Archive for January 2011

Is Apple about to give Android a boost?

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Here’s what could happen if you’re a paid-for content provider and you invest in publishing your content on a proprietary platform that you don’t control – the platform owner turns around and decides to take 30% commission on every piece of content you sell.

This could really backfire on Apple. This year, we’re likely to start seeing a bunch of Android tablets come on the market and if publishers end up making 30% less revenue on iOS than they do on Android, it could lead them to focus more on the Android platform. Even if Apple backs down, a certain amount of damage has already been done – content providers will be taking a closer look at the terms and conditions they’re signing up to, and thinking about the longer-term implications of committing themselves to a content-delivery platform controlled by a company that’s willing to change the rules without consultation and relatively little warning.

It’s not completely unheard-of for a hardware manufacturer to take commission from content providers – that’s how the console gaming market works. The difference is that console manufacturers like Sony and Nintendo sell the consoles at a loss and rely on the fees they receive from games publishers to generate a profit over the long term. Apple make a profit on each iDevice they sell. Taking a commission on subscriber content seems a little greedy and, in this situation, being overly-greedy could result in Apple throwing away its first-mover advantage in the tablet business.

Photo: A lone Magellanic penguin on the beach at Gypsy Cove, near Stanley on East Falkland island in the South Atlantic.

Written by jackgavigan

January 27, 2011 at 9:03 pm

Posted in Openness An Obituary

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I came across this while going through some boxes. It’s a piece about, the dot-com startup I was CTO for back in 1999/2000, by the CEO, Edward Johnstone, from page 4 of the Daily Telegraph’s dotcom section on 17th August 2000.

Written by jackgavigan

January 21, 2011 at 4:47 pm

Posted in Bubble 2.0

Building Silicon Valley in East London?

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Everyone’s talking about David Cameron’s plans to turn London’s East End into a “Tech City” to rival California’s Silicon Valley.

I’m skeptical.

Back when I was working for Morgan Stanley, I once had a one-to-one with Colin Bryce, the European head of sales and trading. At the time, Morgan Stanley seemed obsessed with replicating Goldman Sachs’ success by taking more risk (this was before the credit crunch, during which Morgan Stanley lost $9.6bn and nearly followed Lehamn Brothers into bankruptcy). I felt that, as a company, we were not as competent in certain areas like risk management as Goldman Sachs was, but that we had other areas where we were potentially stronger.

“I don’t want to beat Goldman Sachs,” I told Bryce. “I want to win.”

My point was two-fold. Firstly, Goldman Sachs are always going to be the best in the world at being Goldman Sachs. They got to be the way they are over decades. That’s not something you can replicate overnight or even over the course of a few years. If you try to copy them, the best you can hope to achieve is second place. Secondly, by trying to copy others’ strengths, you risk overlooking your own. Or, to put it another way, focus on what you’re good at.

Silicon Valley is the result of decades of development, growth and investment, beginning with the defence sector. After WWII, the R&D divisions of companies like Lockheed Martin bred a generation of scientists and engineers. In the ’60s, the Californian government came up with an education strategy to support those companies, which turned Stanford, UCLA, UCB and UCSC into some of the top universities in the United States.

It’ll take a lot more than £200m and a trendy name to replicate that success story. The best example I can think of is Ireland, where (notwithstanding its recent economic difficulties) more than a decade of encouraging FDI by American technology companies and a huge investment in education (including the decision to make studying a European language compulsory for all secondary school students, which led to Microsoft choosing Ireland as the base for its European and South American operations, thereby turning Ireland into the largest exporter of software in the world), combined with an enterprise-friendly tax environment, gave birth to the Celtic Tiger.

Britain’s already tried to replicate Silicon Valley, with limited success (Silicon Fen and Silicon Glen). Instead of targeting a specific geographic area (East London landlords must be salivating at the prospect of a government-funded property boom), Cameron should concentrate on doing his job (improving the educational system) and simply get out of the way of entrepreneurs by reducing taxes, red tape and other costs for all start-ups, not just the ones in East London.

Photo: During the 19th century, Royal Marines based on Ascension Island constructed water catchment areas out of concrete near the summit of Green Mountain.

Written by jackgavigan

January 17, 2011 at 10:38 pm

Posted in Entrepreneurship

Bubble 2.0?

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One of my New Year’s resolutions was to start blogging again and the recent news that Facebook is valued at $50bn seems an opportune moment.

I remember very clearly the day back in March 2000 when announced that they were raising their floatation price from a range of 190-230p to 320-380p . I was the CTO of a dot-com startup at the time, and I stood in the middle of our office in West London and opined to my colleagues that was not worth that much. My CEO wasn’t particularly pleased with this, as he was hoping that we could surf the same wave of investor interest to raise £8m.

Unfortunately, history proved me right.’s floatation proved to be the peak of the bubble and we never did raise that £8m (although, ironically, we later signed a letter of intent with to manage their website content). In June 2000, in the face of zero interest from investors, we made the decision to mothball the company and return what remained of our £800,000 seed funding to our investors.

According to Wikipedia, floated at 380p. On the first day of trading, it’s shares peaked at 511p but within a fortnight, they had dropped to 270p. Five years later, it was acquired for 165p per share. During those five years, never made a net profit.

Fast-forward to today and the hype is back. Last week, it emerged that Facebook’s most recent funding round valued the company at $50bn. I don’t believe that Facebook’s worth that much and I’m a big believer in putting one’s money where one’s mouth is, so I’m prepared to bet $10,000 that I’m right.

Facebook reminds me of Compuserve. If you’re wondering “What the hell is Compuserve?”, then you’re (a) a youngster and (b) proving my point. Open standards for electronic mail helped spell the deathknell for Compuserve and its ilk. Facebook is susceptible to a similar fate and if initiatives like Diaspora give rise to open standards and protocols for social networking, I don’t think that Facebook will be able to hang on to that $50bn valuation.

Photo: A waterfall in Zion National Park.

Written by jackgavigan

January 13, 2011 at 7:08 pm

Posted in Bubble 2.0