Monday, June 26, 2006

Patents spooky side

Ahhh.. Patent trolls. It takes one of the big brains who've made millions and left MicroSoft to do it at this level. I had a very interesting experience from my time at Motorola that was similar to this. I'll go into more detail after you read this

From TechDirt (

Nathan Myhrvold's Bait And Switch Plan On Patent Hoarding

from the can-you-say-greenmail? dept

We've written about Nathan Myhrvold's dangerous plans to put hundreds of millions of dollars into hoarding patents many times before. Business Week is now running yet another article that tries to get to the heart of Myhrvold's plans -- though his company, Intellectual Ventures is being quite secretive. The article does discuss his "invention sessions" where he brings together a bunch of smart folks to brainstorm -- where the whole conversation is recorded and monitored by patent lawyers looking for anything they can file patents on. However, what's much more interesting is the story of how Myhrvold pulled a total bait-and-switch on the many big tech companies who represent his investors. The original business plan for Intellectual Ventures was to create a "Patent Defense Fund." The idea was to buy up all the available patents from the bursting dot com bubble and offer to license it to companies to protect them from patent infringement lawsuits from others using the typical nuclear stockpiling defense. However, these days, the company no longer discusses the patent defense fund. Instead, it refers to many of its own investors as "the patent infringers lobby." As the article suggests, it seems like the company basically convinced these companies to fund it based on this "defense fund" plan, by making it clear if they didn't invest, they would be the first targets for future lawsuits. In the meantime, would you trust any company that insists the patent system is just fine -- but doesn't seem to understand the history of innovation?

Spooky eh? But interestingly, this is alot more common than you might think. I worked for Motorola back in the 90's for a few years and had an experience similar to what's described in the businessweek article.

A group of us, mostly technical, a few marketing, went to a remote hunting lodge in Wisconsin. About 50 people with 3 Motorola patent lawyers. We spent an entire week doing nothing, all day, but coming up with ideas related (and many not related) the area we were working in (high speed wireless internet.. what we called at the time 4G). I think we walked out with about 400 potentials of which 150 were already written up by Friday afternoon when we left.

And that was one group of engineers out of a company with 10's of thousands. This was a regular practice. The reason for this was Motorola is a patent machine. As is IBM and several other technology rich companies in the US (and, interestingly, Japan.. who participates in this ritual in a similar way).

They don't actually build any of this stuff. They just apply for the patents so they can own the intellectual property.

These companies use these patents as a form of capital. They use it to get other companies with patents they want to cross license at no charge. To shut down competitors (especially little ones). And to protect themselves from people who might come up with new ideas (and actually implement them.. making them real) so they can't compete with the 'big' company and it's unused patent library. And, of course, they license the patents producing big money for the company. Last time I looked- late 90's timeframe, Motorola was collecting a little over $1 Billion (with a b) ayear in license fee's. Just for the patents they'd filed.

What Myhrvold's doing is really no different. He's just acting like the big guys have been for many years, and he's trying to turn it into a standalone business.

What makes it distastful to people is that he's being pure about his purpose. The big guys who do it are mostly focused on protecting other lines of business and, oh yea.. there's a billion or so of pure cashflow here.. let's grab it. They aren't 'trolls' And I don't see any other way to look at Myhrvold's actions here.

Our patent system (and don't get me started on software and process patents) is in desperate need of being overhauled. This is just one example of why.

Raising Money for an internet startup...

This should be interesting. Our company, ClickCaster, has taken a slightly different route when it comes to how we fund outselves.

We looked at going the venture capital route late last year and talked to a couple of dozen VC's. We even had some indepth talks with 3 or 4. The conclusion we came to was, it just didn't make sense to take VC money.

Much has been written about this by various bloggers, but experiencing it first hand was particularly interseting. We looked at what it would take to build a Web 2.0 type company, in our case, a podcasting business focused on directory services and creation tools with a social networking wrapper and we decided that we'd have a hard time spending $5M (or $3M) of VC money. At least, if we were being responsible.

It just doesn't take that much money to do this anymore.

And once you take that money, you start to trap yourself into high valuations to get the kind of returns those VC's are looking for. That, in turn, limits our options down the road (if you have to sell for $200-300M vs. $30M to provide a decent return, well, you get the idea).

So it turns out that, as an early stage technology company, VC money was available, and tempting (very tempting) but.. was it smart?

Not so much.

