’s like it, others don’t.   
  • Follow a structure, don’t just talk freely about what you would like to do, or even worse, spend all your time describing the problem, without addressing what your solution is.   
  • Don’t forget “small things” like the Team, Product, Market..etc.   
  • It would not hurt to mention how much you are looking for, and how you would use the funds…   
  • Write down and practice your pitch, be ready to deliver a compelling story in 5 minutes.  You may have more time, but believe me, whatever your practice time was, when you are on the spot, you will likely take twice as long to deliver your story.   
  • Last, but not least, please be on time!  I am not kidding… some of you know why I have to even bring this up. As a matter of fact, our host, Deloitte & Touche specifically asked participants to allocate an extra 5 minutes to get through building security.

For event details check the  Zvents post  and remember to click through to register – there are only 10 slots and this one will sell out early!

See you there! Zbutton

Tags: , , , , , , , , ,

Filed Under: Bay Area, Blogging, Business, Enterprise Software, SaaS, Social Networking, Software, Startups ·
post

TiEcon 2006: From 0 to 60 : Ramp it Up with Low Bucks

Posted on May 14, 2006 ·

Liveblogging  Jeff Clavier’s bootsrapping panel at TiEcon 2006.  (note: I am obviously publishing this, as well as other TiEcon posts the day after, but will only do very basic editing, and some linking, essentially posting my original notes)

Panelists:

David Hornik: best way to grow a company is without VC money – now that’s something to hear a VC say…

Jeff Clavier: Agrees, but sometimes  competitors force the entrepreneur to want to accelerate business which in turn leads to a need for VC investment.  

David adds another case when you need VC investment, citing a  payroll company he invested in: in that type of business customers expect a robust infrastructure, not just a  program, and building out the infrastructure is capital intensive.

Toni:  Background:  Oddpost, Yahoo,  Automattic – this being his 4th startup now, and he’s just recently “switched sides” to True Ventures.   Classic bootstrapping worked for him better than VC funding.  Too much VC investment can create a “fat model”, entrepreneurs may find themselves trying to use VC money to “create a market” where there is none.  Oddpost – could not raise money,  since  everyone thought they were crazy to be a “me-too” on the crowded email market.  They got some corporate customers (licencing deals) , eventually took VC money, but ended up not touching it, since Yahoo acquired them  4 months after the funding.   At Automattic they raised intentionally little, could have raised more, but does not favor that model.  Organic growth, go find customers, start revenue flow works better. 

Jeff:  Automattic is  going up against well-funded blogging companies, why is the “lean model” better?

Tony: WordPress is Open Source, combine that with the Silicon Valley effect: start an Open Source project, people will find you.  Want to be lean, organic, likes the craigslist approach: 15-8 people run a huge service.   Jeff Clavier compares them to MySQL’s Open Source – viral growth effect.   Tony: MySQL goes after the corporate market, it  needs Marketing,  while we have a consumer product, and our products are  blog-related, and bloggers are natural marketers.

Jeff: Often the original Founder is an engineer who needs a business savvy partner, or at least advisor, how do you get started in finding the right business guy?

David:  Teaches a class on IP at Stanford B-school.  Recently saw a flyer, showing the original Sun Founding Team.  It said: “Do you wanna be like them?  I am an engineer… looking for business partner”  Cool poster, but generally it’s safer to find them “organically”, living your life, networking, having coffee.  
                      (Warning: this is the Commercial: I am   available )

Toni: more business people are looking for technical parners then the other way around, they tend to be better at networking, while the techies are sitting at home writing code.

Fred Durham:  Don’t start by looking for a patner. Go find customers first before partners, since you’ll never get it right on your own without customers. 

Tim Tuttle: Found his first business partner through determined search on job boards. 

After the warmup / introductory questions Jeff quickly switched to taking questions from the audience.

Question on picking the right business, focus on one out of several options:

Toni: Early in life he was a trainee at Autodesk.  They had 9 original Founders, all engineers, all with their own ideas. Since they could not predict which one would take off, they pursued all for a while, eventually dropping all but on.  But generally it’s good to have a singular focus.

Jeff, as moderator demonstrates the importance of focus when he forces the next questioner to pick only one of two questions he wanted to ask.  After all, that’s what entrepreneurs have to do, too.
Question: How much money/equity to give away to ?   

