Seattle Alliance of Angels has a terrific 2010

The Seattle Alliance of Angels had a wonderful 2010. To quote the headline: Alliance of Angels Invests Record-high $10.3 Million in 2010; Group hits new milestone with investment in 33 Northwest-based startups; surpasses previous investment record by more than $1 million.

I was quoted:

“Once again, our angels have set a new standard for investing in innovative, young companies,” said Dan Rosen, chair of the Alliance of Angels. “For the second year in a row, AoA has cemented our position as the most active angel organization not just in Washington, but in the whole of the Pacific Northwest.”

“What is especially gratifying,” he continued, “is that 95 percent of our members have made at least one investment in the past two years. Even as the economy struggles to rebound from the recession, our members continue to support the AoA portfolio with initial and follow-on investments.”

“That is a testament to the quality of our deal flow, the value of our screening and coaching, and the eagerness of our investors to support entrepreneurs with promising ideas.”

Seems that angel investors are once again full of hope for the future.

See full release: http://drosenassoc.com/AoA%20results%202-23-11.pdf

Apple: You’ve Got to be Kidding

I hope that you all have been following the tiff that has developed between Apple and its app vendors and publishers (see e.g. http://www.informationweek.com/news/personal-tech/smart-phones/showArticle.jhtml?articleID=229200215). Nothing like taking wonderful successes like the iPhone and iPad and then let unbridled greed kill an ecosystem. This is exactly the kind of corporate behavior that has killed so many nascent new markets and deserves to be punished.

As those that have read my previous blogs know, I am a big iPad fan. Among my favorite apps on the iPad are Kindle and Netflix. I was proud of Amazon for sticking up to the publishers to try to get better pricing for their customers, even though they ultimately failed. (Can anyone explain to me why a printed book should be cheaper than an eBook?)

The only logic behind Apple’s decision that ALL content offered through their platform should have to pay them 30% of the gross is that they think they can get away with it. The end result will be one of the following:

1) The content providers will have to charge 30% more on Apple platforms; or

2) There will be less content available on those platforms, because all content will only be available on the iTunes store.

Neither of these alternatives is good strategy for Apple. While exceedingly profitable in the short term, ultimately, it will lead to their ecosystem being stifled of innovation and being surpassed by others that are friendlier to partners and user economics.

I believe that Apple is still thinking like the underdog in its markets and not like the market leader it has become.  Being the market leader brings obligations as well as exceptional rewards.  If Microsoft were to decide to charge a 10% charge for all e-commerce done on Windows, the furor would be loud and never end.  But Apple, with its innovative products seems to believe that it is still the underdog and not the market leader with iPad and iPhone.  It is exactly this sort of bad corporate greed that forces governments to become involved in our industry (see http://online.wsj.com/article/SB10001424052748704657704576150350669475800.html?mod=WSJ_Tech_LEADTop). I hope that Apple senior management and their board wake up soon.

I would urge all iTunes customers to immediately find alternative way to buy content. A good example of this is one of my portfolio companies – Single-Click Checkout (http://www.singleclickcheckout.com/) which is available to merchants on most mobile platforms and allows a user a safe and secure way to purchase things directly from the vendor on their mobile devices without using the platform store.

I hope Amazon and other content owners don’t bow to Apple’s mafia-like tactics. Even if Apple doesn’t realize it, forcing their hand on this and getting them to back down is in everyone’s interest.

I had waited to upgrade my iPhone 3G to an iPhone 4 on Verizon, and was just about to do so.  I no longer intend to go to the iPhone 4 with this Apple policy on content.

Technology & Revolution

I admire Thomas Friedman’s intellect. In today’s NYT, he wrote a particularly insightful analysis about the events in Egypt and the Middle East, called China, Twitter and 20-Year-Olds vs. the Pyramids (http://www.nytimes.com/2011/02/06/opinion/06friedman.html). Like in many of the revolutions that swept Eastern Europe, there is clearly a link between modern communication technologies that were spawned by the Internet and the ability of people to quickly gather around key societal issues. This was one of the original promises of the Internet. Like with many technologies, we often overestimate their progress and impact in the next two years, but underestimate their impact in ten years.

Social networks are one of the first communication media that allow like-minded people to communicate without knowing each other. In the past, you had to at least know someone’s address (physical or virtual) to send them a message. This is no longer true and the vast societal impacts of this will reverberate for decades. I saw this first hand when I was in charge of AT&T’s communication businesses in Eastern Europe in the late 1980’s (even having the good fortune to be in Berlin on the day the Wall was opened.) Even then people realized that communication was a necessary ingredient for change.

But Tom takes this a step further. He points out that “the whole Asian-led developing world’s rising consumption of meat, corn, sugar, wheat and oil certainly is” fueling the revolts in the Middle East. What a fabulous insight about the interconnected global economy! Couple that with an increasingly educated and aware population of 20-year-olds who can now easily communicate their frustrations and gather on social networks – that’s fuel for change. Especially in societies where there are a great many of what Tom calls “the educated unemployables” that have college degrees on paper but really don’t have the skills to make them globally competitive.

It is axiomatic that most new technologies are generational. It is not surprising that the aging autocratic leaders of the Middle East (and elsewhere) at best have a limited understanding and therefore underestimate the impact of Twitter, etc. While those of us in the technology field know that none of these are revolutionary technologies per se, the societal impacts wrought by the wide-spread adoption of them are!