The Firehouse

After Whisher was acquired by wifi.com in mid-January, I was to continue working as CTO for the new venture as part of the deal. Since I had worked on the technology since the very first day, it made sense that I continued to oversee the development of the new phase of the project. In April, news came out that Rob Monster, who headed the venture fund Monster Venture Partners, had shut down the fund and needed to cut costs on all the startups he was funding as a result. This lead to an awkward situation which left me in a limbo, with no income, and no significant equity. I’m waiting for the issues to be worked out, but things are not particularly promising right now.

Spiritus – the divine breath – inspiration^[1]

What I need most after this transition was inspiration, so after I saw Martin’s post about TechTalk ‘09 in Menorca, I sent an email asking if I could join the event. Reply quickly came that while the full event was…well…full, I was welcome to come on the Friday for the talk itself, scheduled for the afternoon. The TechTalk is a loose-scheme round table, where people can stand and share their views, problems or ask questions, and then interact with others during the rest of the event, in a very relaxed and beautiful setting.

As a kid, I had visited Menorca every summer with my parents. We would rent a small house for a month, in places such as Cala en Porter, Cala Galdana, or the beautiful Cala Morell. Menorca is also ripe with archeological features (one of my other interests), with many neolithic constructions such as the Naveta d’es Tudons, and the many taulas and talaiots from around 2.000 a.C. The archeological museum in Mahón, with its necropolis, is also of great interest. Going back after many years would be very interesting, even if I didn’t have the time to tour around the island.

The arrival

Call it fate, but Jordi Vallejo (Fon’s CTO) and I had been trying to meet so that he could give me one of the new Fonera 2.0 routers to try out. Even though we live very close, plans were always thwarted one way or another. Turns out he was sitting two rows in front of me on the flight from Barcelona to Menorca. We took a taxi to Torrenova, Martin’s villa, which left us at the gate after a difficult ride through narrow dirt tracks.

A lesson in optical physics and muon detection

Behind our taxi was a small rented Mercedes, and in it was Isaac Shpantzer, who offered us a ride to cover the rest of the dirt track up to the villa. And what a ride! It turns out that Isaac was a NextNet founder, invented OFDM, and was currently working at CeLight, a company that develops high-tech for communication and military applications. One example is a high-bandwidth optical communication system that points a blue laser towards the sky (and it is blue for a reason, but I’m not telling – it’s really really clever), and uses coherent detectors to grab scattered photons which have been modulated to convey data. We are talking terabits per second throughput – truly amazing. He was preparing a demo on Friday or Saturday night, but sadly I was leaving earlier, it was sad to miss it!

Another interesting development he explained during the trip was a nuclear device detector – picture a small nuclear bomb inside a steel crate shipped to the US by a terrorist group. Current detection methods are essentially x-ray arches and physical inspections. CeLight’s method relies on cosmic radiation detection. This radiation is composed in part of a negatively-charged particle called the muon. Powerful x-rays work at 120 keV, whereas a muon has an energy just over 105 MeV – thus, it has a huge penetration power, much higher than electrons. Every square meter of the Earth is hit by about 10,000 muons per minute. Since nuclear weapon cores consist of very dense, positively charged material, placing two detector plates above and below a steel container should show a straight path of muons hitting both plates, unless they pass through the nuclear core, in which the polarity difference deflects their trajectory. It’s a very neat idea, and they have a working prototype already.

Settling in

We moved into Binisegarra for a couple of hours before lunch, and had the chance to talk with a few people. Many were chilling inside the pool, trying not to get stung by the approximately 4,921 wasps that were flying around it (my most accurate count, they were moving so it was hard to keep track). Saw many known faces such as Loic, Anil, Michael Jackson (no, not that one), Rodrigo, and Ola.

Time for lunch

We had a very nice buffet lunch, and talked to Dina Kaplan of Blip.tv, who also runs the NY Founders Club, which is an interesting idea which could be taken to Barcelona. There are some events already happening here to promote interaction between startups, but nothing like Founders Club (if there is, let me know!).