David: Equity is a zero-sum game.  Early stage entrepreneur normally forgets this,tends to give away too much.  Raising money is a market mechanism  If the market is one, i.e. only one source is willing to fund you, that one source will determin the price.  Price of equity is  more easily determined in an investment situation then with partners.  What’s the value of participation? Depends… Give away as little equity as possible without feeling a jerk.

Fred: interrupts: Give away less than that, it’s  OK to feel a jerk. 

Kanwal: Don’t give partners / employees what you feel they’re worth  upfront, you can always do that later.

Tim: Don’t take money from friends.  Business and Friendship rarely match. (Oops, I know .. been there, done that...)

Question:  When do you give up pursuing a dead business? 

Fred: I failed many times, walked away relatively unharmed. Advice: run early. Get on a different horse. 

Tim: When you and the children need  a tent to live in, it’s a pretty good infication that it’s time to give up.

Question:  Specifically to Tim and Fred. How did you get initial traction once you have the product?

Tim: Raised little money, spent most of it on viral marketing.. 

Fred: Co-founder sent 100 invitations (spam) to random webmasters.  He got 20% response rate.

David:  A portfolio-company used quizzes. 

Toni : design product to be word-of-mouth compatible.

Question:  Entrepreneur ended up “in the tent” in 2002 starting again now.  Trying to release little bits of software to get customer feedback instead of writing plans. Is that a good approach?

Tony: Just be careful that the core is polished enough to put in front of  people without turning them off.

David: Don’t ask me as a VC what to do.. If your VC knows more about your business than you do, than one of you is an idiot.

Fred: Switching cost is huge, don’t easily jump to the next more attractive idea.

Question:  Inventor of ready-to-launch web application to save marriages. (huge audience laughter, apparently the entrepreneur crowd is in need of being saved….  Hey, if I am not married, what can you do for me?)  Finalist of Berkeley Business Plan Competition..  He just needs a VP Marketing to launch, but listening here made him realise he should be hunting for a CEO (Wow!).

David: You don’t want my money NOW, get it out, launch, create buzz, displayt ads – you will get called by VC’s.

Toni: You don’t need a VP Marketing to launch a product. You will need one later to take it above $10M.

Question on chances of a little startup vs. established players.

Kanwal  Uses Cisco as example: they won’t pay

attention until you’re large, then buy you. 

Tim: Truveo: big guys

wanted to build better video search, but they couldn’t, so they bought us.   Now that I am

part of a big com I understand why.  (Audience laughter…. someone on the panel remarks Tim probably missed  AOL’s PR training )

Question:  Legal issues., when to involve lawyers.

David: Cites strory of a great business, raised big interest in the Valley.  Later it turned out the Founder built the products on his employer’s computer and time – BAAAAD.  Advice: get lawywers involved early – try to find ones who are excited about the business and pre-fund their contribution until you can pay later.

Tim:  Strongly disagree, lawyers are a pain in the ass, put it off as long as you can.  

I don’t remember the context but two notable quotes from Fred:

“The only thing you want to do is to separate people from their money.”

“Nothing will focus your mind razor sharp better than losing money, especially your own”

(This post is also published at The Small Business Blog where I am a guest-blogger).

–Tags: , , , , , , , , , , , , , ,

.

Filed Under: Bay Area, Business, Startups ·
post

TieCon 2006: John Doerr, VC, Enviromentalist, GreenTech Evangelist

Posted on May 13, 2006 ·

(Updated)
I’m at TieCon 2006 at the Santa Clara Convention Center.  Trying to park was a nightmare: 15 minutes circling in the parking structure.   Last time I was here for Software 2006, I parked right next to the stairs. Finally got in, sitting in the back of the conference room (power source!), flip my laptop on, and Voila!  – free wi-fi available… as it should be (at Software 2006 it cost $26/day)

Michael Malone,  introducing John Doerr just made the same comment – he parked in Great America’s overflow parking …. 3,000+ participants. Entrepreneurial spirit is definitely back.

Raw notes from the discussion with John Doerr of Kleiner Perkins Caufield and Byers, a Silicon Valley VC Legend:

If you’re thinking of coming to KP just for money, it’s expensive: don’t come. Come for the networking resources, experience. 

