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I love it. TechCrunch blogger Michael Arrington announces a competing conference to DEMO (where startups get to do a high-profile launch), from DEMO! He zings DEMO for its pay-to-play model:
The entire conference is paid startup demos. There are way too many to digest - 60 - and it is a well known secret that if you are willing to pay the $15,000+ fee, your startup will really need to suck to be turned down.
Ouch.
With the resignation of Dell CEO Kevin Rollins today, it is clear that there is a limit to how much a company can squeeze from its suppliers and operations. Now it's up to founder Michael Dell to take back the reigns and try to put the computer maker back on the right path. But when you are talking about a hulking company with $56 billion in revenues operating in an industry with one of the most brutal pricing pressures around, there may not be much more the aging wunderkind can do.
During the 1990s, Dell became the paragon of manufacturing efficiency by selling direct to consumers over the phone and the Internet, and actually building a computer only after it had been ordered. It kept shrinking the number of days it held parts that quickly lost their value, and cranked up the number of times it could turn inventory through its just-in-time assembly lines. Of course, everyone else in the computer industry began to copy Dell's manufacturing and mass-customization approach. At the same time, the gains Dell could eke out of its business became less and less spectacular.
So now Michael Dell is faced with the law of diminishing returns, on the one hand, and the law of large numbers, on the other. His direct model cannot get much more efficient than it already is (after all, we are still talking about physical parts that need to be shipped around the world, not digital bits). And his business is already so big, that finding new ways to grow will become harder and harder. Perhaps Rollins bailed because he finally came to terms with these hard facts.
With the launch of Microsoft Vista today, I was called upon to do some TV punditry this morning on ABC News Now (video link), as well as last night on CNBC (video link). Consumers might be slightly less than enthusiastic about Vista's launch, but that's not stopping the TV networks from covering the launch non-stop. And I was only too happy to help them.
As you'd expect, the ABC interview was more consumer-oriented, while CNBC was more interested in the stock and the competition from Google. The CNBC appearance was set up more as a talking-head debate between VC/blogger Paul Kedrosky and me.
It wasn't really much of a debate. I think we pretty much agreed that you'd rather be Google (GOOG) today than Microsoft (MSFT). But I was cast in the unenviable role of arguing the case for Microsoft, while Kedrosky got to be the Google bull. (Yes, these things are partially manufactured—that's how TV works). So I gave it my best shot.
While this TV format is certainly lively and can be entertaining, I
always find myself wishing I had brought up some crucial point as I am
walking out the building looking for a cab. Oh well, that's what blogs are for. Just for fun, here are some contrarian arguments for Microsoft and against Google:
—Google's stock is priced for perfection, while Microsoft's is priced for disappointment. So Google's stock is risker, and Microsoft's has more potential upside.
—Microsoft can take a Netflix approach to staving off Internet disruption by countering the long-term threat of Google's Webtop spreadsheets and word processors with its own free online versions of Office (a true Office Live instead of the confusing Web hosting offerings of today).
—The half-life for market dominance seems to be shrinking. IBM had 30 years, Microsoft had 15. How long does Google have?
Tomorrow a new startup will launch from Spain called Whisher that is adding a new twist to the concept of a WiFi sharing community. Like Fon, another Spanish startup backed by Google and Skype that is up and running with 50,000 shared WiFi hotspots around the world, the idea is that you make your WiFi router available to other members and when you are traveling or in another neighborhood you can gain access to their WiFi networks. The difference is that Fon requires you to use a WiFi router it ships to you and you have to install, whereas Whisher is a simple software download that turns your existing WiFi router into a shareable Whisher router.
It's no coincidence that both of these startups are from Spain. Whisher CEO Ferran Moreno helped start Fon, but had a falling out with Fon CEO Martin Varsavsky a week before it launched. This is how he explained the rift to me:
I am one of the founders of Fon. I was running a wireless ISP, and presented the idea to Martin. After half a year, I didn't want to continue with him. A week before launch, he wanted me to go 70/30 instead of 50/50 and put in more money.
That sort of thing will happen when Google, Skype, and Sequoia want in on the round. Varsavsky—who is also an investor himself in many Web 2.0 startups like Technorati, NetVibes, Wikio, and Plazes—has a different version of events:
Ferran Moreno did not work for Fon. He was the CTO of a failed Swisscom company known as Air Bites. I considered investing in Air Bites but decided against it. He´s been telling people that he was involved with Fon, that is not the case.
I looked at investing in the company [Air Bites] in mid 2005 but passed.
