Posts Tagged ‘Google’

BW Exclusive: Verizon Wireless: An App Store to Take On Apple

July 23, 2009

Check out the top of my BusinessWeek scoop on Verizon’s new wireless application store.

Verizon Wireless: An App Store to Take On Apple
The carrier is joining with Vodafone, Japan’s SoftBank, and China Mobile to grab a piece of the mobile-software market from the phonemakers

By Spencer E. Ante

In a move that could rattle the wireless industry, Verizon Wireless is gearing up to challenge Apple (AAPL) in the market for software applications that are downloaded to cell phones. Verizon, the top U.S. wireless operator, plans to preview its software store on July 28 and is pouring substantial resources into the effort. But it will be a struggle to catch up to Apple, which has built broad support among software developers and customers in the year since it launched its App Store.

Software apps are all the rage in wireless these days. Customers are flocking to devices such as the iPhone that offer myriad programs, and developers are cooking up software to meet the demand. You can use an iPhone to look for jobs, read golf greens, tune into digital radio, or play games. Juniper Research estimates sales of mobile applications could hit $25 billion in 2014, up from $5 billion this year.

What’s yet to be decided is who will control this market. Wireless carriers have long been the gatekeepers for what people do with their phones. But phonemakers, led by Apple and Research In Motion (RIMM), have grabbed an early lead by creating software stores that are easy for customers to use and profitable for developers. Apple says 100,000 developers have created more than 65,000 iPhone applications so far, and customers have downloaded those applications more than 1.5 billion times. “It is going to be very hard for others to catch up,” boasted Apple CEO Steve Jobs in a July 14 press release.

To get into the game, Verizon is crafting a strategy that’s more open and global than it has ever used in the past. It is teaming up with Vodafone (VOD), Japan’s SoftBank, and China Mobile (CHL) to create a common software foundation. Developers will be able to write applications for the standard, which the carriers are calling the Joint Innovation Lab (JIL). When the store launches in the fall, it could reach as many as 1 billion customers, the combined total for the four operators. “I am not here to bash anybody, but if I could write one application that could touch every iPhone customer or one billion customers, who am I going to write for?” says Verizon Wireless CEO Lowell McAdam.

Click here to read the rest of the story, along with a video.

Innovation During a Downturn

July 21, 2009

Here’s an Adobe PDF of a charticle I created for this week’s issue of BusinessWeek. It’s titled, “Creative Beginnings in a Downturn” and highlights lessons from four companies that took advantage of bad times–Hewlett Packard, Digital Equipment, Genentech and Google–to improve their business.

Over the last six months, I’ve written about this issue a few times. But this chart provides a good encapsulation of the idea, as well adding some new information about Genentech and Digital Equipment–all in a easily digestible and handy chart form!

View this document on Scribd

Google: A Healthy Respect Towards Microsoft

July 10, 2009

The latest news out of Sun Valley, reported by the Wall Street journal’s Julia Angwin, is that Google CEO Eric Schmidt was cool to the idea of building its Chrome Web browser. Schmidt, a veteran of several wars with Microsoft, resisted the project for six years before a demo of the browser changed his mind.

This minor revelation says a lot about Google, I believe, and reflects a new more healthy attitude towards Microsoft–and perhaps a sign of maturity for Silicon Valley. Ever since Microsoft took over the market for PC operating systems and business software, Silicon Valley companies have generally assumed one of two positions towards Microsoft: abject fear (as evidenced by any startup) or loathsome obsession with taking it down (best embodied by Sun Microsystems’s former CEO Scott McNealy).

Schmidt’s position on Chrome reflects a new attitude toward the Redmond giant that I would characterize as healthy respect. Schmidt did not want to rush into a fight with Microsoft over the browser because he knew, having lost many battles with Microsoft as an executive at Sun and Novell, that it was an unwise and potentially distracting move for the company.

“At the time, Google was a small company,” Mr. Schmidt said. “Having come through the bruising browser wars, I didn’t want to do that again.”

