Club Unicornio: Emprendimientos de mil millones de dólares

Welcome To The Unicorn Club: Learning From Billion-Dollar Startups

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Editor’s note: Aileen Lee is founder of Cowboy Ventures, a seed-stage fund that backs entrepreneurs reinventing work and personal life through software. Previously, she joined Kleiner Perkins Caufield & Byers in 1999 and was also founding CEO of digital media company RMG Networks, backed by KPCB. Follow her on Twitter @aileenlee. 

Many entrepreneurs, and the venture investors who back them, seek to build billion-dollar companies.

Why do investors seem to care about “billion dollar exits”? Historically, top venture funds have driven returns from their ownership in just a few companies in a given fund of many companies. Plus, traditional venture funds have grown in size, requiring larger “exits” to deliver acceptable returns. For example – to return just the initial capital of a $400 million venture fund, that might mean needing to own 20 percent of two different $1 billion companies, or 20 percent of a $2 billion company when the company is acquired or goes public.

So, we wondered, as we’re a year into our new fund (which doesn’t need to back billion-dollar companies to succeed, but hey, we like to learn): how likely is it for a startup to achieve a billion-dollar valuation? Is there anything we can learn from the mega hits of the past decade, likeFacebook, LinkedIn and Workday?

To answer these questions, the Cowboy Ventures team built a dataset of U.S.-based tech companies started since January 2003 and most recently valued at $1 billion by private or public markets. We call it our “Learning Project,” and it’s ongoing.

With big caveats that 1) our data is based on publicly available sources, such as CrunchBase, LinkedIn, and Wikipedia, and 2) it is based on a snapshot in time, which has definite limitations, here is a summary of what we’ve learned, with more explanation following this list*:

Learnings to date about the “Unicorn Club”:

1. We found 39 companies belong to what we call the “Unicorn Club” (by our definition, U.S.-based software companies started since 2003 and valued at over $1 billion by public or private market investors). That’s about .07 percent of venture-backed consumer and enterprise software startups.

2. On average, four unicorns were born per year in the past decade, with Facebook being the breakout “super-unicorn” (worth >$100 billion). In each recent decade, 1-3 super unicorns have been born.

3. Consumer-oriented unicorns have been more plentiful and created more value in aggregate, even excluding Facebook.

4. But enterprise-oriented unicorns have become worth more on average, and raised much less private capital, delivering a higher return on private investment.

5. Companies fall somewhat evenly into four major business models: consumer e-commerce, consumer audience, software-as-a-service, and enterprise software.

6. It has taken seven-plus years on average before a “liquidity event” for companies, not including the third of our list that is still private. It’s a long journey beyond vesting periods.

7. Inexperienced, twentysomething founders were an outlier. Companies with well-educated, thirtysomething co-founders who have history together have built the most successes

8. The “big pivot” after starting with a different initial product is an outlier.

9. San Francisco (not the Valley) now reigns as the home of unicorns.

10. There is very little diversity among founders in the Unicorn Club.

Some deeper explanation and additional findings:

1) Welcome to the exclusive, 39-member Unicorn Club: the Top .07%

• Figuring out the denominator to unicorn probability is hard. The NVCA says over 16,000 internet-related companies were funded since 2003; Mattermark says 12,291 in the past 2 years; and theCVR says 10-15,000 software companies are seeded each year. So let’s say 60,000 software and internet companies were funded in the past decade. That would mean .07 percent have become unicorns. Or, 1 in every 1,538.
• Takeaway: it’s really hard, and highly unlikely, to build or invest in a billion dollar company. The tech news may make it seem like there’s a winner being born every minute — but the reality is,the odds are somewhere between catching a foul ball at an MLB game and being struck by lightning in one’s lifetime. Or, more than 100x harder than getting into Stanford.
• That said, these 39 companies have shown it’s possible  – and they do offer a lot that can be learned from.
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2) Facebook is the super-unicorn of the decade (by our definition, worth >$100B). Every major technology wave has given birth to one or more super-unicorns