I had the idea of Fon in September of 2005, which, of course, I had and not him ( I am a blogger the whole episode is well documented in my blog
www.martinvarsavsky.net).
Regardless, Moreno decided to compete against Fon with what he thinks is a better product. 
Whisher's interface is certainly cleaner (in contrast, Fon's Website and homepage has a jarring, graffiti-like design to go with its anarchistic vibe). With Whisher, you download the software, enter the password and location for your router, and decide whether to make it private, public, or accessible to individuals you select. Then Whisher takes care of securely circulating the password and credentials to anyone you allow onto your WiFi network, without them ever having to actually know your password. They launch Whisher, and the software does the rest. If you are traveling somewhere you can search on a map to find Whisher hotspots, and if they are not already public you can instant message the owner to ask for access. Contrasting his service with Fon's, Moreno explains:
Fon is a telco business. It is about shipping boxes. This is more about promoting a community than acting like an ISP. If you want to start just with your friends, do it. Because over time you will be global.
The software also includes a local search function, and the ability for Whisher members to leave comments and tags about that WiFi hotspot as well as local stores, restaurants, hotels, bars, and the like. The comments can work s a message board for local events. You can also share files—music, movies, photos—locally (hello, piracy lawsuit).
Some broadband Internet providers might not take too kindly to its customers sharing their bandwidth so freely. But where both Fon and Whisher get really disruptive is if they can convince cable and telephone companies to partner with them to compete with the cell phone companies. Get a big enough WiFi network out there and Verizon or Comcast could start selling WiFi phones that bypass the cellular networks and run over their pipes instead.
Update: More he-said, she-said from Ferran Moreno, who counters FON CEO Varsavsky's claim above that he had nothing to do with Fon with some visual evidence. From an e-mail he sent me:
Let me advance you a picture which clearly shows that I did work for FON. Those 4 guys on the business cards are the initial founders of FON. Anything different from this is pure bullshit. I could have prepared these with Photoshop...but to be honest, we are pretty busy preparing our presentation at DEMO.
For all those wondering why Apple (AAPL) decided to go with the decidedly slower Cingular network when it chose a U.S. cell phone partner, it's because Verizon balked at Apple's demands. These included a share of subscription fees, control over customer service, and control over where the iPhone could be sold. For instance, the iPhone would be available only at Apple and Verizon stores, snubbing Verizon's other retail partners like, um, Wal-Mart.
No wonder they passed.
Ever since Google (GOOG) bought YouTube, you could see the ads coming. At Davos, YouTube CEO Chad Hurley announced that not only would YouTube start carrying ads, but it would share the proceeds with the audience creators. (Presuming, of course, that they are not sharing somebody else's content). As John Battelle points out:
Google is working hard to figure out how to apply the rules of AdSense - write (algorithms) once, read many (dollars) - to video. There's a massive audience out there, and there's a lot of money to be made "sharing revenues" with it.
YouTube will not be the first video site to spread the wealth. Others such as Metacafe and Revver already do so. In fact, a quick check with Metacafe revealed that since it launched ts "Producer Rewards" program in September, it's paid out $250,000 to about 200 contributors whose videos have made the cut of at least 20,000 views. (And those videos have been seen a total of about 30 million times). I guess it pays to be social, after all.
LinkedIn, the social network for professionals, announced today that it raised , bringing the total to about $28 million. The startup, which is already profitable, raised the money mostly because it could (Rule No. 1 for raising cash: take it when you can). But the cash could help with expansion overseas, as well as new features and services like better search on recently launched LinkedIn Answers.
Keith Rabois, LinkedIn's vice president of business development, tells me to look out for a service in the works internally dubbed Alumni Classnotes that lets you keep track of people from your college, business school, or graduate school class who are also LinkedIn members. Linkedin already knows what college you went to since that is part of your profile page. Soon, LinkedIn will surface to you who else among its 8 million members went to the same schools during the same times that you did, and create a tab on its Website where you can keep track of all the professional changes in the lives of your fellow alumni. And, of course, you will be able to invite them to your personal network.
And another service that is already being tested quietly called LinkedIn Experts will be rolled out more broadly. It is a way to tap into LinkedIn's knowledgebase (i.e, the social version of a database). Here's how it works, accordig to Rabois:
It allows an investment fund or researchers to ask us to find the five top experts in a field. We will contact them. You chat with the expert for an hour for $500, and we keep half of it.
Perhaps LinkedIn should adopt a new slogan: Making connections pay.