This being TiE,  a few India-pecific questions. Response: Kleiner backed 100 companies over the past 4 years and half of those have Indian leadership. They are passionate, have a sense of wanting to give back to India and the world.  KP is also active in in India, which happens to produce the largest pool of engineering pool in he world, English is spoken and it’s a democracy. KP made two recent investments in India.

New subject:  Technology –  what’s coming next?   John Doerr:  Biology.  This is what he really wants to talk about, now he gets passionate.  He talks about soon-to-debut   “Inconvenient Truth”   and shows a few powerful slides about Greenland shrinking, due to ice melt.  If Greenland melted all, the oceans would  rise by 20 feet. Just how much is that? – we get a feel when he shows a few slides of the Bay Area – oops, there goes the convention center we’re in…

So what can we do about it: need to reduce carbon emission. Opportunity for engineers, innovators, politicians: get efficient, produce growth requiring less energy, less pollution.

Kleiner Perkins has invested in 7 stealth GreenTech companies in the past 5 years. – $57M total invested in those.  Huge potential business, ROI eventually may be bigger than “traditional” tech. areas, but wait for payback longer.

Tom “World is Flat”  Friedman’s next book, Green is the New Red-White-blue:  the current biggest enemy facing this country is not Islamism, Communism, or other such ideologies, but Petrolism.  We need petrol tax to encourage getting energy efficient.  It takes guts, not for the “girlie man”.  (Timely quote from the Gubernator due to appear on a panel this afternoon.)

We’ve had no major innovation in energy for the past 30 years.  China has higher automotive emission standards than the USA.  If India and China develops the way the US has, we’re choking the world. We need to innovate.

Michael Malone: “you’re working with your heart, not your mind”. John Doerr: no, this will be the largest economic opportunity in the world.

On to the issue of the Pandemic Fly: Something of this magnitude happens 2-3 times in a century.  Shows some slides of the devastation of the Spanish Flu.  What can entrepreneurs do?  Improve surveillance and diagnostics. KP backed startups working on inexpensive diagnostic devices, and vaccine expected to be 10 times more effective than Tamiflu.  He is calling for backing entrepreneurs in this area.  Distribution, pricing: give it away free or cheap in the developing world, sell it in the developed world..

On Social Entrereneurship:  double bottom line. Build a sustainable operation and eliminate poverty.  John Doerr has some more personal involvement in this area,  not through Kleiner.

Politics: Silicon Valley traditionally was doing best by staying out of politics.  John sees politics playing a bigger role. Advocate for policies that reduce the climate crisis and increase energy innovation.”   Let’s have a President who will make “green ” a priority.

Social Entrepreneurs build should build scalable and sustainable businesses, but they don’t have to be profitable, just self-sustaining.  Do you want to built an inconsequential Enterprise Software company or do something big?   (This reminds me of Steve Jobs famous challenge to John Sculley: “Do you want to spend the rest of your life selling sugared water, or do you want to change the world?”)

In conclusion, John Doerr sums up what he is passionate about: “I want to revolutionize the energy industry, make investments in : fuel cell, solar, bio-fuels.

John’s call for action to the audience: If you’d like a copy of these slides, email me the titles of your  three favorite books.

References:

Tags: , , , , , , , , , , , , , ,

Filed Under: Bay Area, Business, Politics, Social Networking, Startups, Technology ·
post

Innovative Software Business Models

Posted on May 10, 2006 ·

Joseph Weisenthal at The Stalwart felt it was time to dust off Shai Agassi’s infamous half a year old speech and warm up the Open Source as IP Socialism debate again. (hat tip: Jeff Nolan) Why now is beyond me, but in a way it’s perfect timing: draws attention to the Who Pays For Software? New and Old Business Models event tomorrow, where Open Source, SaaS and VC Panelists will discuss the old and new business models.

Talk about Business Models, I haven’t had a chance to write about Intalio’s innovative business model, which I heard about at the World is Flat breakfast organized by Ismael Ghalimi, Intalio CEO and IT Redux blogger.

As Marten Mickos pointed out: “Open Source is not a business model, it’s a software production model and philosophy”. How do you turn it into a business is the million-dollar question now: there is no gold standard, creative entrepreneurs are experimenting with their own models.

