Category: Deals (Page 1 of 6)

Beat(s) It: What’s Up, Apple?

Hello again.

I am writing to you whilst listening to Metronomy on Spotify streaming from my iPad Mini using a Bose headset. Musical zen, so to speak. Earlier, I had the whole thing running via my Denon RCD-N7 with the Airplay patch (but using Mordaunt-Short speakers). Life is good.

Earlier today, I got my new iPhone 6. Spotify works on it. My Bose headphones fit into the headphone jack (but, why, of course).

What is my gripe about then, you ask? Well, you see, I hold about 5 Apple shares (that’s about it, honest). And said company has recently (well, not so recently anymore) spent some $3 billion on acquiring Beats, “that” company fronted by the much (and rightly) revered Dr Dre and Jimmy Iovine, which sells mediocre (sorry, I meant to say, totally friggin’ awesome, headphones to sports superstars (and their fans). Oh, and they also have some sort of streaming service, apparently.

Mind you, my shiny new iPhone 6 nor my equally shiny new iOS 8 show any sign of a music streaming service. Or Beats. Or both. Or either. And today, the formidable (erm) TechCrunch ponders whether Apple may shut down the Beats streaming service (because of said absence of it on the new iPhone and iOS). And the mind boggles.

Let’s have a look at the lay of the land then:

There are a number of streaming services in the world. Spotify tops the charts, undoubtedly (unless your worldmap starts and ends in the US, then it’s probably Pandora). Their valuation is pegged somewhere at North of $10 billion. I do not know a single person that uses Beats streaming service (but then, I know, I am a middle-aged white European). However, my American friends, have you heard of Deezer? No, thought not. Alas, it has 20x the subscribers of Beats though (5m vs 250,000). Could you have bought them for $60 billion? I would guess so. But they don’t have the hardware or brand value, you say. And right you are. But, come on, a difference of nearly $57 billion for this? Really?

I would posit that the Beats acquisition was – a British technical term – complete bollocks. Let’s look further:

Here’s what Apple said (BTW, that Endgadget piece is enlightening on so many levels):

It was a no-brainer for us,” said Cue, outlining the three reasons in more detail. First, Cue says the Beats team is sensational, and will be a perfect fit for Apple; additionally, Dr. Dre is an incredible artist with an incredible ear.

$3.2b for a sensational team with an incredible ear. Yeah, right… Eddy Cue, you rule (or not).

Beats hardware is middle of the road at best (I know Dre would disagree, but he’d have to, no? He’s HipHop’s first billionaire because of it, doh…). For how much could you have had, say, Sennheiser (surely a good fit on hardware), a conservative, German, family-owned company? Would a bid of $3.1b have sealed it? Of off-shore money (which would’ve, what, halved that cost? Mmmh, I wonder (that’s a yes). See, the main (and a super-impressive feat at that) of Beats was its marketing and branding prowess. But Apple really doesn’t have anything it needs in that department, does it? It is the world’s most powerful brand (more than 2x its nearest competitor).

So what is our conclusion, half-way? Apple bought a brand (it didn’t need) that produces mediocre hardware (the one part where Apple always excelled and led everyone else) with the add-on of a also-ran streaming service. $3.2b worth? Erm,  no! And now we are hearing that they’re going to shut down that streaming service (which desperate Apple lovers had quickly termed the main rationale of the genius Apple pulling off another one), You see, Apple has never been great in M&A. T (I’m available). <sigh/>

Finding Money / 4YFN Barcelona [Slides]

Back from another Mobile World Congress, which still seems to be growing. This year, the GSMA had introduced a smaller sibling to the main conference, which proved to be a lot more exciting (as far as I’m concerned at least), namely Four Years From Now (or better termed 4YFN) where I had had the immense pleasure of delivering a talk on “Finding Money”, which focussed on paths to finance your start-up. The slides, which I hope you will like, can be found here (for some reason I struggled to embed the deck this time).

A New Thing: Emerge Venture Lab

Some of you might have seen it (OK, most won’t have) but I have a couple of new gigs going, one of which is Emerge Venture Lab‘s Emerge Education programme. It launched last week in style on L39 in Canary Wharf (yes, we were looking at you, you bankers).

