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A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
May 19th, 2006


By Brent Holliday
Greenstone Venture Partners

There Be Dragons

“I still don't know what I was waiting for
And my time was running wild
A million dead-end streets
Every time I thought I'd got it made
It seemed the taste was not so sweet” – David Bowie, Changes

Is it just me, or is 2006 turning out to be a year of enormous change?  It’s not necessarily that a lot of new things are happening… it just seems to me that a lot of things that have been predicted or slowly ramping up have now started to happen in earnest.  Look around:

  • The two and a half year bull run of the stock markets seems to be ending as inflation has entered the realm of the real and not of the possible.  The various central banks must now slow the economies with higher rates.  Your home is worth as much in Vancouver as it will be for the next few years.  This is the top of the roller coaster ride for now, enjoy the dip!
     
  • That movement in the earth you felt Monday morning was the announcement that Skype was making all Skype Out calls in North America free.  Zero.  All the predictions and talk of the end of the local and long distance phone company… well, let’s just say it isn’t arm-waving hysteria.  It’s really happening.  Now what if municipal Wi-Fi really starts to roll out, bringing broadband to the masses… What exactly does a telephone company sell anymore?  Wireless? TV? If the government becomes an ISP, effectively making the Internet a utility, like gas or electricity, then what does Telus do? 
     
  • The stalwart tech companies of the 1990s are now shining examples of companies gone wrong: Dell, Oracle, Microsoft, Intel and Cisco.  The new darlings of the tech world are Google, HP, SAP, AMD and Apple.  In the blink of an eye, it seems, some of the best managed companies became losers. Is it because of incompetence or is it because the markets have shifted and the old guard have not yet adapted…
     
  • For twenty years, companies and lucky sales people made lots of money selling client-server enterprise software.  Big money, big implementation, big support and big commissions.  But growing since Linux arrived in the late 90’s and now hitting prime time with robust web applications and software as a service we have… free software.  Hard to get a commission on that.  Open licenses and open source are flipping business models for software on its ear.  SGI is dead (partly) because of Linux and Sun is looking around for revenue where Unix used to be and where Java must be free.  Oracle is buying others to grow revenue because its core database market is eroding fast under the weight of mySQL and jBoss.  Software is a changin’ and some will win under the new model of applications as services and others will cling to old models and suffer.
     
  • Web 2.0 and AJAX are happening now and the Internet never looked so good. The community models, prevalence of blogging and existence of an ad-based revenue model appear to make this evolution of the Net a little more substantive than the dotcom era.  But on the flip side, hysteria is driving some bubble talk that sounds a lot like 1999.  According to those attending the inaugural Mesh conference last week in Toronto, the CEO of Rocketboom, with about 100,000 visits a day to the video blog site, says that he thinks the company is worth $500M or more today… in other words, more than Myspace.com.  Just one of many deluded figures out there.
     
  • Huge changes are afoot in the video/TV world.  YouTube has become a phenomenon and Google Video is not far behind.  The saturation of Flash Player and its new capabilities to embed and play video from any enabled browser have spawned a thousand ways to distribute your own video or someone else’s.  This should be the last summer of people clogging your e-mail with attached video segments and will instead point you to URLs to see it streamed.  TV syndication of content appears to be headed for downloads instead of 4:30pm on weekdays.  Making your own content has never been easier or faster to distribute.  The advertisers that supported 60 years of television are now thinking more about a new medium…

Like I said, these are not prognostications.  These are real changes happening today.  And I am sure there are more to come this year. 

Many BC companies appear to be in the right place as the changes I have described here are playing out.  For instance, on the just mentioned video distribution changes, Pixpo just got funded and is already a community from its How2Share days.  Pixpo and about 50 other companies are out there, but the profound change is happening today and there is lots of room for companies to maneuver and make money.  From the change in voice services I described through the Skype announcement, Eqo Communications has Skype over mobile services launched to the market.  In the community/Web2.0 world, AirG is defining a whole mobile social networking space worldwide and appears to be doing extremely well at it.  Many local software companies have figured out how to deliver web based applications to the enterprise after years of getting over the hurdles of reliability, location of company data, security and changing the whole notion of paying too much money up front for software. 

Sadly, there are BC companies, as there are everywhere, that are not ready for these changes and may get bitten. 

These are interesting days, non?  Depending on who you are and what you do for a living, this could be scary or exciting.  Or both.  Here’s an appropriate quote for the times that I came across from someone named King Whitney Jr.: “Change has a considerable psychological impact on the human mind. To the fearful it is threatening because it means that things may get worse. To the hopeful it is encouraging because things may get better. To the confident it is inspiring because the challenge exists to make things better.” 

What Do You Think? Talk Back To Brent Holliday

 



Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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