Montreal Start Up

Back in the day, Wired ran an article called “Netheads vs. Bellheads“. It was an interesting read, but I didn’t fully grasp how wide the cultural divide was until I went to work for a Telco. When Alexander Graham Bell got his prototype working, the first thing he did was patent it. Telephony has been around for roughly 120 years and it has always been about making money. Making lots of money. Data networks on the other hand, came from the academic world. If you are a CEO, your peers will judge you based on how much money your company is making. If you are an academic on the other hand, you are judged on how much you publish, the quality of your publications and, as a result, how often your research is cited and by whom. Respect based on how rich vs how clever you are; very different yardsticks indeed!

Cellcos are businesses; they are in it to make money. The Telco heritage, while somewhat diluted, is still a part of their DNA: you make the money by controlling the service from end-to-end. Because North America lags the rest of the industrialized world in cellphone adoption, the Cellcos have been able to achieve good growth rates simply by signing up new subscribers and selling voice minutes. In Europe and even more so in Asia, everyone who was going to use the service has long since signed up for it. In order to keep growing their businesses, operators had two choices: steal market share from rivals or grow the pie by offering services beyond basic voice. That’s why consumers in Europe and Asia currently enjoy better pricing and more data services than we do. As the growth rate of cellphone adoption slows here, I expect to see our operators start to offer more competitive data packages and new services to go along with them. So hopefully, it is just a matter of time before they get serious about LBS.

Hackers (and academics) are usually the first ones to experiment with new ideas and technologies. They are driven by their desire to grok new technologies, an itch that needs to be scratched and, lets face it, their egos, which can be both good and bad. It’s good when you create something new or build a better mousetrap which you share with the world, so that all will appreciate just how clever you are. It’s bad when it leads to arrogance. In my experience the “I am smarter than everyone else” attitude is fairly rare. Unfortunately the “We are smarter than them” seems to be widespread, with “We” being the hackers and netheads, the people from the computer world and “Them” being anyone from the Telecom side of the fence. If you don’t believe me, just look at some of the comments in forums and on blogs concerning Telcos, Cablecos and Cellcos. Or better yet, ask your local hacker what he thinks of Bell.

Hackers have such low opinions of the Telecom folks, that they will do anything to avoid them. I’ve spoken to a number of developers working on applications that are positioning dependent and you would not believe the hoops they jump through to avoid dealing with Cellcos. When you point out that their product would be much simpler to use, more reliable and reach a thousand times more people by partnering with a carrier you typically get the following responses:
“Carriers are too hard to work with” (Have you ever tried?)
“They move to slow” (True. Why aim for 500 000 customers next year, when you can sign up 300 on your own this year?)

My personal favorite though is “They just don’t get it”. Seeing how the Internet has been mainstream for several years now, is it reasonable to think that senior executives at multi-billion dollar companies have below average reasoning abilities and market understanding? I don’t think so. I do believe they have serious constraints imposed upon them by the regulators, the need to leverage legacy assets, obligations to current customers, shareholders and employees and the inertia that exists in any large organization. I think they are painfully aware that pretty soon everyone and her dog will own a cellphone in Canada, yet Bay Street will demand evermore growth in revenues and profits. I think that anyone who can show them how they can add a fresh revenue stream, that doesn’t cannibalize existing services and allows them to maintain control of the customer relationship will be richly rewarded.

Operators see hackers as these crazy yahoos who want to give everything away for free. Hackers see operators as dinosaurs who fear change. Neither of these views is accurate and I think the best way to change them is to connect on a personal level first. That’s why I am pleased that some people in Montreal have taken it upon themselves to organize a local chapter of Mobile Mondays. There has been tremendous activity in the local tech startup scene in the past year and Montreal has a wealth of cellular talent, so lets get both groups chatting in an informal setting and I am certain good things will come of it.