Intalio recently moved 80% or so of it’s offering into Open Source. The fully featured product is avaialable free as long as it is run on an Open Source Database, however, customers have to pay an Enterprise Licence if they intend to use it on a commercial DB. Services and Training are chargeable – so far that’s the “traditional” Open Source model, if there is such a thing…

However, Intalio started an innovative experience outsourcing their product management to none other but their customers. They publish the future product development roadmap, along with the estimated timeline and cost of features, enhancements. Customers then can “bid” as to how much they are willing to pay to rep-prioritize the plan and get their requested features developed sooner. To move an item up on the schedule the entire cost has to be covered and at least two customers have to request it. As the model scales up, the requisite minimum “vote” may move from two to a higher number of customers – the more the better, the closer they are to a standard core product. 50% of what customers pay will be made available to them as discount towards future Enterprise Licence purchases.

So let’s tally it up. If the model scales up, Intalio expects most of it’s development paid for by customers – albeit at cost level. But when you start from zero development cost, zero sales cost (there is no sales organization, it’s all a download-try-buy pull process), add revenue from training and services, provide incentives for customers to purchase licences (the 50%) – I’d say it looks pretty good to me. Let’s review the model in half a year or so…

Update (7/11/06): More details from Ismael on Intalio’s business model.

Update (3/18/07): A year later Ismael declares the model a success.

Tags: , , , , , , , , ,

Filed Under: Business, Open Source ·
post

Who Pays For Software? New and Old Business Models

Posted on May 10, 2006 ·

Philippe attended an event titled Demystifying Open Source – How an Open Source Strategy Can Make and Save Money for Your Business.  He sums up statements by one of SQLFusion’s customer; the CTO of Del-Jen ( a Fluor company):

“Over a period of 4 years the cost of open source software did go down. The more they use it the less it cost.
On the other end the cost of commercial software increased constantly during the same period. The cost includes licensing and consulting.”

The product Fluor is using is Open Source Fusion Enterprise;  The small-business version, Open Source Fusion on-demand has opened for beta a few weeks ago.

Tomorrow I’ll be attending another event where I suspect we’ll hear a lot about Open Source: Who pays for software: new and old software business models – What’s next?

The panelists:
Josh Stein, Director, Draper Fischer Jurventson
Brian Bhelendorf, Founder and CTO of CollabNet.
Philippe Courtot, Chairman and CEO, Qualys.
Scott Dietzen, Ph.D., President and Chief Technology Officer, Zimbra
Marten Mickos, CEO MySQL.
Bernard Pesh, CTO of Salesforce.com.

This promises to be a hot event, pre-registration is now closed, but ad-hoc attendance appears to be open. Zbutton

Tags: , , , , , , , , , , ,

Filed Under: Bay Area, Business, Enterprise Software, Open Source, Software ·
post

SMB / SME Have Become Obsolete Acronyms

Posted on May 10, 2006 ·

SMB / SME describes Small – Midsize Businesses (Enterprises), but in terms of describing a market segment, especially in the software industry it has become obsolete. Why?

It used to collectively refer to companies too small to be attractive for the major Enterprise Software providers – and of course the same held true vice versa: it described a group of businesses that could not afford “enterprise software”. Well, that’s changed with Oracle, SAP now catering for the lower- mid-market, and a growing number of innovative new software solutions affordable even by the really small businesses. Hence the problem with the SMB / SME acronyms: they were sufficient to describe the “crowd to be ignored”, now that the software industry can actually address the needs of this segment, it’s too heterogeneous to be lumped together. To demonstrate the point, here are two articles talking about sofware in the SMB market:

SaaS Players Jostle For Position (internetnews.com) uses the term SMB, cites a VC and software vendor, but clearly the focus is on “small- and medium-sized companies of several hundred employees and 20 or more sales reps”

In Gartner, SAP and small business – an oxymoron? Dennis points us to Small Business Vision – a Gartner Event. As he says: “SAP also has a definition of SMB which starts at revs of $250 million. (last time I looked) Which kind of says it.”