• Facebook is what we call a super-unicorn: it accounts for almost half of the $260 billion aggregate value of the companies on our list. (As such, we excluded them from analysis related to valuations or capital raised)
• Prior decades have also given birth to tech super-unicorns. The 1990s gave birth to Google, currently worth nearly 3x Facebook; and Amazon, worth ~ $160 billion. The 1980’s: Cisco. The 1970s: Apple (currently the most valuable company in the world), Oracle, and Microsoft; and Intel was founded in the 1960s.
• What do super-unicorns have in common? The 1960s marked the era of the semiconductor; the 1970s, the birth of the personal computer; the 1980s, a new networked world; the 1990s, the dawn of the modern Internet; and in the 2000s, new social networks were built.
• Each major wave of technology innovation has given rise to one or more super-unicorns — companies that could change your life to work at or invest in, if you’re not lucky/genius enough to be a co-founder. This leads to more questions. What is the fundamental technology change of the next decade (mobile?); and will a new super-unicorn or two be born as a result?

Only four unicorns are born per year on average. But not all years have been as fertile:

• The 38 companies on our list outside of Facebook are worth about $3.6 billion on average. This might feel like a letdown after reading about super-unicorns, but remember, startups generally start as ideas that most people think are crazy, dumb, or not that important (remember when people ridiculed Twitter as the place to share that you were eating a ham sandwich?). Only after many years and extraordinary good fortune, a few grow into unicorns, which is extremely rare and pretty awesome.
• Unicorn founding was not front-end-loaded in the past decade. The best year was 2007 (8 of 36); the fewest were born in 2003, 2005 and 2008 (as far as we know today; there are none yet founded in 2011 to today). From this snapshot in time, it’s not clear whether the number of unicorns per year is changing over time.
• It would be interesting to plot the trajectory of unicorns over time  — which become more valuable and which fall off the list — and to understand the list of potential unicorns-in-waiting, currently valued at <$1 billion. Hopefully for a future post.

  
  

  
  

3) Consumer-oriented companies have created the majority of value in the past decade

Venture investing into early-stage consumer tech companies has cooled significantly in the past year. But it’s worth realizing that:

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• Three consumer companies — Facebook, Google and Amazon — have been the super-unicorns of the past two decades.
• There are more consumer-oriented than enterprise unicorns, and they have generated more than 60 percent of the aggregate value on our list outside of Facebook.
• Our list likely seriously underestimates the value of consumer tech. Of the 14 still-private companies on our list, 85 percent are consumer-oriented (e.g.Twitter, Pinterest, Zulily). They should see a significant step up in value if/when a liquidity event occurs, increasing the aggregate value of the consumer unicorns.

4) Enterprise-oriented unicorns have delivered more value per private dollar invested

• One reason why enterprise ventures seem so attractive right now: the average enterprise-oriented unicorn on our list raised on average $138 million in the private markets – and they are currently worth 26x their private capitalraised to date.
• The companies that seriously improved this metric are Nicira, Splunk andTableau, who all raised <$50 million in private markets and are worth $3.8 billion today on average.
• Plus Workday, ServiceNow and FireEye who are currently worth >60x the private capital raised. Wow.
• Contrary to conventional VC wisdom about enterprise companies requiring more early-stage capital, we didn’t see a difference in Series A dollars raised by enterprise versus consumer unicorns.

Consumer companies have delivered less value per private dollar invested

• The consumer unicorns have raised $348 million on average, ~2.5x more private capital than enterprise unicorns; and they are worth about 11x the private capital raised.
• Companies who raised lots of private money relative to their most recent valuation are Fab, Gilt Groupe, Groupon, HomeAway and Zynga.
• It may just take more capital to build a super successful consumer tech company in a “get big fast” world; and/or, founders and investors are guilty of over-capitalizing consumer Internet companies at too-high valuations in the past decade, driving lower returns for consumer tech investors.

