From the monthly archives: January 2008

Alec had a good post yesterday on the state of VC funding in Ontario, calling it “a mess”, based in part on a post by Ian Graham: “Is Startup Funding Broken in Ontario?“.

One of the points raised in both posts is the legal cost of doing small rounds of funding. We certainly felt that pinch last summer. Our small angel round cost around $70k in legal work. And check out how much paper was involved!

Canada has always been under-served in the VC department. Most entrepreneus end up going south to find money, which is often followed by moving the whole company with them. But all is not grim. Two major successes in the last year: Montreal-based Mobivox raised $11m and Vancouver-based EQO raised $8m.


This post is a bit off-topic, but geolocation has been a side interest of mine for some time.

iPhone Geoloc

There are two ways a mobile device can figure out its location. GPS is the most common way and it is appearing in ever-cheaper phones and car navigation systems. But adding the GPS radio and chipset still has an incremental cost, so many handsets (including the iPhone) don’t include it.

The other way is to triangulate based on signals from WiFi hotspots and cell phone towers. Navizon pioneered this technique starting in 2005. They offer a software download for most smart phones that adds geolocation features even if you don’t have GPS. And if you do have GPS, it improves the accuracy (especially in dense urban areas). What I like about Navizon’s approach is that the map of “Signal Space” is user-generated. That is, users with GPS on their device contribute to the database of which cell towers and hotspots are where. Navizon even has a program to pay people that provide this data.

Another neat thing is that you get mobile coverage maps as a byproduct. More from Brough Turner here.

In September, Navizon released a version for the iPhone. I’ll bet they were hoping for a nice deal with Apple to make their geolocation system part of the core system (like Apple does with Google Maps). No dice.

Instead, Apple released a firmware upgrade that crippled Navizon (and many other apps), causing their CEO to actually cry. (Which you can watch here. Ah, what an age we live in.)

And then, three months later, Apple releases another update that includes Navizon-like geolocation. According to their press release: “iPhone can now triangulate your position using nearby Wi-Fi base stations or cellular towers.” Ouch. More at Gizmodo.

What’s Navizon going to do next? Some speculation here: “Can Navizon survive Google’s location mapping in iPhone v1.1.3?

There are some early reports of poor performance from iPhone’s geolocation. DreamOfToday said “it can’t find a hippie at Woodstock.” (Couldn’t resist including that quote.) So maybe Navizon can win on better technology and/or a better signal map.

And then there’s the legal angle. A friend of mine who is close to the company said that Navizon’s patent coverage on this technology is “solid”.

On one hand, I feel bad for a scrappy start-up that was way ahead of the curve. But on the other hand, I continue to be awed by how much excellent product engineering comes out of Apple. They’re simply on fire.

(Image from GearLive.)


iphoneWired put out a great piece today on the iPhone, calling it a “4.8-ounce sliver of glass and aluminum … that has forever changed the mobile-phone business, wresting power from carriers and giving it to manufacturers, developers, and consumers.”

Interesting info on the profits to Apple: “The company nets an estimated $80 for every $399 iPhone it sells, and that’s not counting the $240 it makes from every two-year AT&T contract an iPhone customer signs.”

But what’s more interesting to me is this info on what the iPhone has done for AT&T: “40 percent of iPhone buyers are new to AT&T’s rolls, and the iPhone has tripled the carrier’s volume of data traffic in cities like New York and San Francisco.” Tripled!

In my last post, I talked about Yahoo’s widget strategy versus Google’s OS strategy. Which is another way of saying “smart pipe vs dumb pipe”. If a carrier offers a phone running Android (Google’s new mobile OS), they have relinquished all control over the user experience. The same applies to the iPhone except in this case, the OS is married to a specific piece of hardware as well. Both Android and iPhone make the carrier a behind-the-scenes provider of bits. Stats like the one above suggest that the dumb-pipe strategy might be the better approach.

Two other data points:

  • Verizon (which reportedly rejected the iPhone deal without even hearing the pitch) announced in November that it was opening its networks to any device (although there’s quite a bit of fine print). See coverage in NYTimes here.
  • Sprint is reportedly launching their “Xohm” WiMax service in April. According to a talk I heard by Russ McGuire in November, their vision is allow Xohm receivers to be placed in a variety of consumer electronics devices, using the Sprint WiMax for connectivity. See a good post from him on this topic here.

