Posts Tagged: investment

Business — Comments
8
nov 08

Fon’s revenues II

Martin just wrote in his blog

“(…) At Fon we are still losing money but losses are coming down fast from 1.2 million euros in October of 2007 to 310K euros in October of 2008 to do a month to month comparison. (…)”

If you read Fon’s revenues which I wrote in May/08 and I suggest you to read FON Raises $9.5 Million – To buy their grave? too, you will recall that he wrote:

“(…) Cash burn which was over a million euros during December was down to 480K euros in April and is going down to 350K euros in June (…)”

I also predicted this:

“That was fast, 18 million Euros is gone in around 24 months, I really though it was going to last more, only solution, more investment, this time 1/3 of the initial investment, 9.5 milion dollars, why it’s announced in dollars and not Euros like the last time? Fool me! It is 6 million Euros, around 8 months of happiness.”

If cash burn is really down to 310k, we still have around 12 months until the next round of investment.

Business — Comments
12
abr 08

FON Raises $9.5 Million – To buy their grave?

I wake up in a beautiful Saturday morning, start reading my feeds and I face this post in Fon blog:

“Great news! We’ve raised another $9.5 million to grow the movement! We’ve got lots of great plans for the money. We’re going to Launch FON in Russia, launch the Fonera 2.0 (the fonera that uploads and downloads stuff to and from the internet while you are doing something else with your laptop) and develop the fonera 802.11n for an end of the year launch!”

Stop the world! I want to get off! Let’s go back a while and remember what hapenned on Sunday, February 5, 2006, 2 years ago:

“… FON can now count Google , Skype, Sequoia Capital, and Index Ventures as investors and backers. They’ve joined us to help advance the FON movement, leading a group that has put 18 million Euros into FON…”

That was fast, 18 million Euros is gone in around 24 months, I really though it was going to last more, only solution, more investment, this time 1/3 of the initial investment, 9.5 milion dollars, why it’s announced in dollars and not Euros like the last time? Fool me! It is 6 million Euros, around 8 months of happiness.

“I’m really exited we were able to raise so much money, and not just because I’m expecting a gigantic raise ;) ! It’s a challenging economic climate and an investment this large shows support for our business model. The leading investor in the round was the US Venture Capital arm of Sistema, Russia´s leading telco. Other investors in this C round include Google, British Telecom, Digital Garage and our founder and CEO Martin Varsavsky.”

They say they will make money selling a network they don’t own or have any control over it. In the beginning the idea was interesting, but you need to reinvent yourself all the time, it has serious problems. If you own the hotspot, you need to make money with it or it must come with more value to be interesting, none happens with FON, no one makes money and thats why people lose interest very fast, the hotspot is already unstable because people don’t care about having it up all the time, it’s just a matter of time when it will be down forever.

This reflects a network you can’t trust, will you pay for your neighbor network when you know it will suddenly go down? Will you knock the door and say, “I need to send important emails, can you please turn it on? I paid for it!”. And even worse, what kind of place they have networks? I want to be in a Cafe, Airport, Restaurant, Mall, not home.

Be creative FON, this model is not sustainable, no one can live with investments forever.