5) Four primary business models drive the value and network effects help

• We categorized companies into four business models, which share fairly equally in driving value in aggregate: 1) E-commerce: the consumer pays for goods or services (11 companies); 2) Audience: free for consumers, monetization through ads or leads (11 companies); 3) SaaS:Users pay (often via a “freemium” model) for cloud-based software (7 companies); and 4) Enterprise: Companies pay for larger scale software (10 companies).
• None of the e-commerce companies on our list hold physical inventory as a key part of their business models. Despite that, e-commerce companies raised the most private dollars on average — delivering the lowest valuations vs capital raised, and likely driving the recent cool down in e-commerce investing.
• Only four of the 38 companies are mobile-first. Not surprising, the iPhone was only launched in 2007 and the first Android device in 2008.
• Another characteristic almost half of the companies on our list share: network effects. Network effects in the social age can help companies scale users dramatically, seriously reducing capital requirements (YouTube and Instagram) and/or increasing valuations quickly (Facebook).

6) It’s a marathon, not a sprint: it takes 7+ years to get to a “liquidity event”

• It took seven years on average for 24 companies on our list to go public or be acquired, excluding extreme outliers YouTube and Instagram, both of which were acquired for over $1 billion in about two years since founding.
• 14 of the companies on our list are still private, which will increase the average time to liquidity to eight-plus years.
• Not surprisingly, enterprise companies tend to take about a year longer to see a liquidity event than consumer companies
• Of the nine companies that have been acquired, the average valuation was $1.3 billion; likely a valuation sweet spot for acquirers to take them off the market before they become less affordable

7) The twentysomething inexperienced founder is an outlier, not the norm

• The companies on our list were generally not founded by inexperienced, first-time entrepreneurs. The average age on our list of founders at founding is 34. Yes, the founders of Facebook were on average 20 when it was founded; but the founders of LinkedIn, the second-most valuable company on our list, were 36 on average; and the founders of Workday, the third-most valuable, were 52 years old on average.
• Audience-driven companies like Facebook, Twitter and Tumblr have the youngest founders, with an average age at founding of 30 (seemingly imminent unicorn Snapchat will lower this average). SaaS and e-commerce founders averaged aged 35 and 36; enterprise software founders were 38 on average at founding.

Co-founders with years of history together have driven the most successes

• A supermajority (35) of the unicorns on our list have chosen to blaze trails with more than one founder — with three co-founders on average. The role of co-founders varies from Co-CEOs (Workday) to technical co-founders who live in a different country (Fab.com). Looking at co-founder equity stakes at liquidity might be another interesting way to look at founder status, which we have not done.
• Ninety percent of co-founding teams comprise people who have years of history together, either from school or work; 60 percent have co-founders who worked together; and 46 percent who went to school together.
• Teams that worked together have driven more value per company than those who went to school together.
• Only four teams of co-founders didn’t have common work or school experience, but all had a common thread. Two were known and introduced by the investors at founding/funding; one team was friends in the local tech scene; and one team met while working on similar ideas.
• That said, the four unicorns with sole founders (ServiceNow, FireEye, RetailMeNot, Tumblr — half enterprise, half consumer) have all had liquidity events and are worth more on average than companies with co-founders.

  
  

Most founding CEOs scale their companies for the long run. But not all founders stay for the whole journey

• An impressive 76 percent of founding CEOs led their companies to a liquidity event, and 69 percent are still CEO of their company, many as public company CEOs. This says a lot about these founders in terms of their long-term vision, commitment and their capability to scale from almost nothing in terms of money, product, and people, to their current unicorn company status.
• That said, 31 percent of companies did make a CEO change along the way; and those companies are worth more on average. One reason: about 40 percent of the enterprise companies made a CEO change (versus 25 percent of consumer companies). And all CEO changes prior to a liquidity event were at enterprise companies that added seasoned, “brand-name” leaders to their helms prior to being bought or going public.
• Only half of the companies on our list show all original founders still working in the company. On average, 2 of 3 co-founders remain.

Not their first rodeo: founders have lots of startup and tech experience

• Nearly 80 percent of unicorns had at least one co-founder who had previously founded a company of some sort. Some founders showed their entrepreneurial DNA as early as junior high. The list of prior startups co-founded spans failure and success; and from tutoring and bagel delivery companies, to PayPal and Twitter.
• All but two companies had founders with prior experience working in tech/software; and only three of 38 did not have a technical co-founder on board (HomeAway and RetailMeNot, founded as industry rollups; and Box, founded in college).
• The majority of founding CEOs, and 90 percent of enterprise CEOs have technical degrees from college.