Since then, Google has gotten much much bigger and much more powerful. The Chrome project, both the browser and the operating system, has evolved to a point where it was good enough to fight for consumer’s attention in the marketplace. And Microsoft, though it remains arguably the most powerful tech company in terms of its financial heft, is no longer the pole star around which the entire technology universe revolves.

Even so, Schmidt is still wide enough to not pull a McNealy and stick a finger in Microsoft’s eye, antagonizing the giant and attracting more attention from regulators poking around its business. Schmidt and Google cofounder Page, says Angwin, were careful not to position Chrome as a competitor to Microsoft Windows. They argued that Chrome will expand the market for netbooks, rather than eating into Windows’ share of the netbook market.

I doubt they really believe that. But it’s a much smarter move to play down expectations of this effort.


Brazil: The next hotbed of venture capital and private equity?

June 26, 2009

Yesterday, I attended a packed conference about investing in Brazil. The event, which was sponsored by the Brazilian-American Chamber of Commerce, drew more than 150 investors, executives and technologists at the Palace Hotel in New York City.

There were several good panels but the one on venture capital and private equity really caught my attention. Luiz Figueiredo, president of the Brazilian Association for Private Equity and Venture Capital, told the audience that as of the end of 2008 investors had committed $28 billion in venture and private equity capital to Brazil. That is up from $6 billion in 2004, amounting to an incredible 50% compound annual growth rate over the last four years. To date, 500 Brazilian companies have received venture capital or private equity investments, and there is $12 billion left to invest over the next few years from that $28 billion kitty.

The conference was capped by two big announcements. On June 25, the Brazilian stock exchange Bovespa hosted the world’s largest IPO of the year, a $4.3 billion offering by Brazil credit card processor VisaNet. On the same day, Boston-based private equity firm Advent International announced that it bought a 50% stake in Brazilian holding company PAP for $142 million. PAP control Kroton Educational, a fast-growing education company. It was Advent’s 15th investment in Brazil since 1997.

An April 2009 survey by Coller Capital found that investors plan to increase their exposure to emerging markets, and that Brazil’s stock was rising. In the survey, Brazil ranked as the second most attractive choice for private equity investment, behind China and ahead of India. Last year, Brazil ranked fourth.

Why is Brazil such a hotbed for investment? Figueiredo pointed to several factors. Among them: A large, stable and growing economy, a modern financial system that escaped the financial crisis, a solid and improving legal framework, a strong local investor base, and robust capital markets, including the country’s Bovespa stock exchange.

More than 50% of the growth in capital came from the nation’s pension funds. In Brazil, pension funds are allowed to invest up to 20% of their funds in alternative investments such as private equity and venture capital. “The industry is getting new money and we are ready for it,” says Figueiredo. “We are really well positioned to attract foreign capital.”

One of those new foreign investors is Draper Fisher Jurvetson. In May 2007, the Silicon Valley firm launched a partnership with a Brazil-based firm called FIR Capital. The two firms launched a $170 million fund. Marcus Regueira, a founding partner of FIR Capital who was on the panel, said that his firm is looking to invest in information technology, mining technology and agribusiness. “We’ve never had the quality of entrepreneurs that we have now,” said Regueira, a former executive at Bank of America who received an MBA from the Wharton School of the University of Pennsylvania.

Brazil has yet to produce a breakout technology startup that is a leader on the global scene. But Regueira says the influx of new capital will help the country reach that next level. As an example, he cited the experience of Akwan Information Technologies, a Brazilian search engine that FIR invested in. In 2005, Google bought Akwan Information Technologies and used it to set up a research and development center for Latin America. Regueira says Akwan and its investors had to sell the company because it could not attract more follow-on investment. Now, he says, that won’t be so much of a problem. Thanks to the flood of new capital, “now is the time to invest in Brazil.”

