John Fisher, an MD at DFJ who has an investment in mobile content company, Mforma was recently quoved as saying Mforma, a mobile content company that has an investment from DFJ.
He said if a user is willing to spend $10 a month for entertainment content on a phone, and there are a billion people with phones in the world, that works out to $10 billion in revenue a month, or $120 billion a year. “Venture capitalists get excited about a $1 billion market. When its $100 billion, you get very, very excited,” he said.
Great thing to say, especially to an unsuspecting reporter whose grasp on math is actually worse than the VC himself. For instance, why not pay attention to the fact that, nearly 350 million of those so called users are in China, India and Brazil where they pay about $8 or so a month for their monthly wireless bill. Maybe $2 a month in content is okay but $10 seems to be a bit of a stretch. Thanks to an astute reader who sent me this in an email, this one wins the Duh! Award for the Week. His point about the mobile market being huge is right, but he certainly has got his numbers wrong. If this is going to be the math used in investments, well we got problems.
One thought on “Right Idea, Wrong Math”
Make that a double DUH award.
When the cellphone business experiences churn of even 2% per month, that 24% per year, and that is considered good.
It shouldn’t take a rocket scienist VC to figure out that over time the Content will be subsidize and giving away to atract gross additions. I mean, how many more minutes can they give away?
When this happens the consumer of the content shifts from the subscriber to the carrier, and that my little VC friend changes everything.