Use VOIP to call your broker — and sell

And so we return to our story, to find our hero — the plucky little (or not so little) voice-over-Internet company Vonage — finally going public, after much back-and-forthing over the past year about when to issue stock and for how much, or whether to try and convince someone to take the company over. And what happens? The stock tanks, dropping by as much as 15 per cent at one point on Wednesday. Needless to say, that’s not what most IPOs are supposed to do (as Mark points out), especially since underwriters of initial offerings usually try hard to underprice the issue so that they get a little “pop” on opening day.

Well, Vonage definitely got a pop, but it was more like the sound a balloon makes before it deflates. Why? as Paul Kedrosky notes, it isn’t much of a surprise. While the term VOIP may be hot, industry watchers such as Om Malik have been warning for some time that Vonage is caught between a rock and a hard place — it has the name-brand value (courtesy of a very expensive marketing campaign) but it is being squeezed by free VOIP provider Skype on one hand and by cable providers on the other.

It’s true that by selling shares at $17 (U.S.) each, Vonage managed to raise a little over $500-million, giving the entire company a combined market value of over $2.5-billion. So we shouldn’t be holding any charity drives for CEO Jeffrey Citron, whose stake is likely worth about $1-billion or so. But at the same time, Vonage needs all that money to try and plug the gigantic hole in its balance sheet, which continues to drain money at a furious pace. Last year, the company lost $261-million, which was almost as much as it had in revenue.

The worst part is that Vonage’s costs are likely to remain roughly the same, or even increase, as the market gets more competitive — and yet its chances of becoming profitable are likely to fall, as Skype and the cable companies both put pressure on prices. Sound like a good recipe for an investment to you? Then Vonage would like to hear from you. Better use Skype to call your broker though, it’s cheaper. (Henry Blodget has a great anecdote from an AP story about a Vonage user who got some stock as part of the issue).

Items that might become blog posts

Here’s another roundup of stuff that I haven’t had time to write about. Someday I hope to (find time, that is):

  • Vonage has finally completed its IPO — one that was reportedly put off several times as the company searched for a buyer — and has raised $500-million, despite the fact that it is hemorrhaging money and facing increased competitive pressures from cable VOIP.
  • notes the launch of something called in the UK — a website for unsigned musicians that includes blogs, events listings, photos and video downloads, and also allows artists to sell their songs and get 70 per cent of any sales.
  • Anne Zelenka of Anne 2.0 has a great post about how content has filed for divorce from advertising, and cites two other smart people on the subject, namely Scott Karp of Publishing 2.0 and Stowe Boyd of /Message.
  • Jeff “resident philistine” Jarvis takes a few jabs at Nick “resident curmudgeon” Carr, over the idea that books might not be the ne plus ultra of intellectual life.
  • PlagiarismToday looks at whether quoting large sections of other blogs — even if you source them properly — is (or should be) considered plagiarism.

Is Sphere winning at blog search?

For a company that has only been around a few months, seems to have already made quite a mark, including signing on for a trial with Time magazine that involves putting “Sphere It” links on Time stories. Clicking the link does the same thing as the Sphere It bookmarklet — that is, it searches the blogosphere for posts that are relevant to the story or page being viewed.

To me, the fact that Sphere has managed to strike such a deal when is already well-established in that area (it has arrangements with the Washington Post and Newsweek, among others) is indicative of how wide-open the whole field of blog search still is. Remember when Google’s blog search launched, and how excited everyone was? And yet, Google’s size and might doesn’t seem to have translated into dominance — in fact, its blog search is distinctly underwhelming., formerly owned by Mark Cuban, is a little better but not much.

Even, the kingpin of the field, often produces results that aren’t particularly relevant. Although my own demo of Sphere over the past while has been hit and miss, there have been several occasions in which it came up with distinctly more useful links than Technorati. The reason for this appears to be that Sphere — which uses software from predecessor companies Waypath and Yodel — does a “semantic analysis” of the text in a page and uses that to judge relevance, rather than just tracking raw links as does.

Susan Mernit is no doubt right that being in the right place at the right time and having a cool widget also makes a difference, but I think the search technology matters too. Sphere may not be perfect, but it’s better than we had before, and it’s certainly better than what we get from the king of search — Google — which seems like a real missed opportunity. Maybe Google is too busy launching things like Google Notebook and Google (chicken) Coop.

Some mesh pics — Kedrosky, et al

It seems like ages ago now that Mark and Stuart and Rob and Mike and I were all standing around nervously waiting for mesh to begin, but it was only a week ago. I have to say that even though I am a bigshot columnist at a big-city newspaper, I was a little starstruck at the calibre of Web 2.0 talent in the room at MaRS, including Om Malik, Matt Mullenweg from, Andrew Baron from Rocketboom, Jason Fried from, Paul Kedrosky, Steve Rubel, Tara Hunt and Chris Messina.

In case you haven’t seen any of the posts by Tris Hussey of Qumana or my new pal Scott Karp at Publishing 2.0, it was by all accounts a smashing success. And much of the success was due to all the meshing that happened between participants and panelists and speakers in the atrium and at the cocktail party afterward — and also at The Drake, where many fascinating conversations were had, including Andrew Coyne talking with Tom Williams of about a market-based approach to charitable donations.

If you missed the photos that are up at (tag “mesh06”), I’ve got some here — which I put together using Bubbleshare, fittingly enough, since Albert Lai of was at mesh on a panel with Malgosia Green of and Mike McDerment of Included in this series are some of us nerve-wracked organizers, one of Amber MacArthur and Joey “Accordion Guy” DeVilla, and some of Om and Paul and Matt and Jason yakking — including the now infamous shot of Eliott Noss of getting introduced to Matt Mullenweg of WordPress (Tucows has a competing blog platform called Blogware).

Pixpo gets financing

Mark’s column reminded me that I had been meaning to post something about the financings announced at mesh, including the seed capital that Michael Tippett and his team at got (Michael was on a panel at mesh), and the $6.5-million combination of seed and venture capital that Colin How and the gang over at recently got (Colin was one of our “15 Minutes of Fame winners). Coincidentally enough, both are based in British Columbia — which makes one wonder if Web 2.0 ideas flourish better in warm weather.

The funds for Pixpo came from Madrona Venture Group, a VC based in the Pacific Northwest that specializes in early-stage companies, as well as Canadian VC group GrowthWorks, a Canadian fund called Yaletown Venture Partners that focuses on Western Canada, and a Calgary-based early-stage fund called Springbank TechVentures (started by one of the early investors in MetroNet, which was sold to AT&T in 1999 for $7-billion).

Pixpo’s software — a modified version of “peer-to-peer” software — allows computer users to share their photos, music, video and other media without having to upload it all to some external site such as or Instead, the user just leaves the photos or music or videos where they are, and gives outside Web surfers access to those files on the PC, while keeping that access secure enough that the user doesn’t have to worry about hackers messing around with other files.

Hosting all the files on your home PC can pose its own problems, however, including the strain that gets put on both the PC and your home Internet connection if your video clip of your cat falling into the bathtub happens to get linked on and millions of people try to access it at the same time. Mr. How says that Pixpo uses a combination of a modified P2P network and a hosted-server network so that if certain files become particularly popular, they can be cached or hosted on Pixpo’s own servers. He also said that in contrast to other streaming-media software such as Orb Networks, Pixpo is more flexible, faster and provides a better quality video feed.