The talk

Since there were so many people this year, instead of having everyone stand up and say their bit, volunteers spoke about their startups, problems or questions for the audience. It was interesting to hear Isaac’s presentation (which was way less technical than in the car but still left some puzzled faces), and Deborah’s project involving the location of firefighters in 3D space through time-reversal techniques – it’s a shame we didn’t get to talk more on the subject. Ola (the other half of Sweden!) related his most embarrassing story ever, involving clothes (or the lack thereof), a hotel in Chueca, and room locks – all in exchange for solutions to his fix-the-world problem.

Catching the last flight home

It was sad to have to leave as many activities went on during the weekend, and those are the real opportunity to talk to people about their projects and learn from them, but it was time to go. Alejandro Santana was kind enough to drive me to the airport, even though he had a later flight to Madrid.

In all, it was a very good experience after many months of stress due to a number of situations, the worst just having come to light as I was typing this post – more on it later. All I can say is that I found the inspiration to get going again, and look for new exciting projects (either join or start them). Thanks Martin for hosting such an event in such a beautiful setting!

[1] Quote taken from the movie Always, when Hop tells Pete that his task will be to inspire a young pilot as he gets started in firefighting attack planes.

I read with interest the list of the top 50 startups to watch by BusinessWeek after a post by Martin Varsavsky on Facebook. I think there are considerations not taken in the list, such as how much money every point earned cost, which would measure how good the brand image, PR and relationship with its users are, among other things.

I tried to weigh the ratio of funding to points ($M/point), the funding versus how long the company is running ($M/year), and the number of points gained for every year the company is running. After scoring each company on these three factors plus the original score, this is the result:

Some curious results show up, such as Ning and Tudou dropping many places (due to their huge amount of funding).

It seems that they are already legally bankrup, but the Madrid-based Mobuzz has sent out a cry for help, in the form of a request for people’s donations. They need to raise 120.000€ to keep going, and seem to have already raised 20.000.

To be forthcoming, I’m not going to donate. Being a volunteer firefighter in a severely understaffed and underfunded municipal department, where the council tells us they cannot afford 12.000€ for a set of four air packs (SCBA) as a result of the crisis, makes me put Mobuzz’s call for help under a different light. The SCBA sets (pictured below) would allow us to safely enter burning structures and actually save lifes. We find that at times, we cannot intervene, and have to wait until nearby departments respond, which can take 20-30 minutes. So far we haven’t had to lament fatalities due to this shortcoming, in part due to luck, and in part due to our crews taking (otherwise unnecessary) risks.

We are offering an infinitely higher ROI with a 10th of what Mobuzz needs to survive. There have been plenty of comments, some in favor, most against, in the blogs of Martin Varsavsky, Enrique Dans, and even TechCrunch. Essentially, many people would rather give to a charitable cause, than to keeping the lifestyle, company perks, and jobs of an internet startup.

I feel Mobuzz’s pain, almost every startup is in a very similar situation, facing deep cost cuts and layoffs to try to survive, or facing certain death already. Before considering a donation, I would make these questions:

• My donation will go towards keeping your site alive, your jobs, but what are you going to do about your style? Are you going to lay people off, run on a shoestring budget, cut the number of shows, move to smaller and cheaper offices, sell your expensive editing equipment and go back to handheld cameras, which for web video work just as well? Basically, I need to know your plan on how you intend to make my donation count.
• What happens after and if you raise the money? Are we just prolonging your agony? When the 120.000 run out, and you face the same situation again a few weeks or months down the line, do we need to donate again?
• If you do make it and raise new funding, or eventually turn a profit, will you publicly commit to returning the donations, or even better, donating the 120.000€ to a charitable cause?

One final doubt – some sources quote 2 million visits per month, yet both Alexa and Compete seem to disagree – this is a chart comparing it to elmundo.es, one of the most read online newspapers in Spain, and a source of some of the buzz:

Where’s the traffic?

Curious how all of a sudden we can swing from parties and conferences to loom and gloom. Over the last few days, several pieces of bad news have hit the world of startups, Silicon Valley, and venture capital.

“When the going gets tough, the tough get going”^[1]

During the last few days, two VC heavyweights have contacted their portfolio companies CEOs, instructing them to get ready for a severe cash crunch and economic downturn. This means cutting costs wherever possible, concentrating on what you can do instead of what you think you can do, and plan to make your cash last for at least a year. This already means a death sentence for some companies who simply don’t have a year left in the bank, no matter how much they cut costs. Mike Arrington has posted interesting posts on both Benchmark Capital and Sequoia Capital’s “batten down the hatches” emails. A copy of the R.I.P. presentation has found its way to docstoc – a must read, with some excellent background on the source of the crisis.