So how long will it be before every major carrier has at least one dumb-pipe option? I say 3 years.


yahoo-goYahoo announced today the next revision of their mobile strategy. Lots of press coverage, including the NYTimes which opened with the sentence: “There may not be a Yahoo phone in the works, but…”, an obvious comparison with the “Google Phone”. Man, that must be frustrating for Yahoo’s PR team.

Main reaction from the press is that, since this isn’t a Google Phone, it falls far short. However, the jury is still out on whether Android (Google’s OS for a phone) is a smart move. Google’s offering, a full operating system for a mobile device, is certainly more technically ambitious than Yahoo’s “Go” platform, a system for widgets that users can install on their existing phones. But you don’t necessarily win by writing the most code.

The problem with widgets

Widgets are small, lightweight pieces of software. On mobile devices, their main downside is that they can’t access the key features of the phone, like dialing functionality, or the contact list.

(This limitation is baked deep into the design of cell phones so it goes far beyond Yahoo’s control. Cell phones were designed to keep 3rd party applications in a very limited “sandbox” because wireless networks were designed assuming all end clients are well-behaved. A cell phone that misuses the connection with its cell tower — maliciously or not — could cause lots of trouble for the network, and other subscribers. )

Another problem with widgets is that installation can be cumbersome and different for each phone.

There are two ways to get an app on a cell phone

Google’s Strategy: Build a new OS for the phone, in which case you have maximum flexibility, but large barrier to entry (you can’t add Android to an existing phone).

Yahoo’s Strategy: Create a framework and developer ecosystem around mobile widgets, which gives you limited functionality but easy adoption.

Incidentally, this highlights nicely an important inflection point we should all be watching for: The first time that a mass market phone comes with an API (most likely Java) that gives access to core functions of the phone. That will be a game-changing moment.

Two advantages to Yahoo’s approach

1) Time to market
A few years ago, some people I knew at Yahoo told me they had an internal mantra of “fail early, fail often.” Meaning: “Run through many iterations of your idea quickly.”
I think this attitude is at work here. While Yahoo’s widget platform is available today on 30 handsets, it could be a year or more before Android phones are in the hands of a critical mass of people. In that time, Yahoo will be letting the developer crowd try out different apps, see what sticks, and maybe they’ll find a magic formula.

2) Carrier friendliness
The carriers are still gatekeepers to the mass market, especially in the US, and will remain so for at least the next 5 years. If you want to get anything on to the cell phone, you have to find a strategy that works from their perspective too. For a carrier, taking the plunge with a “Google Phone” (i.e. providing handsets that run Android) means giving up all control over the user experience. There’s no turning back. A widget strategy allows a less risky, incremental approach. But on the other hand, you can’t cross a chasm with small steps.

Ready for ads

One point that didn’t get as much attention from the press is that Yahoo is allowing developers to include display ads and sponsored search in their widgets so that they can earn money.

According to, Adam Taggart, a director of product marketing at Yahoo, they will even allow competitive advertising networks: “We’ll build a plug-in so you can bring that in”.

So Yahoo is providing a platform that allows for rapid iterations of mobile apps along two critical axes: features and ad model, with low barrier to entry and compatibility with a large installed base. Yahoo knows that the next Twitter is more likely to come from an unknown developer than inside a corporate R&D group. The creativity is always in the edges.


Techcrunch has the news that Pudding Media just raised a substantial round of funding from Opus Capital and BRM Capital. Pudding is offering free phone calls throughout North America in exchange for showing you ads on their website. The catch is that the ads are targeted based on extracting key words from your conversation in real time.
The blogs and the general press had a field day ripping in to these guys back in September when they first launched. Here is my post reviewing some of the feedback. Om called it “inane”. My local news called it “creepy”.

Mostly people are focusing on the privacy aspect of the service. I think the bigger flaw is that long distance in North America is already cheap enough that most people don’t care about it. Expanding into international calling is an obvious move for them. Although then the challenge of properly targeting the ads gets much harder too.

I think the web-based version of this service is just a showcase for the technology and that the real potential is connecting this with the mobile experience. Everyone is trying to figure out how you make mobile advertising work. That little screen gets a *lot* of eyeball time. From the perspective of an attention economy, that’s a mother lode that hasn’t been tapped. Further, mobile calling costs *are* still high enough for people to care.

So to everyone condemning this as a foolish investment: don’t be distracted by the immediate implementation, that’s not the main event.