An educational barbell: many “top 10 school grads” and dropouts

• The vast majority of all co-founders went to selective universities (e.g. Cornell, Northwestern, University of Illinois).  And more than two-thirds of our list has at least one co-founder who graduated from a “top 10 school.”
• Stanford leads the roster with an impressive one-third of the companies having at least one Stanford grad as a co-founder. Former Harvard students are co-founders in eight of 38 unicorns; Berkeley in five; and MIT grads in four of the 38 companies.
• Conversely, eight companies had a college dropout as a co-founder. And three out of five of the most valuable companies (Facebook, Twitter and ServiceNow) on our list were or are led by college dropouts, although dropouts with tech-company experience, with the exception of Facebook.

8) The “big pivot” is also an outlier, especially for enterprise companies

• Few companies are the result of a successful pivot. Nearly 90 percent of companies are working on their original product vision.
• The four “pivots” after a different initial product were all in consumer companies (Groupon, Instagram, Pinterest and Fab).

9) The Bay Area, especially San Francisco, is home to the vast majority of unicorns

• Probably not a surprise, but 27 of 39 on our list are based in the Bay Area. What might be a surprise is how much the center of gravity has moved to San Francisco from the Valley: 15 unicorns are headquartered in San Francisco; 11 are on the Peninsula; and one is in the East Bay.
• New York City has emerged as the No. 2 city for unicorns, home to three. Seattle (2) and Austin (2) are the next most-concentrated cities for unicorns.

10) There is A LOT of opportunity to bring diversity into the founders club

• Only two companies have female co-founders: Gilt Groupe and Fab, both consumer e-commerce. And no unicorns have female founding CEOs.
• While there is some ethnic diversity on founding teams, the diversity of founders in the unicorn club is far from the diversity of college grads with relevant technical degrees. Feels like some important records to break.

So, what does this all mean?

For those aspiring to found, work at, or invest in future unicorns, it still means anything is possible. All these companies are technically outliers: they are the top .07 percent. As such, we don’t think this provides a unicorn-hunting investor checklist, i.e. 34-year-old male ex-PayPal-ers with Stanford degrees, one who founded a software startup in junior high, where should we sign?

That said, it surprised us how much the unicorn club has in common. In some cases, 90 percent in common, such as enterprise founder/CEOs with technical degrees; companies with 2+ co-founders who worked or went to school together; companies whose founders had prior tech startup experience; and whose founders were in their 30s or older.

It is also good to be reminded that most successful startups take a lot of time and commitment to break out. While vesting periods are usually four years, the most valuable startups will take at least eight years before a “liquidity event,” and most founders and CEOs will stay in their companies beyond such an event. Unicorns also tend to raise a lot of capital over time — way beyond the Series A. So these founding teams had the ability to share a compelling company vision over many years and rounds of fundraising, plus scale themselves and recruit teams, despite economic ups and downs.

We tip our hats to these 39 companies that have delighted millions of customers with fantastic products and generated so much value in just 10 years despite a crowded startup environment. They are the lucky/genius few of the Unicorn Club – and we look forward to learning about (and meeting) those who will break into this elite group next.

————-

*  Many thanks to the Cowboy crew who helped with this, including Noah Lichtenstein, Meg He, Lauren Kolodny, Kim Stromberg and Jennifer Gee.

** Our data is based on information in news articles, company websites, CrunchBase, LinkedIn, Wikipedia and public market data. It is also based on a snapshot in time (as of 10/31/13) and current market conditions, which are currently fairly “hot.”

*** Yes we know the term “unicorn” is not perfect – unicorns apparently don’t exist, and these companies do – but we like the term because to us, it means something extremely rare, and magical

**** By our rough definition, consumer companies = e-commerce + audience business models; enterprise companies = Software as a Service + Enterprise business models

***** Our definition of “top 10 school” is according to US News & World Report.

[Illustration: Bryce Durbin]

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Por que a los preadolescentes no les gusta Facebook

Some 13-Year-Olds Tell Us Why They Think Facebook Stinks

JILLIAN D'ONFRO

Last week, we learned some big news from Facebook's earnings report: Teens don't want to spend their time on Facebook anymore. 