Be it as it may, I am now a Venture Partner there. And I am thrilled to be there. Swanky title, you say, what else? Here’s what: Emerge merged (oooh) a couple of rather sweet things into one coherent offering, namely:

  • The guys come out of Oxford University’s prestigious Said Business School and have hence, per se, a pretty awesome pedigree AND network. But these are not your usual millenials. They put their talent to hard, hard work and assembled a team of mentors that is mind-bogglingly good: you will find a network of insanely gifted (and successful) entrepreneurs there that comprise the true heavyweights of today: tons of entrepreneurs, investors, big corporates (yes, Google is also there) and public ventures (like NESTA) are there.
  • I would suggest (but of course I would say that) that your chances of finding follow-on funding are better here than anywhere else because of the above. Why (besides that bloody awesome advisor list)? Oh, just read on…
  • Emerge have managed to compile a list of top-tier educational institutions that will work with you to hone your application or service before it hits the market. So the next time Mr Big Investor asks you if you have any proof it works, you will just coolly whip out that Oxford Uni study. Not bad, huh? And if you think that this still is all my usual BS, just think of the sell-in cycles in education. Then pause. Then think of what Oxford University on your PowerPoint might actually do for you. With me?

Everything aside, I am truly excited by what Emerge has achieved in a very short space of time. They have managed to navigate the insanely complex and dangerous seas of the educational minefields to assemble something that should accelerate aspiring ventures in the field in the true sense of the word. If you come out of this programme, you will have had your product vetted not only by passionate entrepreneurs but also by real clients. And that, my friends, is pretty astonishing for an accelerator programme, don’t you think?

And, yes, that’s why I am excited, and, yes, that’s why I am here! Get in touch, talk to us, apply to the programme here!

Godspeed!

What is the Value of a Twitter User?

German newspaper F.A.Z. had a nice graph where they compare the “values” of users by putting user numbers in relation to market capitalization. The paper says “experts” estimate (ahead of the recently announced IPO) the value of Twitter to be up to $15bn (€11.3bn) which, with some 200m users, would equate to the value of a user to just under €57. They then go on and compare it to other companies and suggest that that value is really rather low. They provide comparative numbers:

  • Amazon: €809
  • Walmart: €752
  • Vodafone: €327
  • Google: €200
  • Facebook: €72
  • Procter & Gamble: €49

Now, this is of course a somewhat crude analysis (an Amazon or Vodafone user arguably must be a lot more valuable as those two companies derive value directly from transactions with and by those) but it is interesting nonetheless. If you want to see snazzy graphs and/or can read German, here’s the article.

MoPub is Now With Twitter

Over everything else that’s been going on today (my resignation from BlackBerry only putting one of the smaller cats amongst my own pidgeons), I nearly missed a rather remarkable deal: Twitter is buying MoPub for – according to unconfirmed sources – $350m in stock. Not too shabby, huh?

Why’s that then? Well, we have all been following Twitter’s attempts to turn its growing user base into dollars for (arguably) too long. Their previous (and current) initiatives may have gained somewhat over previous attempts but they still do not really stack up in terms of revenue to what their powerful network (which has famously made regimes tumble down) would suggest it could do.

They have been looking for an ad exchange for a while (the signs were on the wall then) and MoPub looks like a good fit: they are a truly “mobile first” company as was, arguably, Twitter (they have had more mobile usage from Day 1 than most other networks). They run a real-time ad-exchange, meaning the offer of an open space is being created the moment a page loads, an app opens, something happens – in real time (check here for a better explanation). It is basically like Google AdWords for mobile, with the nifty variation that they couple all sorts of mobile inventory and sources into one output. Rather sweet. This of course makes even more sense for Twitter than it might for some other folks as Twitter is “changing” by the second depending on waves of popularity – and, as I said before, a lot of it is on mobile – and it will be more still in the future. So this dynamic nature coupled with the mobile-centric view of MoPub will, I suspect, have been the part that made Twitter part with that much of their stock.

As to this being an all-stock deal (if what TC reports is true): Twitter is probably one of the better pre-IPO stock to hold, I suppose… 😉

Momentum, a Mobile Accelerator in the Valley

Here’s something cool, a mobile accelerator run by people who actually know mobile, namely the good folks from Mobile Monday (disclosure: I am a co-founder of Mobile Monday Manchester). For those who don’t know (and I don’t expect many of the readers of this blog to being that ignorant… 😉 ): Mobile Monday has a global presence in over 140 cities across 50 different countries. As part of Mobile Monday, participants will get greater global exposure with leading brands to help foster business relationships and potentially commercial deals. It works, believe me!

