Re: Why Helio Didn't Connect

[David Farber <dave () farber net>]

________________________________________
From: Jim Thompson [jim () netgate com]
Sent: Thursday, July 03, 2008 5:08 PM
To: David Farber
Cc: Robert Berger
Subject: Re: [IP] Why Helio Didn't Connect

On Jul 3, 2008, at 12:20 AM, David Farber wrote:

> The "money" quote:
>
> "If you look at wireless as a whole, it's represented a net
> destruction of capital for venture capitalists," grumbles William
> Frezza, a general partner at the Boston venture capital firm Adams
> Capital Management.

I think the VCs got what they deserved here.  Rather than put a bit of
money in, and receive an
interesting ROI, they wanted to put huge wads of cash in, and get an
even better ROI.

Wireless scales sub-linearly.  There are information-theoretic proofs
of this.

And most VCs invested on the promise (or perhaps what they demanded as
a promise) of the
technology trappings and non-limitations, rather than the actual E&M
physics of wireless.

> I suspect this is applicable to most wireless investments, even those
> beyond non-monopoly Cellular like Helios. I've now seen it personally
> at several in the Muni-WiFi realm and I think were going to eventually
> see it with wImAx. Infrastructure plays do not generate ROIs that Wall
> Street expects except for monopolies. - Rob

Perhaps "wireless infrastructure plays" is what you meant, because
some of them did get very interesting
returns from investments like UUNET and Level3 (though L3 took a long
time to provide positive ROI, and
the early L3 investors got screwed anyway.)




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