Although Facebook CFO David Ebersman said almost all teens in the U.S. have an account, the daily engagement of younger teens has dropped.  

Why? We decided to touch base with some younger teens to find out why they personally think that Facebook stinks. 

We interviewed them separately, but both of the 13-year-olds, Lucas and Aiden, brought up the same issue almost immediately: 

"Well, a lot of the moms are getting on Facebook," Lucas says, "And that definitely has something to do with it."

"We don’t want to be in the same space as our moms," Aiden admits.  

Both also mentioned that they cut back on FB because all their friends had done the same thing. 

Aiden says that he created his Facebook account before he had a cell phone. On a computer, FB was his best choice, but now that he has a phone, he would rather check out other cooler options, like Snapchat, Vine, and Instagram.

"Facebook takes more time to create and read," he said. "And words are less important than images and videos."

Lucas says that although pretty much everyone he knows has an account, only about 25% of them still use Facebook regularly. 

He likes Vine and Instagram because you can just scroll through quickly when you're bored, looking for funny or interesting stuff but not having full conversations. He sees Facebook more for communicating personally with friends, but even then it's not his first choice. 

"You’d probably just text them, or a lot of people use Kik," he said. "You can use it with an iPod."

Kik is a messaging service like WhatsApp. It's by no means new, but both Lucas and Aiden said it's very popular with their age-group right now. (Interestingly, neither mentioned Twitter throughout our conversations.)

A recent Pew study shows that 74% of teenagers are mobile Internet users, and Lucas and Aiden both said that almost everyone they know has at least some kind of cell phone.

"I used to check Facebook a lot before I got a smartphone, and now I don’t really check it at all," Aiden said.

Lucas said that the people he sees using Facebook the most are the ones who changed schools; it's still a good way to catch up on someone's life you don't see very often. 

"I wouldn’t de-activate," Aiden said. "It’s still a way to connect, I just won't check it often."

Business Insider

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Tablet norcoreana sorprende

On North Korea’s surprisingly amazing tablet you can play Angry Birds and read Dickens

By Lily Kuo

The Samjiyon tablet isn't likely to be sold out. AP Photo/Vincent Yu

“After a few days of intensive use I can say that this is one of the few cases in my career as a consumer when I got more for my money than I had expected.” Rüdiger Frank, a professor at the University of Vienna and frequent visitor to North Korea, bought a Samjiyon SA-70, the only tablet made in North Korea, at a shop in Pyongyang last month, for €180 (about $240). He has now posted a lengthy review of the device, named after the location of a Korean-Japanese battle in 1939. And he has some remarkably nice things to say about it.

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When we learned just over a year ago that North Korea had developed a tablet that runs on Google’s popular Android operating system, we didn’t take the device too seriously. (For one, you can’t get online with it.) But Frank found 488 pre-installed applications like Angry Birds, a Siri-esque speech-recognition program, and a library that includes foreign books like Dombey and Son by Charles Dickens, Gone with the Wind, and Honoré de Balzac’s Eugénie Grandet.

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Frank said he bought the Samjiyon for €180 (about $240) in Pyongyang.38north.org

The tablet also included a Microsoft Office package, with Word, Excel and PowerPoint. According to Frank, the weakest feature of the device—which came with with 4 GB  of memory and a 1-GHz processor—was that its seven-inch screen has a resolution of only 800 by 480 pixels. Google’s Nexus 7, the same size, has 1920 by 1200 pixels.

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The tablet’s landing page.38north.org

Frank’s account matches that of a tourist to Pyongyang who bought another version of the Samjiyon for about $200 earlier this year. The tourist, who gave his name only as Michael, said using the device to play games, take photos, or open different apps was a fairly fluid experience. “In terms of responsiveness and speed, it can almost compete against the leading tablets,” he told IDG News in July.