“There’s a ninety-five pound Chinese man with a hundred sixty million dollars behind this door” ^[2]

While browsing through TechCrunch, I came across this shocking piece on Entellium, a CRM startup that managed to raise $50M in venture capital, apparently with the help of cooked books. By the look of things, the culprits weren’t exactly Ferran Adria, but more like a three-year-old left alone with a recipe book, ingredients and some matches.

The CEO and CFO were arrested by the FBI at their homes, and charged with wire fraud (PDF). Between 2006 and 2008, they reported much higher revenues to the board, in order to increase interest by potential investors into the company. This all ended when Melisah Wojtacha, a human resources VP, came across the fake books while clearing out the desk of a departed employee.

Investors include Seattle-based Ignition Partners, who invested some $19.7M into Entellium. There is more information on Seattle Times’ website. Why a company that had actual revenues needed to do this is unclear, unless it has to do with the reported Maserati Quattroporte the CEO drove, along with over-$1M-houses in Mercer Island and Seattle.

“Fellas, last year I made 3 million dollars, but your 50 thousand was the most fun. Are you ready? Then let’s go get ‘em.”^[3]

It would appear that in this particular case, there was little or no oversight from the board on the company’s books, other than relying on what was being reported by the CEO and CFO. The real numbers lay in the bank statements, and it is critical for effective oversight to match the books against them. Otherwise, it’s easy to see that having a couple million dollars in a bank account can prove tempting to some. In these last few years, series A investments have mainly consisted of low seven-digits amounts, usually even less than $1M, which could provide investors with less motivation to watch the financials in depth than if they had sunk $100M into the company. Running audits is expensive and time-consuming, so some may have settled for less. In cases like Entellium, it shows that it doesn’t pay off in the long run.

Movie quotes:

1. Soundtrack, The Jewel Of The Nile.
2. Danny Ocean in Ocean’s 11.
3. Janet Colgate in Dirty Rotten Scoundrels

I am quite surprised about the lack of respect for privacy and anti-spam laws that many startups are showing nowadays, with the excuse that being social and web-two-d0t-ohish gives them carte blanche to jump over all the hoops. Today’s case: Twitxr.

A friend got this in his inbox:

——– Original Message ——–
Subject: Martin Varsavsky wants to keep up with you on Twitxr
Date: Mon, 3 Mar 2008 01:01:07 +0000 (UTC)
From: Twitxr
Reply-To: no-reply@twitxr.com
To: notshown@nospam.com

See Martin Varsavsky’s pictures:

http://twitxr.com/martinvars

Thanks,
The Twitxr team – http://twitxr.com

About Twitxr

With twitxr you can share a moment, a picture, a thought, instantly with your mobile phone. Where are and what are you doing your friends now? Twitxr tells you.

To start with, the email address this was sent to is from an old company he worked at, and which has not been used for over three years. It seems that Martin has just taken his list of email addresses, containing anyone who he has ever been in touch with, and copy/pasted them into the Twitxr database. Secondly, the email comes from a no-reply email address, and provides no way to unsubscribe from these communications. In fact, this email was not even used to subscribe to a Twitxr account!

Now, I believe there are many laws in Europe and the US that prevent this. We currently use a mailing list platform that requires us to comply with many regulations and provisions, so I know for a fact that it’s not as simple as copying a bunch of emails into a database and clicking ’send’.

It was fun while it lasted. It seems that Ted Dziuba, the hand behind Uncov, the extremely harsh startup review site, has given up, curiously, at the same time he attended the Crunchies, and is launching his own Web two-dot-oh startup, Persai.

Always extremely critic of other startups in the new ’social internet’, he was often cited as the anti-Techcrunch, providing alternative not-so-shiny reviews of the same companies featured there. The professional blogosphere is very closed and competitive medium, and so, you can find yourself in a position where you get effectively blackballed from being mentioned in most top blogs, either for making fun of them (like Ted did) or by being strongly criticized in one. In the latter case, it will be the rest of bloggers who will not want to step on the first one’s toes, and write good reviews or posts, for fear that their friendship could suffer.