So we decided to lay back and build the service out more. We opened a public beta in late 2005 and just kept building it. We'd take user feedback, and add it. We'd take our users bug reports (everyday average users are WAY better at finding bugs than a formal test team) and fix them. And, interestingly, the customers started coming to us.

So we're in the process now of building a pipeline of business that uses ClickCaster, our service, as a platform that many other businesses can use. Small independent folks looking to promote a service, or a type of music, or an idea. Professionals with valuable information people are willing to pay for (which drove our creation of a commerce engine for people to charge for a single podcast, or a subscription to a series of podcasts over time).

And now we find ourselves with several contracts either signed, or about to be signed, and some pretty interesting businesses ahead of us.

And NOW, we need some money.

But not alot of money. Just enough is really all we want. The amount we think we can do it with is less than $1M. Now, for us at this stage, that's real money, but to a VC, it's not really worth their time.

So, we decided Angel Investment was the way to go.

I've been talking to a local VC here in Boulder named Brad Feld for over a year now. Great guy, very smart, get's the space, fair, open and tough. Exactly the kind of guy you want involved in an Angel round.

He offered a couple of months ago to lead an angel investment round if it looked like we really had a business and told me to come to him if I was convinced this was something we could really make fly.

So we continued development and we watched our usage numbers grow. From a few thousand users in Jan to almost 100,000 in May with over a million page views. OK.. we've got something here.

And that's where we are now. About to start a round of Angel financing. This is a first for me. Raising the money directy, in chunks, from wealthy individual investors.

I'm going to keep a sort of running story on the progress of it here. I'll change names to protect the innocent, and, hopefully, learn something about the process.

Wednesday, June 21, 2006

Will a spiky-haired, camera-toting super-heroine... restore decency and common sense to the world of creative endeavor?

A documentary is being filmed. A cell phone rings, playing the “Rocky” theme song. The filmmaker is told she must pay $10,000 to clear the rights to the song. Can this be true? “Eyes on the Prize,” the great civil rights documentary, was pulled from circulation because the filmmakers’ rights to music and footage had expired. What’s going on here? It’s the collision of documentary filmmaking and intellectual property law, and it’s the inspiration for this new comic book. Follow its heroine Akiko as she films her documentary, and navigates the twists and turns of intellectual property. Why do we have copyrights? What’s “fair use”? Bound By Law reaches beyond documentary film to provide a commentary on the most pressing issues facing law, art, property and an increasingly digital world of remixed culture. This book is available under a Creative Commons Attribution-
NonCommercial-ShareAlike license

I'm all for intellectual property. People that create should be compensated. But what the hell? I mean CHARGING FOR A RINGTONE IN A DOCUMENTARY? Are you kidding me?

This is essential stuff. Everywhere we look, more and more things are being removed from the 'I can do that' list of life. Read this (comic) book. It's substantially more dense then Spider Man, but it's a much better read.

Download this comic book here:

Listen to an interview with the author (James Boyle) here:

All Your Data Are Belong To Us... -AT&T

From today's Wall Street Journal, stalwart of the business elite of America, comes the news that AT&T is changing it's privacy policy to explicitly allow them to share your private data with the US Government (or anyone they damn well please, thank you very much).

See (subscription required)

  • AT&T Revises Privacy Policy,
    Says It May Share Personal Data
    June 22, 2006

  • AT&T Inc. said it clarified its privacy policy for Internet and television customers to state explicitly that subscriber information is a business record belonging to the company and may be turned over to law enforcement in some cases.
  • AT&T also indicated that under its revised policy, which takes effect tomorrow and is being emailed to its more than seven million Internet customers, the San Antonio company plans to track customers' TV viewing habits. Some privacy advocates said they were troubled that the new policy appeared to be an attempt to give the company broader control over customer information.
  • The policy revisions come as AT&T, as well as other phone companies, come under criticism and as it faces lawsuits claiming AT&T had inappropriately assisted with government surveillance of customers. AT&T has denied wrongdoing.
  • AT&T's new policy states: "While your account information may be personal to you, these records constitute business records that are owned by AT&T. As such, AT&T may disclose such records to protect its legitimate business interests, safeguard others or respond to legal process."
  • AT&T's old policy wasn't as explicit, saying customer information may be shared "to respond to subpoenas, court orders or other legal process," but not specifically calling them business records owned by the company. The new policy also states that customers must agree to it before using the broadband and TV service. AT&T's old policy didn't include such a requirement.
  • AT&T said the revisions had been in the works since December and were aimed at clarifying legal wording for customers. The new policy is aimed at covering Internet subscribers as well as those of AT&T's new TV service, which it plans to expand in numerous markets later this year, said spokeswoman Tiffany Nels. AT&T regular phone customers, who make up the vast majority of its business, won't be affected by the updates to the policy for Internet and TV customers. The lawsuits didn't prompt the revisions, she said.
  • Some privacy advocates objected to the new policy. "The public needs to be deeply concerned that AT&T is asserting proprietary ownership over a record of what they do by calling it a business record," said Mark Cooper, director of research for the Consumer Federation of America.