DFJ director Elizabeth Clarkson, who was also on the panel, predicted that the new vintage of Brazil funds will produce extraordinary returns. “DFJ was early in China,” she said. “We are looking for Brazil to be a similar experience.”

Reinventing Venture Capital

June 10, 2009

Today, Paul Kedrosky released a report, “Right-Sizing the Venture Capital Industry,” as part of his work as Senior Fellow at the Kauffman Foundation.

Now, I couldn’t agree more that the venture capital industry needs to reinvent itself. That was the theme of my recent feature in BusinessWeek, Super Angels Shake up Venture Capital. But I was a little surprised by the way that Kedrosky goes out of his way to diss the venture capital industry’s role in nurturing innovation, even though I know the Kauffman Foundation has a bit of an anti-VC bent.

“The industry has become conflated with entrepreneurship in the popular imagination as well as in policy circles, with the result being a widespread and incorrect belief that venture capital is a necessary and sufficient condition in driving growth entrepreneurship,” writes Kedrosky.

Kedrosky’s big data point? Of the 900 companies on the Inc. 500 list between 1997 and 2007, he reports that only 16% received venture capital backing. It’s an interesting data point. But to then argue that “venture capital and entrepreneurship are separate phenomena,” as Kedrosky does, seems like an overstatement to me.

Obviously, most new companies do not require venture capital but the ones that do need it play a hugely important role in the economy because they tend to be the ones that grow the biggest and create the most value. Think Google, which got a $25 million injection of venture capital at a key moment in its evolution. Without that money Google might have never become Google. There are many examples like this.

The rest of the report tries to figure out why venture capital performance has been poor lately and suggests how the industry will reshape itself. The upshot? The industry must shrink, perhaps in half in the coming years.

I basically agree that the industry needs to shrink. That’s pretty much what I argued in my super angels feature. The industry has an inversion problem: Fund sizes have gotten bigger while the capital needs of companies have shrunk. $500,000 is the new $5 million, as Mike Maples said in my story.

Will it shrink in half? Maybe. Maybe not. All I know is that it will get smaller and that’s a good thing for industry and for the economy. An excess of capital ends up wasting money and the scarce time of entrepreneurs to create great companies.

The more important issue to me is that the industry needs to develop new models to finance and nurture innovation that fit today’s capital-constrained economy. Super angels will be part of the answer but it won’t solve the whole VC problem.

My colleague Mike Mandel blogged about this issue, making the point that science-oriented VC requires more money and a longer time frame to come to fruition. I think he’s right. And I’ve heard many VCs who invest in clean tech make this point.

Another big issue: Without an IPO market, there needs to be a new type of capital market that helps young companies finance their growth once they graduate beyond venture capital.

In Memory of Rajeev Motwani

June 6, 2009

This morning I woke up and read the very sad news that Stanford computer science professor Rajeev Motwani passed away on Friday. He was only 45 and left behind a wife and children.

The tragic news hit me particularly hard because I had recently met with Rajeev and was actually working on a profile of him for BusinessWeek. It was only a few months ago that we connected over a cup of coffee at the University Cafe in Palo Alto and talked about all the great things he was doing at Stanford to help students advance their research and to help entrepreneurs to realize their dreams. I remember his kindness, his soulful eyes, and his deep desire to help others. Rajeev was one of those special individuals who, while not well known outside of Silicon Valley, represent the unsung heroes of the tech industry.

They push Silicon Valley forward through their teaching, their research, their financial support of entrepreneurs, and their tireless work as advisors to many, many startups. Most famously, Rajeev helped support the creation of Google through his tutelage of two young Stanford University grad students, Larry Page and Sergey Brin. At Stanford, Rajeev started the Mining Data at Stanford project (MIDAS), a research group that provided the intellectual sandbox for Larry and Sergey to develop the underlying technology of Google.