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The tablet shouldn’t be taken as a sign that life has gotten dramatically better for millions of poor North Koreans. Only a small minority can afford it, mostly elite officials and others profiting from an emerging underground economy that’s allowing them to buy mobile phones or refrigerators.

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The Samjiyon, however, is a window into the country’s development and political priorities. Frank recommends studying things like the pre-installed dictionaries and books, many of them about Kim Il Sung, for clues about the socialist country’s evolving ideology. An “IT dictionary” could demonstrate the country’s focus in terms of technology—or how far behind it is. The dictionary includes an entry for  “Anna Kournikova”—a computer virus, not the tennis player, from 12 years ago. And it includes mentions of Apple and Yahoo, but not Google.

Quartz

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Cómo Silicon Valley puede matar el emprendedorismo

How Silicon Valley can kill your startup

In the last year I have lived in San Francisco, Toronto, New York City and Vancouver, where our team currently resides.

Our team comes from a small city in Canada, called Saskatoon, where startups are few and far between. Dealflow, angel investing, strategic partners, mentors and basic startup information is scarce. The angel investing group that once was has disbanded and is just getting started again. The fabric and tools necessary to scale, be disruptive and understand the true ideology of what it takes to build a startup, dramatically pales in comparison to the ‘Valley’ and ‘Alleys’ of the world.

It was evident that if our team wanted to build a start up, grow past a regional market and compete on a world stage we would need access to a combination of mentors, capital and talent. As bright-eyed eager founders so often do, we packed our bags and headed to the riches of Silicon Valley.

The energy of the valleys ecosystem is intoxicating and energetic. The world was our oyster –– with over a million dollars in revenue in our local market, we envisioned our bootstrapped startup would be easily fundable! The first shock to the system came with the realization that our company was a “me too” product in a market full of dominators that were well funded and had, in fact, gone through multiple rounds of funding.

The sobering truth was that these people knew a lot more and our team was behind the 8 ball. They knew the processes, and the basics of how to put together a deck, executive summaries, and more. They understood importance of ESOP and how it can prevent an option pool shuffle. We felt like high school kids who were late to the dance.

We needed to learn quickly, and could not have asked for a better place in the world to get educated.  We are indebted for the time we had in the Valley: It was an environment where people genuinely want to help, educate, empower and where sharing knowledge is a pay it forward custom of life.

The lessons we learned from the Valley equipped us with a new foundation, toolset and skills required to pivot and launch a disruptive product. With this new lease of knowledge we were accepted into one the most lucrative accelerators in Canada where we built the first crowd-funding platform for events. As a result, we created further traction, acquired additional mentors, raised funds and continued to attract talent.

The Valley wonder dust has settled, and looking back, I realize that it was actually quite distracting and limiting. In fact, I would argue now that it is the the worst place in the world to run your startup.

I know what you are thinking; how can that be? Don’t misconstrue my words because I’m not slighting the Valley. I found that it’s a great place for deal flow, relationship building, founder dating and idea vetting.

However, if you are a seed stage company post-funding, take my advice and get the heck out of dodge for these reasons:

1. Talent War – You will need to hire talent, and there is a veritable talent war in Silicon Valley. You will need to compete for engineers with Facebook, Twitter, and Google, which offer heated toilet seats, lap pools, napping pods, executive chefs and of course salaries. It’s a hard sell to bring people on board when you have to court them with the luxuries of a ramen-filled diet.
2. Money Pit – A company’s burn is their oxygen, you die without it, so not spending the burn on living expenses means you live another day. The Valley and New York are very expensive and finding a decent rental space is another war!
3. Free Cash – There are a lot of startups taking full advantage of their state/home/or country incentives. If you are from a small town you may have to leave it in order to chase funding but you don’t necessarily have to relocate. In Canada we have incentives that give startups a massive competitive advantage.
4. Distractions – Top ten lists, meetups, conferences, hackathons, demo days, the list goes on and these distractions are in abundance in the Valley. The only thing that matters is staying focused, building a strong team, disruptive product, traction and going after a large market. My advice: Work on product, raise capital, build users.

Our travels taught us that the Valley and Alley are the best places and the worst places to build your company as they require a lot of burn and can be distracting.

