Mindcast

A friend of mine was the CEO of a regional ISP in the mid 90's. I worked with his clients setting them up with Sybase and Oracle databases to back their web sites.
He specialized in T1's for businesses (no dialup at all) and also took a stab at the convention connectivity market. There was no wi-fi back then. He spent a lot of time laying cable under convention floors circa 1996 to provide connectivity for conferences, especially the trade show floor.
I forwarded the TechCruch post on LeWeb/Swisscom fiasco to him and he had some interesting insights.
 
Nitin,
 
Thanks - interesting.
 
The problem with the Internet business is that reliability is an
exponential function of cost.
 
With conferences, it must be 100% reliable - no second chances - so it is
expensive to do well. Everybody gets stars in their eyes when they see the
$$$ attached.
 
So you get lots of competitors who don't have a clue, undercutting you and
then you get convention center management and show management looking at
the $$ and trying to pick your pocket because they think you are making
too much money.
 
The problem is that most of the cost of delivering internet is setting it
up and having the infrastructure in place to deliver it. So whether you
use it for 5 minutes or 5 years, the cost doesn't change that much. Or
saying it differently, you have to pay for 5 years worth of connectivity
for a 2 day show - which makes people weak in the knees when they think
(wrongly) of how much money you must be making (or they could make if they
undercut you by 25%).
 
We got out of the business because knuckle dragging cable crimpers thought
they could do the job and the convention centers hired them to keep most
of the profit for themselves.
 
It was only a matter of time before something like this happened. It is
very hard to do well,and only 100% reliability is an option unless you
want to be the subject of this kind of blog posting, or worse, lawsuits,
either one of which can end your business.
 
I'd love to be back in the business, but it is a very stressful, demanding
activity where your entire reputation and business is on the line at every
event.
 
Hope you are well. Let's catch up soon.
 
<...>
 
> http://www.techcrunch.com/2008/12/13/swisscomm-tries-to-deflect-criticism-of-le-web-internet-failure/
> --
> Nitin Borwankar
> nitin@borwankar.com
>
 
I wonder whether Swisscom was one of those doing the undercutting or getting undercut and how much LeWeb negotiated to get a low price.
 
Nitin

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