“In addition to being a brilliant computer scientist, Rajeev was a very kind and amicable person and his door was always open,” wrote Sergey Brin on his blog. “No matter what was going on with my life or work, I could always stop by his office for an interesting conversation and a friendly smile. When my interest turned to data mining, Rajeev helped to coordinate a regular meeting group on the subject. Even though I was just one of hundreds of graduate students in the department, he always made the time and effort to help. Later, when Larry and I began to work together on the research that would lead to Google, Rajeev was there to support us and guide us through challenges, both technical and organizational.”

Now more than ever, I feel an obligation to finish that story as a tribute to him and what he represented.

What do Authors and Readers Think About the Google Book Settlement?

April 30, 2009

I am still mulling over this Google Book settlement deal.

Yesteday, a few readers on BusinessWeek TechBeat blog posted some comments in response to Rob Hof’s post. Admittedly, it is a very small sample (only four people) but most of the readers are in favor of the settlement.

Steve writes that it “seems to me like a no-brainer. So Google can profit from something they did. If the agreement says other companies can also scan books and profit from those scans, more power to them. No need for Justice to get their panties so much in a bunch.”

Chuck Gaffney says Google should of course get authors’ consent to license books but he compares publishers to the hidebound music industry and says they “are trying too hard to be conservative in fears of losing their already very, very deep pockets.”

I do think Google Books is sort of like a public service, which may one day turn into a profit stream for Google, but that still doesn’t mean Google should be given exclusive right over these orphan books that are out of print. That is a key issue that needs to be clarified. Other entities need to be able to access these texts at no cost.

Google argues that it has structured the deal so that it’s not exclusive to the company—that is, other groups could choose to scan books as well. But we need an independent arbiter to confirm and codify that principle. I know Google does no evil but let’s just get a judge to corroborate that before signing on.

Check out the other posts here.

Letter: Read the Terms of the Google Book Settlement Agreement

April 29, 2009

Today, the New York Times published a story reporting that the U.S. Justice Department has begun an inquiry into the antitrust implications of Google’s settlement with authors and publishers over its Google Book Search service.

The settlement, announced in October, gives Google the right to display the books online and to profit from them by selling access to texts and selling subscriptions to its entire collection to libraries and other institutions. Revenue would be split among Google, authors and publishers. But critics say that Google alone would have a license that covers millions of “orphan books,” whose authors cannot be found or whose rights holders are unknown.

The news gives me the perfect opportunity to weigh in on this issue from the perspective of an author. I am inclined to participate in the program, thereby forgoing my right to sue Google. The main reason is that listing your book in the Google index would make its existence known to lots of people, which would presumably boost sales. But I still have a few concerns.

Among them:
1. How much money could Google Books bring an author? That is one big unknown here. And it makes it hard to come to a decision without knowing the potential return on on a Google Books licensing deal.

2. Authors need more time to figure out the deal and its implications. On that note, I was happy to hear that this Tuesday Judge Denny Chin of Federal District Court in New York, who is overseeing the settlement, postponed by four months the May 5 deadline for authors to opt out of the settlement and for other parties to oppose it or file briefs. The decision follows requests by groups of authors and their heirs, who argued that authors needed more time to review the settlement. My colleague Rob Hof wrote on TechBeat that he expects Chin to take a month deciding whether the settlement should go forward.

3. Is there any way to make the program easier to understand and practice? I write about these issues for a living and I am having a hard time getting my head around all the structure and mechanics of the program. Apparently, authors need to create a user account in order to dictate what licenses they grant to Google. Yet I still have no idea where I would go to create that account or how that process works.

I look forward to hearing comments on this post, especially from other authors. I haven’t found a water cooler yet where authors are debating these issues. Perhaps my blog can serve as one little forum.

Here’s the copy of an email I got from my agent detailing the terms of the Google Book Settlement:

In response to the formation of Google’s Library Program, involving copyright-infringing activity, the Authors Guild has taken a class action against Google, resulting in a settlement and the intended creation of the Book Rights Registry, a subsidiary organization that will represent the interests of authors and publishers and will enforce the decisions of the Google Book Settlement and audit Google as necessary.