These locations do have some of the best and brightest tech influencers of our time and provided our company the structure and foundation required to journey past  “The crash of ineptitude.”

However, after you’ve raised seed funding, you have a limited amount of chances to get product market fit and scale. Take my advice, find a cheap city that has the best of all the worlds like we did in Vancouver. Stop talking about your startup and get shit done before you run out oxygen and die.

Venture Beat

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La guerra termonuclear judicial que anticipaba Steve Jobs: Todos contra todos

Judgment day for Android: Apple, Microsoft file lawsuit against Google, Samsung

This is what Steve Jobs meant when he threatened to go nuclear against Android.

Yesterday, on Halloween, a consortium of companies including Microsoft, Apple, Sony, Ericsson, and BlackBerry filed lawsuits again Android manufacturers such as Samsung, HTC, LG, Huawei, Asustek, and ZTE, as well as other Android manufacturers. All the lawsuits target Google as well, if only indirectly, and one mentions the company by name, saying its core money-maker, Adwords, violates a 1998 patent.

Yesterday, the latest smartphone marketshare reports showed that Google’s Android mobile operating system has attained a record 81 percent share, and that Google’s app store, Google Play, now drives 25 percent more downloads than Apple’s, and is catching up in revenue.

Essentially, having failed to compete in the marketplace, Apple and Microsoft are choosing to compete in the courts.

Apparently, they haven’t learned anything from the recent past, in which Apple won a billion-dollar judgment against Samsung that has since been whittled down, reduced, appealed, and essentially stuck in legal limbo. One tremendous accomplishment of that lawsuit, however, has been that many lawyers have gotten much richer.

The lawsuit stems from over 6,000 patents acquired by Apple, Microsoft, and others from the bankrupt early mobile innovator, Nortel, for $4.5 billion in 2011, and amassed in a holding company that the companies’ executives, in an adolescent fit of testosterone overdosing, dubbed Rockstar Bidco. Google was also bidding for the patent portfolio — it was the first bidder, at $900 million —  but lost that battle.

At the time of that bidding war, there were already 45 patent lawsuits against Android in various shapes and forms. Today, there are many more. And Google, probably, knew at that moment that this day was coming.

The Google lawsuit cites United States Patent No. 6,098,065, won by Nortel originally, for “matching search terms with relevant advertising.” In other words, this is not just a fight against Android. Rockstar Bidco — and by extension Apple and Microsoft — are firing directly at the very basis of Google’s existence, its very lifeblood, and the source of all the revenue that enables it to build and give away the world’s best or second-best mobile operating system essentially for free: advertising.

It’s genius, really. Why attack your enemy’s toes when you can go straight for the heart?

And the companies say that by bidding on the Nortel patents, Google was essentially admitting that it was infringing them:

Google was aware of the patents-in-suit at the time of the auction.

Google placed an initial bid of $900,000,000 for the patents-in-suit and the rest of the Nortel portfolio. Google subsequently increased its bid multiple times, ultimately bidding as high as $4.4 billion. That price was insufficient to win the auction, as a group led by the current shareholders of Rockstar purchased the portfolio for $4.5 billion.

Despite losing in its attempt to acquire the patents-in-suit at auction, Google has infringed and continues to infringe the patents-in-suit.

That’s really going too far — the patent portfolio includes many mobile-relevant patents that any company in the space would love to have — but it may play well in court. The Adwords-relevant patent was issued in December, 1998. Google was founded in September of that year, and currently earns $50+ billion annually based on technology that, on the surface, appears to infringe the patent.

(Of course, the patent may also be obvious — at least, it is in retrospect.)

The Samsung lawsuit cites seven patents that Rockstar Bidco, and by extension, Apple, Microsoft, Sony, and Ericsson, say Samsung infringes. They include U.S. Patent No. 6,765,591, on virtual private network technology, a user interface patent, and a seemingly impossibly broad U.S. Patent No. 5,838,551, which covers an “Electronic Package Carrying an Electronic Component and Assembly of Mother Board and Electronic Package.”