There is very little a $200M business and a 10-person startup have in common – their IT needs will definitely be different. Most analyst who talk about SMB really mean midsize businesses. That’s an important market, but let’s not forget the huge untapped opportunity the “long tail” presents; i.e. the millions of very small businesses that can now directly be reached, sold to, serviced inexpensively over the Net – classic SaaS style. Essentially what we are seeing is that the SMB / SME market really isn’t one segment at all, but at least two … perhaps three:

  • SAP, Oracle may consider a $100-200M million business “small”, but it really is midsized, the “M” in SME, with a few hundred employees and a dedicated IT department, that will likely need help with software implementation, but will cope with the ongoing maintenance themselves. SaaS is a wise choice for these businesses, but certainly not the only one.
  • One could define the “S” part, i.e. small businesses in terms of revenue or headcount, but from a software point of view a more important criteria is that they typically do not have permanent IT staff on payroll. This by definition makes any software products that are implemented and ran at the customer’s premises a poor choice – a potential maintenance nightmare. There is simply no better option for this group than SaaS – Software as a Service.
  • The third category in my mind is the very-very small business, possibly with 1-5 employees, who are likely all do-it-all types, focus on their core product / service, and are likely to struggle not only with IT, but some of the standard processes of running a business. This category needs more help than just technology, and vendors like WinWeb are experimenting with a unique combination of hosted software as well as “Live” services, i.e. expert advisors in various aspects of business. (Update: see Stefan’s new post on Live Services)

I’m hearing a new term more and more: VSB – for Very Small Business, describing either the third group above, or a combination of the second and third.

(Key ideas in this post were first published at The Small Business Blog where I am a guest blogger)

Update: 3 days after this post, Wikipedia now has an entry for VSB.

Update (8/14/2006): Vinnie‘s guest blogger, Jyoti Banerjee approaches the issue from the opposite direction, the “M” in SME / SMB, but comes to the same conclusion, i.e. they should not be lumped together with small- and micro-businesses.

Update (10/23/07): Further SMB segmentation by Gadi Shamia.

Tags: , , , , , , , , , ,

Filed Under: Business, Enterprise Software, SaaS, SMB / SME, Software ·
post

Vonage – OpenIPO?

Posted on May 9, 2006 ·

(Updated)
I had already called the Vonage IPO a dud prior to receiving this email:

“Because much of our success is attributable to our customers, we have asked the underwriters of the IPO to reserve shares of common stock for sale to certain Vonage customers at the IPO price in a Directed Share Program.
You may be eligible to participate in the Directed Share Program if you meet certain eligibility requirements, including having been a Vonage customer from December 15, 2005 through February 1, 2006.”

So Vonage is offering it’s IPO shares to all their customers.   I can’t help but see the similarity to WR. Hambrecht’s OpenIPO in the bubble years: little guys like me would never get an allocation in any of the juicy IPO’s, but we got all the duds the brokerage was trying to dump.   D

Filed Under: Business ·
post

Clothe Stowe: The First Mover Disadvantage.

Posted on May 9, 2006 ·

Stowe Boyd “created this market” : his eBay bid on wearing logo’d t-shirts totaled him $3,600 – he sold his body for a year.  As we know, in business being a first mover is not always an advantage – the second player comes in having learned all the mistakes an conquers the market.

In this case the second player is likely not smarter, but most definitely cuter  : Baby Jake will wear an advertiser’s clothes for a whopping $10,000 a month, or .. are you ready for this?… $100,000 for an entire year. (via Steve Rubel)

My prediction: I doubt any company will pay $100K for the year, but someone probably will be “crazy” enough to cough up $10K for a month. 

Prediction #2: we’ll soon see (baby) Jake in a movie.

Tags: , , , , , ,

Filed Under: Marketing / PR, Misc ·
post

Why I “Cleaned House” on LinkedIn – When Less is More

Posted on May 7, 2006 ·

Social Networking is all about connecting People, not linking dumb Data Records…

I’m a fan and early user of LinkedIn, and am really happy with the recent enhancements, including a public web profile and a badge:

View Zoli Erdoss profile on LinkedIn.

However, I’ve recently spent hours combing through my list of contacts, compiling a long list that I asked Customer Service to disconnect me from (why it’s not a self-serve option is beyond me…). Why do such an insane thing, the more connections the better, isn’t it? – No, it’s not.