Seeing a pattern here?

Kill network neutrality.
Musings from Scott: Do you care about Net Neutrality? You should.

Promise low cost high speed internet, charge for it, then don't deliver
Musings from Scott: Yes Virgina.. the Telecoms are screwing you

Now this. Your data belongs to us.

So first they promise a low cost fast network, charge you for it, but keep the money to fatten profits and buy million dollar routers that allow them to create specific levels of service on the public networks, then they make the net something they can productize and charge tiered service fees for and to top it off, they make sure you 'agree' (or they won't give you service) that all your data, usage, and information is something they own and that they can use as they see fit.

I doubt it was planned so blatantly, but I doubt they aren't aware of the benefits of these actions as well. I spent several years in the telco world as an executive in charge of strategy for services. This is not beyond them. And, based on my experience with many of the other executives that ran these companies, it's very much intended. These are businesses that view the telco space as a battleground. Fiercely competitive. They don't consider the internet a public utility and they most certainly don't consider us, the users, as anything other than revenue generation points.

Call me cynical, but you can also call me right.

Tuesday, June 20, 2006

Another reason DRM is a bad idea

This quick tidbit, from TechDirt, outlines yet another reason DRM, in it's current incarnation(s) is a bad idea.

Besides locking people into hardware (iTunes/iPod) and making it difficult to USE equipment you own (try moving a DRM's .WMA file to your MP3 player sometime), what if the store that 'validates' your DRM files goes away?

And Coke ain't no little company. It's just dropping this 'particular' business.

  • Latest Entertainment Digital Strategy: Incidental Obsolescence

  • from the hmmmmmmm dept

  • One of the Guardian blogs has a post involving the demise of the MyCokeMusic download store, at one time the biggest download store in Europe. It raises an interesting question, though not one the post actually hits on -- what happens for consumers when a seller of DRMed media files shuts down? With things like cassettes, LPs or CDs, their obsolence can really be determined only by a lack of available playback equipment. But for locked-down digital files, particularly those using a mechanism that has to go out and validate a license from a content provider or another authority, the closure of such an entity could render files unplayable. One of the downsides of current DRM implementations is a lack of interoperability. It's hard to imagine that those interoperability problems won't get worse, particularly as some of the music download sites that have popped up go out of business. Of course, with so much of modern entertainment strategy revolving around getting consumers to pay for the same content multiple times, it's hard to see Big Content really caring.
Check out the guys for stuff like this daily. VERY insightful group (if you don't mind a little vinegar with your news and opinions).

The lesson here? Don't buy DRM'd media, period.

How? Buy the CD (or DVD) and rip it. At least, then, you have control over your digital file and you've (legally) obtained your media.

Yes Virgina.. the Telecoms are screwing you

This guy has written a book on just how badly we've been served by the telecom industry in the US.

For a SHORT TIME a download of the book is free (Till June 26th) at this link:

It's big. 400 plus pages. But it makes the very clear case that our telecommunications companies can't be trusted to serve the public in any way other than maximizing profit.

Now, I have NOTHING against profit (or maximizing it). But if you're lying and stealing to do it.. well, not so much. If you take, you should also give. It's a balance (karma?) thing.

The Net Neutrality debate falls squarely into this area as well. Not only have these companies been scewing your for decades, they want still more.

Here's short overview of the book:

Bruce Kushnick, 718-238-7191

To Read this as a PDF file


$200 Billion Broadband Scandal

This book documents the largest fraud case in American history

The case is simple: Do you have a 45 Mbps, bi-directional service to your home, paying around $40? Do you have 500+ channels and can choose any competitive service? You paid an estimated $2000 for this product even though you did not receive it and it may never be available. Do you want your money back and the companies held accountable?

Background: Starting in the early 1990's, the Clinton-Gore Administration had aggressive plans to create the "National Infrastructure Initiative" to rewire ALL of America with fiber optic wiring, replacing the 100 year old copper wire. The Bell companies SBC, Verizon, BellSouth and Qwest, claimed that they would step up to the plate and rewire homes, schools, libraries, government agencies, businesses and hospitals, etc. if they received financial incentives.