The lawsuit is extremely comprehensive, citing no fewer than 118 claims of infringement on Samsung’s part, and no fewer than 21 “prayers for relief,” in the somewhat archaic language of the court. Those prayers, which Apple has been offering up fervently for years now, include that Samsung be found guilty of infringement, be forced to pay damages — including triple damages for willful infringement — and either a permanent injunction or a “compulsory ongoing licensing fee.”

Products cited include the Galaxy S III, the Galaxy family of tablets, and others.

In other words, this is likely to be the definitive battle that shapes Android and the future of mobile technology in the U.S. and abroad. Google will likely strike back — every large enterprise has patents that just about every company could be conceivably infringing — and we’ll likely enter a long, protracted, messing, and boring sideshow of legal shenanigans that advance the world of technology not a single bit, but continue to enrich lawyers.

And may, eventually, result in licensing fees on Android that will make the free operating system slightly less free.

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Internet, el enorme mercado donde todos vamos a estar

Here's Why 'The Internet Of Things' Will Be Huge, And Drive Tremendous Value For People And Businesses

EMILY ADLER - Business Insider

The Internet Of Things represents a major departure in the history of the Internet, as connections move beyond computing devices, and begin to power billions of everyday devices, from parking meters to home thermostats. 

Estimates for Internet of Things or IoT market value are massive, since by definition the IoT will be a diffuse layer of devices, sensors, and computing power that overlays entire consumer, business-to-business, and government industries. The IoT will account for an increasingly huge number of connections: 1.9 billion devices today, and 9 billion by 2018. That year, it will be roughly equal to the number of smartphones, smart TVs, tablets, wearable computers, and PCs combined.

In a new report from BI Intelligence, we look at the transition of once-inert objects into sensor-laden intelligent devices that can communicate with the other gadgets in our lives. In the consumer space, many products and services have already crossed over into the IoT, including kitchen and home appliances, lighting and heating products, and insurance company-issued car monitoring devices that allow motorists to pay insurance only for the amount of driving they do.  

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Here are the top business-to-business and government applications:

• Connected advertising and marketing. Cisco believes that this category (think Internet-connected billboards) will be one of the top three IoT categories, along with smart factories, and telecommuting support systems.
• Intelligent traffic management systems. Machina research, in a paper prepared for the GSM Association, sees $100 billion in revenue by 2020 for applications such as toll-taking and congestion penalties. A related revenue source will be smart parking-space management, expected to drive $30 billion in revenue.
• Waste management systems. In Cincinnati, residential waste volume fell 17% and recycling volume grew by 49% through use of a “pay as you throw” program that used IoT technology to monitor those who exceed waste limits.
• Smart electricity grids that adjust rates for peak energy usage. These will represent savings of $200 billion to $500 billion per year by 2025, according to the McKinsey Global Institute.
• Smart water systems and meters. The cities of Doha, São Paulo, and Beijing have reduced leaks by 40 to 50% by putting sensors on pumps and other water infrastructure.
• Industrial uses including Internet-managed assembly lines, connected factories, and warehouses, etc

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Otra (fuerte) adquisición de una startup en la nube

CSC just acquired cloud startup ServiceMesh

CSC just acquired cloud management startup ServiceMesh for an unspecified sum.

ServiceMesh is a Santa Monica-based startup that aims to give large enterprises a bit more control over the cloud. The company raised $15 million in venture capital from Ignition Partners in 2011 to compete with giants like IBM and HP. It was founded in 2009.

CSC has not revealed the amount it paid for ServiceMesh, although we hear from several sources familiar with the matter that it’s in the $325 million range.

The press release announcing the acquisition is filled with someincomprehensible jargon. Simply put, the buy-up will help an IT infrastructure giant like CSC work with clients who are running applications on different clouds. Increasingly, we’re seeing companies adopt a flexible, hybrid cloud approach.

In August, CSC bought data management startup InfoChimps, which suggests that the company is ramping up its M&A and is keeping a close eye on fast-growing enterprise startups.

This is the second business software acquisition announced in the past 30 minutes. Neustar just revealed that it has acquired Aggregate Knowledge for $119 in cash consideration.

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