So, I guess Ted finally woke up and saw the reality, and realized that he has to play ball in order to get his own startup promoted around the blogs and forums. It would be interesting to know what kind of reception he got at the Crunchies, I bet it wasn’t warm, and this made him see what happens to those who stray from the politically correct path. In any case, good luck with Persai Ted, you made us laugh a few times.

This comes a little late as the event is over, but I thought it was worth making some final remarks. On the last day we presented the new look & feel of Whisher, together with some new features such as integrated SIP VoIP, and powerful geolocation functionality.

It was interesting that a couple of companies presented their products using PowerPoint documents labeled ‘Confidential’ (this happened to us at Lift’07, so a little mea culpa, and a heads-up to others). Not that the information is really confidential, just remember to take out the labels:

At the end of the day, Chris Shipley interviewed Martin Varsavsky, who was also being presented with an Entrepreneur of the Year award by the conference organizers. By this time, many attendees had already left, eager to catch trains to take them to Madrid or Barcelona for a flight back home, so the interview was rather bleak. People were asked by the organizers to sit towards the front of the theater to make it look a bit more full (if that was at all possible), and we even saw students from Zaragoza’s University turn up, who had not been present during the rest of the event. We also left after this, as we had a longish drive home, and felt sorry for SpeedBit, who were the last to present, after the interview with Martin.

Some comments about the event:

• The venue was nice, but the low glass desks were totally inadequate. At DEMO, we had nice custom-build stands, with the company name on top, so even if you were standing, the laptops were at the right level to show people stuff. At this event, everyone resorted to stealing chairs from around the theater, as none were provided by the organizers.
• The WiFi worked OK, but sometimes got too congested. There were two 3Mbit ADSL lines, and six access points tied to each, placed about 20cm from each other. You can guess that interference, and heavy usage by some of the attendees didn’t do the network much good.
• For some strange reason, a van with a huge screen was placed in the middle of the main square of Zaragoza, near the event, and live video feeds from the event were shown there. A simultaneous translation ran at the same time, but the volume was set at the same level as the original audio, and the end result was a cacophony that basically amused the locals.
• The catering did their best, but left every day just before 17:00. This meant 3 to 4 hours with no food or drink (not even water, never mind coffee).
• Little publicity of the event was made, which resulted in basically a couple of local newspapers showing up to report, and the sponsoring newspaper Cinco Dias. Other media was there but were basically not very interested in investigating all the companies presenting. The feeling was a bit depressing, almost like you were presenting to the other companies also attending. There is no point running such an event if absolutely no national press coverage (at least) has been attempted to be captured.

I won’t say the event was bad, we actually met some great people, talked to a few VCs, and had a good time. I will leave you with a few more pictures from the event (and a few more are on my Flickr page).

We’re presenting Whisher at Innovate!Europe 2007, being held in Zaragoza, Spain. The event itself is not huge, and has not been written about much, but since it is a stone’s throw away from Barcelona base, we felt it was worth coming. I’ll be posting some pics and info a bit later on.

Day 2: Presentations, demos, networking and no coffee after 17:00

The day started off with an intro from Chris Shipley, and a few onstage demos.

One of the demos that caught my eye was a service called Smeet, which creates a virtual 3D space (in an isometric birds-eye view for your techies), for example, a bar, and places animated avatars which correspond to real users who login to the system. Each user also dials in to a conference number, and his audio can then be heard by others in proportion to their distance, i.e. there is a hearing range, and a speaking range. Thus, by moving your avatar close enough to a group, you will begin hearing their conversation, and even talk to the group if you get closer. Pretty cool stuff!

In the afternoon there was a discussion panel on angel and VC funding of startups, with some heavyweights present – Klaus Hommels from Benchmark, Simon Levene from Accel, Mark Tluszcz from Mangrove, Saul Klein from Index, and Oliver Jung from Adinvest. The moderator was supposed to be Loic Le Meur, but he didn’t show up, apparently due to political engagements back in France (my guess is he will be the next interior minister!), so Chris Shipley took the lead. Some interesting discussion was generated around when and how to take money, and from whom. One conclusion is that if you go for top VCs, you have to set your aims very high, not on a $10 or $20M exit, which can be fine if you take angel funding instead.

The event is OK for networking with others, but the catering disapeared around 17:00, and we were left with no coffee!