The Commitment:

  • By 2006, 86 million households should have already been wired with a fiber (and coax), wire, capable of at least 45 Mbps in both directions, and could handle 500+ channels.
  • Universal Broadband: This wiring was to be done in rich and poor neighborhoods, in rural, urban and suburban areas equally.
  • Open to ALL Competition: These networks were to be open to ALL competitors, not a closed-in network or deployed only where the phone company desired.
  • Each State: By 2006, 75% of the state of New Jersey was to be wired, Pennsylvania was to have 50% of households by 2004, California to have 5 million households by 2000, Texas claimed all schools, libraries, hospitals.…Virtually every state had commitments.
  • Massive Financial Incentives: In exchange for building these networks, the Bell companies ALL received changes in state laws that gave these them excessive profits, tax savings, and other perks to be used in building these networks.
  • This was not DSL, which travels over the old copper wiring and did not require new regulations.
  • This is not Verizon's FIOS or SBC’s Lightspeed fiber optics, which are slower, can't handle 500 channels, are not open to competition, and are not being deployed equitably.
  • This was NOT fiber somewhere in the network ether, but directly to homes.

The Harms and Outcome

  • Costs to Customers — We estimate that $206 billion dollars in excess profits and tax deductions were collected over $2000 per household. (This is the low estimate.)
  • Cost to the Country — About $5 trillion dollars to the economy. America lost a decade of technological innovation and economic growth, about $500 billion annually.
  • Cost to the Country — America is now 16th in the world in broadband. While Korea and Japan have 40-100 Mbps at cheap prices, America is still at kilobyte speeds.
  • The New Digital Divide The phone companies current plans are to pick and choose where and when they want to deploy fiber services, if at all.
  • Competitor Close Out SBC, BellSouth and Verizon now claim that they can control who uses the networks and at what price, impacting everything from VOIP and municipality roll outs to new services from Ebay and Google.

The Truth: This is a Fraud Case

  • Fraud: There is a dark secret — the networks couldn't be built at the time the commitments were made and are still not available. If someone pays thousands of dollars for a service and doesn't get it, isn't that fraud?
  • Collusion and Cover-up: TELE-TV and Americast, the Bell companies' fiber optic front groups, spent about $1 billion and were designed to make America believe these deployments were real in order to pass the Telecom Act of 1996 and enter long distance. How did every major phone company in America not know that these fiber-based services couldn't be built and were able to defraud over 40 states?
  • The mergers killed fiber optic deployments in over 26 states and harmed competition. With every merger, the phone companies simply dropped all state commitments and harmed every state they merged with. Case in point: Verizon cut deployments to 13 states during the NYNEX-Bell Atlantic merger, not to mention GTE's 28 state deployments. SBC did the same in all 13 of its states, from California to Illinois. Worse, the mergers were based on the companies competing with each other and there is NO evidence they ever did any serious wireline residential competition.
  • The Regulators Killed Competition and Broadband. Over the last 4 years, instead of continuing competition as ordered by the Telecom Act of 1996, the FCC has rewritten the laws close down Internet Service Providers (ISPs) that brought America to the Internet, as well as virtually all local competition. AT&T and MCI couldn't compete because they were regulated out of business and thus were sold off.
  • Distortion of the Truth by the FCC. Virtually every piece of documentation presented in this work is missing from the FCC's Advanced Network Reports. The FCC defines broadband as 200 kilobytes per second in one direction — 225 times slower than what was promised in 1992.
  • Cross-Subsidization — Instead of spending the money on these networks, the Bell companies used the money to enter long distance, rollout wireless and the inferior DSL services. The Bells also lost over $20 billion overseas and paid executives over a billion in stock options during the mergers.
  • Bait and Switch — Customers paid for a fiber optic wire and got DSL over the old copper wiring — it's like ordering a Ferrari and getting a bicycle.

20 Year Analysis of Revenues, Profits, Expenditures: This book is based on a 20 year analysis of Bell-supplied data, Census Data and Business Week. Since 1984::

  • Revenues are up 128%.
  • Employees are down 65%, Construction is down 60%.
  • $92.5 billion is missing in network upgrades.
  • Profits based on failed fiber plans up 188% as compared to other utilities.

Teletruth has filed a complaint with the Federal Trade Commission, (FTC) to investigate the claims presented; the book is the data for our complaint.

Do you care about Net Neutrality? You should.

