Excerpt from full interview in Israel Opportunity Investor:
• • •
We recently got a chance to sit down with Jon Medved, a rock-star in the Israeli tech world, to discuss his new startup.
Jon, can you tell us what Vringo’s all about?
Jon Medved: It’s not just a company story, it’s a story about trends. The trend is personalization 2.0. The big bonanza which most investors missed, myself included, was ringtones. If you were pitching VCs a ringtone company in 1999, you wouldn’t have even been able to get a meeting. You would have been shooed out. The ringtone business has been a goldmine for those investors who got it. Now, it’s a $6 billion business worldwide. It’s becoming a major source of revenue for the music labels. Take Universal Music Group, for example. Music star, Akon, recently sold a batch of 11 million ringtones. And unlike iTunes, which sells songs for $.99, these ringtones go for $2.
It’s the drive for human expression to want to stand out in a crowd, to personalize things, to make them mine. Just like Jibbetz does for Crocs shoes, allowing you essentially to pimp your shoes, like wearing a T-shirt with a slogan on it, or slapping a bumper sticker on your car — Vringo is doing the same thing for the phone.
Where does personalization go from here to unleash value?
JM: Content on mobile phones will move from aural to multimedia for a fuller, richer experience. With the iPhone, we’re really starting to see some eye candy. Why isn’t there a visual clue when you call someone? Why isn’t there a sort of visual caller-ID? Basically, you get the caller’s phone number and a name, if you’re lucky. There’s no slideshow, no avatar, no picture. More and more of this content will be user generated. The impulse is unstoppable. It’s happening in a major way on the Web, but it hasn’t happened on the mobile yet. It’s no longer about your phone anymore. It’s about two axes and bringing in your friends’ phones. Now, it’s about, how do I cast my image onto your phone. Vringo sends images as caller ID. Vringo brings together personalization with the social networking aspects of the mobile network.
Where does your financial backing come from?JM: I’m really happy with the quality of our investors. We’ve got good backing, and we just raised a round of $12M led by Warburg Pincus, which closed at the end of July.
Where are you in terms of deal making?
JM: We’ve brought on Universal Music Group as a partner. They are the key content player in all of this. They’re the largest music group in the world. We’ve also signed a deal with Nokia (NYSE:NOK). These guys get it. They’re the thought leader in all of this. We’re working to be compatible on all networks. We want to be Facebook and Google Android. We’re going to be the platform to allow people to express themselves every time they use the phone.
Why do you think that Israeli entrepreneurs have focused mainly on the enterprise and with a few notable exceptions, haven’t gone straight to the consumer?
JM: We’ve seen only a couple of Israel companies go after consumer markets. When I was at Israel Seed [an Israeli venture capital fund], our portfolio company, Shopping.com, was successful in going after bold consumer applications. We’ve now got some of the key Shopping.com guys on our team. Like Shopping.com and ICQ, you have to own the relationship with your customer.
I think there are two reasons why traditionally, Israeli start-ups didn’t go after consumer plays:
First, we’ve been far from our markets. Israeli entrepreneurs felt that in a consumer play, distance makes a lot of difference when trying to market to the mass market.
The second reason is that traditionally it cost a lot of money to market to a mass market. That being said, we’re finding success stories. Both Incredimail (Nasdaq: MAIL) and Hotbar have a ton of users. Israel Seed invested in Earthnoise, which basically was YouTube but 5 years too early.
How have things changed?
JM: Israel is much more similar to the rest of the world now. Nobody is more advanced than Israel in cellular technologies (except Japan and Korea). We’re as good as Scandinavia. Other countries have started to do test marketing here. From an Israeli perspective, the world has shrunk. Our markets have matured to the point where domestic entrepreneurs and marketing people have developed the skills and ingenuity to address the global consumer market.
Also, you don’t need so much money anymore to finance a startup targeting the consumer. Web 2.0 and Mobile 2.0 don’t require building such a big box. Facebook, although it raised a lot of money, didn’t need it right away. Startups are getting cheaper to finance. In mobile VOIP, the two leading players are both Israeli (Fring and iskoot). We’re so good in mobile that the upcoming 3GSM conference in Barcelona, the industry’s most important event, is dominated by Israelis.
Which publicly traded Israeli companies do you expect to benefit from Mobile 2.0?
JM: I think everyone underestimates Amdocs (NYSE: DOX). They’ve recently hired Harel Kodesh, a senior player at Microsoft’s (Nasdaq: MSFT) CE business. He’s now the Chief Product Officer at Amdocs. The fact that the CPO position is filled by someone who has developed a mobile platform for consumer devices at Microsoft is very telling. Amdocs is going to be huge in mobile billing and interested in building a content platform. They recognize that mobile content is going to be huge. Nielsen reported only 4M people in the US used mobile video over 240M total subs. Mobile internet usage in the US is still in its infancy. There is going to be a lot of opportunity.