This is a 12-week program (from 23 September – 6 December), run at RocketSpace in Silicon Valley with the aim to help accelerate mobile startups. They will select 8-10 startups from around the globe to participate in each class. If you are not based in the Bay Area, you’d have to cover your own housing and living though (which they say should amount to $2,500/month; also: you need to sort out your own visa should you need one though they’ll help you).

The program is designed for startup founders. It consists of weekly workshops and dinners lead by leaders of “global brands” who will help mentor and work closely with participating companies. You will have the opportunity to pitch their “dedicated” team of VCs and angels. The program will end with a Demo Day attended by industry leaders, VCs, and the press. So it’s pretty much the usual stuff. However, it being run by the MoMo folks, you can probably expect a rather good pick from the mobile world!

Here are the minimum criteria (and you will see from this that you actually have to have something already; this is an accelerator, not an incubator):

  • At least 2 people in the startup (two’s company…);
  • Shipping live product;
  • Angel funding or Participation of a startup program or Experience as a founder in a prior startup;
  • Pre-series A funding.

Each application will be scored on five criteria:

  • Team
  • Product
  • Market viability
  • Traction (clients, users, customers)
  • Fit for mobile industry

All Mobile Monday Accelerator events will be held in the San Francisco bay area. Office space at the RocketSpace Innovation Campus (San Francisco downtown) is provided free to all accelerator class participants. RocketSpace is home to Fortune 500s like, T-Mobile, GM, DoCoMo, Microsoft, ABInBev, LEGO and to 150+ startups including Spotify, Supercell and HasOffers (yup, that is straight from their sales pitch).

The program currently provides 50+ of the best in mobile mentors; Samsung, Sony, Twitter, Facebook, AOL, ESPN, Polariod, PayPal, Intuit, The Weather Channel, Hotel Tonight, Millenial Media and more… (yup, again from their pitch)

Each week, they’ll host a workshop in the San Francisco bay area at our offices or a partner’s office on the usual topics like:

  • Marketing
  • Negotiation
  • Monetization
  • Legal
  • Analytics and Tracking (if you still haven’t got this)
  • UI/UX Best Practices
  • Scaling (under the heading “luxury problems” but immensely important)
  • Selling to the Enterprise
  • M&A How to sell your startup (my guess is they won’t give guarantees though…)
  • Effective Pitching

If you want to get into this (and, hey, it is just about the time when the weather in certain areas get somewhat yucky), you can apply here. Good luck!

A quick note on second-hand software

This is not strictly speaking a mobile topic but, as we all deal more and more in digital goods, I reckon it has its place (and, then, I cannot deny my legalease origins, I suppose), so here we go:

In case you haven’t heard, the European Court of Justice recently ruled against Oracle with respect to the question if a licensee was allowed to sell this license to someone else. The case at hand was against Usedsoft, a company that has made exactly that its business. Now, often software licenses prohibit the onward sale to third parties (the vendors would rather like to sell a new license to a new customer). And, of course, if there was a market opening up for second-hand licenses (mobile games anyone?), this could impact the commercial opportunities of the originators of the software quite significantly. And lots of people came out quickly complaining.

However, what would you say if you could not sell your car once you would want to buy a new one? Or that Ikea table that looked so radically modern only 3 years ago? Unthinkable, huh? That would be a world without car-boot sales, flea markets or eBay or GameStop (who make tons of money with pre-owned games). And, no, no one would understand why that should be prohibited: you bought that car/table/whatever after all, so it’s clearly yours, right?

And, yes, it is. And this principle (well, following the rough outlines here at least) was also applied by the European Court of Justice. And I, for one, would agree with that. What the court also said (and this is where the nitty gritty might come in) is that the seller of a used piece of software would – of course – be prevented from continuing to use it after the sale. I mean: you cannot use your car anymore after you sold it either… However, this is of course not just as trivial for digital goods that can much more easily duplicated than physical ones.

When it comes to the commercial implications, I would posit that this is “merely” a question of business models: if you are “selling” (and Oracle’s lawyers will of course say it wasn’t a sale but a mere license) something, that would be it. However, if you provide an ongoing service (“SaaS”), your continued benefit is in the service, not the piece of software that carries or facilitates that service. So hard to do? No.

So, can we all get back to earth and crack on with it then? Thank you!

Oh, and happy July, 4th to my US friends! 🙂

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