What differentiates LinkedIn from some of the very early social networking services is the business focus, and the fact that it attempts to map one’s existing network in the real-world. Link-mongers drove business users away from Ryze, one of the very early players, and LinkedIn opened just in time to shelter the “Ryze-refugees”: the invitation-only feature was supposed to keep link-spammers away. It worked … for a while. Then “superconnectors” with thousands of contacts showed up who bombed everyone with link requests. I made the mistake of accepting most link requests in the early days, thinking rejection was rude. No, it’s not rude, it’s playing by the rules, and keeping LinkedIn what it’s meant to be, so from now on whenever I receive a link request from someone I do not know (these tend to come with the boilerpate text) I take the only reasonable action:

Today I received an email from one of these “superconnectors”: apparently I was not the only one who disconnected him, in fact LinkedIn canceled his account. He negotiated his account back, but is now complaining that LinkedIn limits invitations to 3000 individuals. He is trying to rebuild his “empire” of 16,000 contacts (yes, that is 16K!) by circumventing the rules and trying to convince his former contacts to invite him back.

I used to think LinkedIn was a better place without such link-collectors, but I guess I no longer care: let them play their game, I play by my rules. If having 16,000 contacts makes him happy, so be it. I tend to think that Social Networking is all about connecting People, not simply linking Data Records, so his 16,000 database empire is quite useless. It’s the good old rule of Quality vs. Quantity. As a result of my housecleaning my LinkedIn network has shrunk by 30%, an the extended “reach” of 3rd-level connections by a much larger margin, but it’s no longer just a database: it’s a true reflection of my social-business network. Just the way it’s supposed to be.

Update (5/8): Konstantin’s comment below is well worth reading, he hints at future LinkedIn features…

Update (5/9): A new debate on the usefulness of Online Social Networking. I think it reinforces my point: useful, but purely online (in a business context) does not make sense, should be based on real-life connections. You can’t expect to build a new network online (unless you’re happy owning 16K dummy records), but online systems help stretch your own network a little further by reaching out to contacts of your own trusted contacts.

Update (5/10): Oh, now we have guides out there on How (Not) to Get Banned from LinkedIn. Gee … how about just playing by the rules?

Update (7/25) : Vinnie LinkedOut! (?)

Update (1/22): On the other hand, Phil Wainewright may just give in … I mean Link in 🙂

Update (1/31): A major improvement in LinkedIn: breaking connections is self-serve now, you no longer have to ask Customer Service. Finally! Steve Rubel is about to clean house, too….

Update (11/29/07):  Even Facebook-ers are starting to realize that Less is More

Related posts:

Tags: , , , , , , , , , ,

Filed Under: Business, Collaboration, Social Networking ·
post

Vonage Playing Lingo

Posted on May 6, 2006 ·

Finally Vonage is offering a subset of Lingo’s free calls to Europe:  if you’re on the unlimited ($24.99) plan, calls to France, Ireland, Italy, Spain and the UK are now free. Too bad Lingo whose unlimited plan is five bucks cheaper has been offering free calls to most Western European countries ever since they launched. 

Before anyone thinks I am on Lingo’s payroll: no relationship whatsoever, in fact I’ve been a faithful Vonage customer since the beginning. I still  am – just don’t know why… probably since I am too lazy to switch, and $5 a month savings was not a strong enough incentive (hm… let’s see… Lingo has been in business for about 2 years, that’s a $120 in “lost” savings…).

But the real threat is not Lingo:  ZDNet crunches the numbers for us: 

“Let’s just say that I am a U.S.-based caller who talks to other U.S. local and long distance numbers 16 hours a month, as well as spends four hours a month speaking to colleagues and friends in the nations now part of Vonage’s new plan.
If I am on Vonage’s Premium Unlimited, I can do it all for $24.99. If I am on SkypeOut, 20 hours= 1200 minutes or around $25.00.
So that’s pretty much a wash.” 

But Skype is not the only threat, there are zillions of competitors – Yahoo IM is less expensive than Skype, but I don’t even want to do the math on it, let’s jump to almost-free right away:  VoipStunt  allows (almost) free calls to landlines in 46 countries.  “Almost”, since there’s a flat fee of 10 euros (roughly $12.70) that has to be renewed every 4 months – that’s about $3.25 a month.   That’s what I call a squeeze.

And that’s why the Vonage IPO is a dud.

Tags: , , , , , ,

Filed Under: Business, Personal Productivity ·
« Previous Page
Next Page »