Why Americans don't trust their ISP

Kansas city is one of three areas that are served by Google Fiber, one of very few Fiber-To-The-Home (FTTH) initiatives in US. Subscribers on average get double bandwidth for the same price. One would think this would be appreciated as a good thing, but the state legislators seems to see things differently. Or rather, their puppeteers do.

I recently spent 7 years in China, and thought I had experienced my share of corrupt government. But the Chinese at least tried to maintain a façade of who were actually calling the shots.

Why does this matter? US is already far behind Europe and Asia in residential broadband, and the gap is widening. Anecdotally, I get better broadband at lower cost in my remote French Alpe village than I do in the heart of Silicon Valley.


Netflix Country Average Bandwidth

In Europe, EU is putting FTTH front and center of their Europe 2020 strategy. In US, residential fiber connections seems not to be on the agenda at all. The industry experts I meet have all but given up hope, saying this is business as usual. The Cable Lobby will routinely stop initiatives through local legislation when necessary.

It is really quite sad to see them wasting their resources on buying politicians instead of investing in better services. Makes me question if the ISP channel strategy we are establishing in Europe really can be replicated in US, or if we need to change approach...

Google Getting in the Game

Nest valuation at more than $3B is huge in itself, but Google cashing it out makes it a landmark. This was the day the big guys joined the game. Really looking forward to what will come out of this, especially keen to see Google Now applied to appliances and sensors.

We're prepping for an outreach to service providers, will be super interesting to learn what effect this acquisition will have on their priorities. We have already been using the potential threat of Google entering this market as a strategic call to action. Now the threat is real.

Google is almost religiously a cloud company. They will do hardware and devices as a source of user interaction and data for the cloud. The Google antidote is cable companies and their industry alliance that build "smart" into the set top box.

Our focus on re-inventing Wi-Fi router puts us somewhere in the middle, and also offer the ISPs a competitive and defendable position versus cloud competitors. Sure feels like we're at the right place at the right time...

Bitcoinia

At first I thought Bitcoin was silly - geek libertarian naïveté of using technology to escape the forces of evil called “financial system” and “government control”. And don’t get me wrong - a platform sporting killer apps like “Drug Dealing for Dummies”, “MoneyLaundry 2.0” and the unexpected Chinese runaway success of “From China with Cash” (which has gone largely unnoticed in the US), expecting governments to keep their hands off? Good luck with that.

I was surprised seeing an authority like Chris Dixon leading $25M investment in Coinbase. Earlier investments in the space had been somewhat on the other end of the gravitas scale. Was I missing something?

 I took the time to dig a bit deeper into the technology and protocol, and actually agree that this is significant and disruptive innovation. It has the potential to make money transfers and micropayments way more secure and efficient than what is available in US today. But then, US is also hopelessly lagging the rest of the world in this, as in other infrastructure investments.

Both Europe and China already have national payment gateways, through collaboration between financial institutions and the governments. They are non-profit. Government provide regulatory, banks provide oversight. The result is super efficient debit plastic, with fixed transaction fee of a few cents. It also allows such “radical” ideas as direct wire transfer between accounts in different banks, without having to write a check. To European and Asian readers: yes, you read that right.

While visiting the Nordics I have not needed cash for years. Plastic is accepted everywhere, at no significant cost for anyone. In the occasion when you need to pay a friend or split a bill, a mobile banking transfer is now as easy as sending a text. China is quickly moving in the same direction through UnionPay, which might transform the global credit card business.

But Bitcoin could surely solve real use cases, also outside US. Social, digital micro-incentives in advertising and gaming is a good example. I am sure there are many more.

Still, Bitcoin in its current form as a currency is doomed. Why? Because a currency needs stability, and stability is provided by a central bank.

To enthusiasts, the idea of having a currency with no central bank seems to be a good thing. The argument is along the lines that it will become more stable as central banks cannot inflate the value by printing more money to fund government deficit.

So here’s my prediction of how Bitcoin will play out in the current form. I believe the currency will survive this first hype curve, supported by enthusiasts in tech community. What will ultimately kill it as a currency is when increased transaction volume makes it a meaningful asset class for hedge funds. With no backing or oversight, it will be paradise for market making traders. They make money whenever there is volatility and sufficient volume of amateur traders to crush. The resulting permanent volatility will effectively make Bitcoin unusable as a currency.

Bitcoin could work great though if it were just a digital payment protocol. If it was pegged to the dollar, or rather a basket of dollar, euro, yuan and yen, it could be a serious disruption and help make financial transactions frictionless. Digital exchanges like Coinbase could become the new de-facto digital payment gateway. Could this be the scenario the smart money is investing in?

Suits vs Surfies

Interesting to observe the micro-cultures of the valley, almost as diverse as the microclimates. I have spent last couple of weeks getting involved with the Telecom community, centered down south in San Jose. They talk about semiconductors and Moores law - actual substance for the real world. But slow-moving.

The urban hipster haven of SoMa feels worlds apart from San Jose.  SoMa talk is Insta and Snap. Lightweight, viral entertainment. And counter-intuitive to the microclimate – hot and sunny San Jose dress code is suit, while cold and foggy city wear is surfer shorts.  

And then there is us in the middle. We are somewhere on the Peninsula – San Mateo, Palo Alto, Mountain View.  We do software and internet and cloud stuff. We dismiss city as fluff and shrug at San Jose as boring hardware.

City is not all fluff of course, and hardware is far from dead or boring. So many new exciting device+service products launched this year, and innovations of Arduino and RasPi making creative process so much more dynamic and accessible. But Telco world keep pitching dead-on-arrival technologies like NFC for mobile payments. As our Lean Startup mentors teach, they need to learn how to fail faster...

Angels for Christmas

Just a quick update that we recently closed an angel investment round, raising more than $100k. In addition we won a $50k grant from Innovation Norway.

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Our angel investors are a great bunch of experienced industry experts with heaps of clout and acumen. Charles Huang and Kai Huang bootstrapped Guitar Hero. Anders Brandt built a Norwegian internet service provider. WilliamKlippgen co-founded Kelkoo. Bjørn Haugland built ConfirmIt to a global software company. Chris Evdemon is insider of Silicon Valley angel and VC community.

This is our Dream Team. And as with any Christmas present, it is really the thought that counts. We are very proud to have earned your confidence and trust!

In our own backyard

Sometimes you go casting a wide net only to find what you look for in your own backyard.

We where in the need of a good developer that had experience in OpenWRT, a Linux-based software that can be used on a range of routers. Starting with Google, this lead us to a Master Thesis written about this in the southern part of Norway some months ago. Then talking to the one writing this paper then lead us to yet another person that he had used as an advisor.

We then engaged in conversations with this person, and understood that this might be the right guy for us. And where was he based? In the room next to us in StartupLab here in Oslo.

I could have literary jumped on top of my desk, shouted ”Any OpenWRT-knowledge here?” and he would have been able to answer.

Employee No. 1 is about to get hired!

Becoming Alchemists

Proud to announce that we’ve been selected for next batch of Alchemist Accelerator in Menlo Park. It is a six month program backed by leading VCs and is only for B2B startups. Heard lots of great stuff on how Ravi Belani and his team run the program, so really looking forward to it.

Some other big news coming up as well, more updates next week