What's the big hoopla about Net Neutrality? Why should you care?

Well, you should. It means less choice and less competition, especially in our world (internet startups).

It's very likely that ClickCaster, a podcasting company based in Boulder, CO. would not exist if we had to pay 'extra' fee's beyond the costs we currently pay to provide our service. Frankly, if low cost high speed bandwidth hadn't been available when we started ClickCaster... well, we simply wouldn't have started it.

The low (relative) cost of bandwidth, and the fact that we're on a level playing field with Apple’s iTunes, Google, Yahoo and Comcast (as far as the internet is concerned) is what enabled us to start the company.

Take that away, add additional costs to getting the company started, and it's possible and even likely we just wouldn't have done it at all.

Here's a quick overview of something in USA Today that sums it up nicely:

  • Internet Fast Lane Marginalizes Smaller Web Firms
  • USA Today
  • USA Today spoke with several small businesses about the possible effects of an Internet fast lane on their business. Many of these companies are helping lead the push for "net neutrality" laws, which received a major blow a few weeks ago as one of many bills defending net neutrality was struck down by the House of Representatives. Internet service is currently "neutral" in most instances, meaning that content providers don't have to pay extra if their video service sucks up more bandwidth than, say, a blog. This is because network owners deliver information over their pipes to users' computers at the same speeds. If lawmakers fail to pass legislation guaranteeing network neutrality, that could all change--soon. "That would be a disaster for little companies like ours," a CEO of an online video startup told USA Today. The Web, the so-called "Great Equalizer," would no longer be equal for companies that can't afford to pay for faster delivery of their content. This would skew heavily in favor of larger companies like Google, because they could--however reluctantly--afford to pay these surcharges. But it might discourage them from spending on R&D in bandwidth-heavy areas like broadband video. The future of entertainment on the Web depends on faster speeds, and content providers agree that a "fast lane" would simply stymie competition--to the detriment of both consumers and the Web industry. - Read the whole story...

Make no mistake, this is a big deal for everyone. Not just us little web based startup companies. ALL the big guys on the internet today started as little web based startups like us. All now employ thousands of people and produce billions in revenue and shareholder value.

Cut out the little guys ability to get started and you radically cut the number of potential big guys down the road. The end result: A few monopoly like players that control the market AND a lack of innovation. Most of the 'cool' stuff the big guys do comes from little guys they either copy or buy up. A few of us little guys actually grow up to BE big guys. And that keeps things moving forward. ClickCaster wouldn't exist today if the net weren't neutral. If we were required to pay 'extra' just to compete at the same level as the big guys (fast bandwidth, nicely shaped packets that get to our customers at the same time and same speed as Yahoo Video's, or iTunes) we simply wouldn't have started the company. We'd be working at Comcast or Apple or Yahoo. We'd be doing interesting things, no doubt, but true innovation? Not so much.

Email your congressman or senators. Tell them you actually care about Net Neutrality being real because, in the long run, you really do. It may not be obvious to the average person today, but it effects you, your children and your work, in a big way.

Thursday, June 15, 2006

Denver #6 per capita for Starbucks

Let Starbucks Find You a Place to Live

It seems that every week some organization or another comes out with a list of American’s best cities. These lists go by different names (Most Livable Cities, Best Places, whatever), but some how they all end up with similar content. They have Seattle, San Francisco, Boston, Portland, and the like near the top of the list, and Detroit and New Orleans near the bottom (here’s a good recent example, the Sustainable Cities list).

These lists are good and useful, but it turns out that if you just list cities by the number of Starbucks locations per capita, you get a pretty similar result. Here are the largest US cities from most to fewest Starbucks per person:

  1. Las Vegas
  2. Seattle
  3. Portland
  4. Sacramento
  5. Washington
  6. Denver
  7. Atlanta
  8. San Francisco
  9. San Diego
  10. Cincinnati
For the entire list (and the rest of this blog post).. go to:

technorati tags:,

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Tuesday, June 13, 2006

Denver/Boulder- One of the best places to do a startup company

Paul Graham recently did an essay on what it takes to create an environment like Silicon Valley (Boulder and Portland were ID'd as top candidates).

Some additional data is coming out, in particular, Tim O'Reilly's blog (click on the title of this entry to go directly to his post).

What's interesting is the above chart.

Apparently, we're number 5 for startup oriented hires in the US. Not bad for a region that's smaller (by millions) than the 4 above it.

So, if you're interested in starting a company, and you don't want to deal with Silicon Valley, it doesn't get much better than Boulder.