Google’s Library Program will contain books that are out-of-print (unless rights-holders say otherwise), not books that are currently in-print (unless rights-holders offer their inclusion), and with the exception of children’s/picture books, there will be no pictures included.

For out of print books that are included in the program, rights-holders may grant any of the following licenses if they choose to stay included in the program:

1. Public Access License – free online portal to view database of
out-of-print books, such as at a public library. However, it is a “see only” policy here, and if the pages are to be printed, there will be a per-page fee.
2. Preview License – (comparable to Amazon’s “Search Inside the Book”
feature) online preview of selected pages of the book (but is non-printable).
3. Outline Editions – not a pdf, download, or ebook – this is an
online-only edition that charges a price between $1.99 – $29.99 with a median price of $5.99. The book can only be viewed after purchase, and can be printed as well.
4. Institutional Subscriptions – Google can license institutions the
entire database for a flat fee/annual subscription. This is where they expect their greatest monetary results.

As the author, you will be entitled to receive $60 for each copyright infringement by making a claim to your work. Not all work has been infringed upon, but making a claim regardless of whether that’s the case or not, ensures that you will have credit in the Book Registry and will further protect your rights. As your agent, we will be able to make these claims on your behalf, but each client is encouraged to create an account in order to dictate which licenses to grant Google per each book or insert or inclusion in an anthology. Clients can change their elections at any point after making claims and activating their account. Clients can make the claims themselves or agents can make claims on behalf of their clients. The client will have to make the specific licensing elections if he/she decides to remain a part of the program, but the agent can file the claim on their behalf while still allowing the client to create an individual account on the Book Rights Registry online system to have control over their licensing elections (which are changeable at any point after setting up an account).

Please note that as clients, you also have the option to opt out of the settlement, retaining the right to sue Google separately. Please also note that in order for books to be covered in this settlement, they must have been published and copyrighted before January 5, 2009.

The money flow for books in the Google Library Program will be as follows:

– Out of-print, Reverted Rights = 100% to Author
– Out-of-print, No Reversion of Rights = 50/50 to Author/Publisher
– Out-of-print, No Reversion of Rights, Contract Pre-1987 = 65/35 to
Author/ Publisher
– In-Print, Chosen to License = Almost all cases, $ to Pub, Pub pays
Author per contract terms (can be exceptions, but for most part, split as decided in contract)
– Institutional Subscription = Google collects $, keeps 37% and passes
63% to the Registry. The Registry keeps 10-20% of the 63% (exact %
TBD) and the remainder is passed to the rights-holder.

Please let us know if you would like to participate in the program before April 10, 2009. If we do not receive a response from you by April 10, we will assume that your wish is inclusion in the program.

You will still be responsible for making your individual accessibility elections and maintaining your active online account with the Book Registry. If you would like to file the claim yourself and set up your account simultaneously, this must be completed before January 5, 2010.
Once you do this, you will have the freedom to change your elections and even to withdraw your book(s) from the program up until January 2011.

Should you have any questions about the settlement or the process outlined above, please visit for further explanation, details, and directions.


Come See Me Speak at Stanford Next Friday

March 22, 2009

A quick speaking update: I have been invited to moderate a panel at the Stanford Global Technology Symposium on Friday March 27. The event will be held at the Arrillaga Alumi Center on the Stanford campus. This year’s theme couldn’t be more timely “Entrepreneurship and Investment in a Turbulent Economy.”

T. Boone Pickens, Facebook COO Sheryl Sandberg and venture capitalist Steve Jurvetson are giving keynote addresses or fireside chats.

We’ve got a great panel. The topic is corporate venture capital and we’ve lined up top executives from IBM (Claudia Fan Munce), Microsoft (Dan’l Lewin) and Google (David Lawee) to participate. My panel is from 3pm – 4pm.

Please come and say hello. I may be selling books afterwards.