The 5,000-Mile Remote –

It seemed like a fairly simple problem. A game developer in India needs to test his new software on a handset in Helsinki; in fact, he needs to test his software on about 50 different handsets-all at once if possible. The old solution: Fly to Helsinki and set up shop. Or, alternatively, pay a bunch of consultants quite a bit of money to do it for you.

For a couple of entrepreneurs in San Francisco who had faced that exact problem in their previous jobs, the old solution seemed needlessly inefficient-expensive, time consuming, clunky and not altogether complete given the rapid introduction of wireless devices capable of running ever more robust games and applications. This was Silicon Valley, after all, and there was something that could be quite useful called the Internet. Theoretically, a 5,000-mile remote-control cable should solve exactly this type of problem.

That was 2003 and the company was Mobile Complete, a San Mateo, Calif.-based 20-person startup that has recently closed its first venture round of funding from Innovacom, the strategic investment arm of France Telecom. Mobile Complete’s founder and CEO, Faraz Syed, discovered more than a year earlier while working as a developer for Brience (a San Francisco company building mobile WAP apps) that “you could build something but then you’d have to test it and there was simply no mechanism for alleviating all of the bottlenecks in technology testing.”

What Syed saw as a short-term problem was only going to get worse over time, gaining in complexity as “lots of applications and lots of devices and lots of platforms began to appear on the market.” Moreover, as most developers, device manufacturers and carriers know all too well, testing is actually the greatest technology expense incurred in launching any new application. Lower those costs and create higher quality applications for mobile devices and customers should beat a path to your door.

In Mobile Complete’s case-even for an early stage startup-those customers are already pounding away. Having deployed its first product in September 2004, the company now claims at least 21 customers, including AOL Mobile, Ascend Mobile, Digital Bridges, Google, Swisscom Mobile and others. “From a remote access perspective, if AOL wants to launch on Vodafone in Europe, it will need to first test on all of Vodafone’s products,” Syed says. “Yet, instead of sending consultants over there, it can now do it from its desktop computers in Virginia, connecting with live handsets in any of Vodafone’s target networks.”

What’s makes Mobile Complete’s solution so unique is that you can do virtually anything over the phone that you could do manually if it were in the palm of your hand, including listening to audio, watching video, press any button or see if it vibrates. This isn’t just server side software where testing what works on each end of the network connection might not take into account sudden changes or disruptions in network architecture or transmissions. Mobile Complete can actually set up a variety of devices at different locations within a network and actively monitor and report in real-time the access, usage and continuous quality of an application. Moreover, the company can boast it supports 100% of the devices on the market today and can grab information off of any of those devices at full frame rate video of 30 frames per second.

What Mobile Complete represents for early stage investors is not just a technology solution but the concept of an entirely new market opportunity for a broad range of startups-startups that we affectionately call “5,000-mile remote” types of companies. Or, companies with the ability to test, manage, develop, monitor, create, use or change any form of technology application from anywhere on the planet. This goes far beyond the basic notion of the Internet as a two-way interactive communication medium. Now, as Mobile Complete and other remote applications management startups emerge, early stage investing could play a pivotal role in the build-out of these technology solutions.

Got FOTA?

“Would Mobile Complete have existed three years ago? Probably not,” says Nagraj Kashyap of Qualcomm Ventures. “The explosion of wireless games alone requires more cost efficient testing given there’s now more and more cross-geography development than ever before.”

Kashyap outlines an emerging area of technology where the concept of the 5,000-mile remote represents a brand new category of fundable startup companies helping to reshape, and/or respond to, the needs of the wireless industry: firmware-over-the-air updates (or FOTA for short). “Given that the cell phone is now a consumer device and no longer just a phone, a lot of its features revolve around ever more complex and creative software applications,” Kashyap says. “Yet, what happens if the phone breaks, if it stops working and the user doesn’t know why? Up until now consumers had few choices. They could bring it back to the store, call customer service or trigger warranty coverage on the phone, all of which wind up costing the carriers quite a bit of money in lost usage time.”

With FOTA updates capable of fixing most problems on the fly, the across-the-board benefits of this type of new technology become obvious: The customer saves time; carriers or cell phone manufacturers save money on reduced customer service costs or warranty coverage; and the customer continues to use the phone, racking up those precious high-margin minutes the service providers depend on for revenue. Thus, for carriers (and in the future for some enterprise customers) FOTA updates will fall into the category of must-have features on any wireless phone or device.

No one understands this business proposition better than Gene Wang, CEO of Bitfone, a Laguna Nigel, Calif.-based private company, funded partly by Qualcomm Ventures, that’s focused purely on FOTA solutions for mobile phones. Bitfone’s 5,000-mile remote device management can offer firmware updates for mobile phones, specifically for operating systems, drivers, applications, application engines and communications stacks. It can also offer remote diagnostics for wireless carriers to help test and repair customer’s devices in the same way Symantec offers downloadable technology solutions for PCs. “Where all of this comes in handy,” Wang says, “is that up until now mobile phones have remained as static as toasters. Now, with new hardware capabilities and new software features, these devices can evolve over time as more and more new applications are loaded onto new phones.”

It’s that combination of advanced software driven features, advances in hardware capabilities (such as cameras or video phones, MP3 players and the like) and the build-out of ubiquitous and robust broadband networks worldwide, that now allow these 5,000 mile remote startups to bring their technologies to market in ways not possible just one year ago. And the problems that companies such as Bitfone can address in the future will only grow larger. According to Wang, “The launch of the 3G network has caused all kinds of problems. NTT Docomo felt that at the very minimum it needed FOTA as an insurance policy against any future network problems. And that doesn’t even get to the notion of security issues that must be detected and addressed, where viruses, worms and security breaches still need pioneering breakthroughs to address those problems.”

Blending

Yet, 5,000-mile remote solutions need not merely be limited to wireless technologies. Traverse Networks (a Labrador portfolio company) takes the concept of staying in touch anywhere/anytime and elevates it to a higher level of integration for all of us trying to keep track of far too many wireless and/or wireline voicemail and email accounts.

Traverse, a Fremont, Calif.-based private company, offers consumers and business professionals the ability to remotely control their communications from anywhere. You can forward your home phone or office phone to a cell phone. Voice mail can be configured to look like email, describing who the message is from, the length of the voice message, whether it should be prioritized into letting that specific caller through next time, or whether the system should turn voice mails into text messages.

The reason why Traverse and many other remote control companies are gaining traction now is simply because many of the technology advances and market dynamics that have evolved over time are finally intersecting to create market opportunities that only now warrant investment. Doug Brackbill, CEO of Traverse, says: “Handsets themselves had to first evolve to allow them to run all different kinds of visual applications and display them through much higher resolutions. High-speed data networks had to evolve at the same time as when all of our communications devices made life too complex and burdensome to the point where they had lost their efficiency.” Combine all of that with the simple technology advances of being capable, on the back end, of communicating with all different types of networks, capable of moving from a PBX to an IP PBX and of connecting traditional legacy systems with next-generation networking technologies, and a company like Traverse can finally see that the market opportunity is about to become a reality.

Though all of the examples above approach the concept of the 5,000-mile remote in different ways, the theme for early stage investors remains the same. If defensible technology can help solve a real technology or business problem-as Mobile Complete, Bitfone and Traverse Networks do-by allowing end users ever greater ease of use of software applications even while connecting remotely, the future rewards should be there for those willing to place their bets now. At Labrador, we view the opportunities within 5,000-mile remote startups as clearly the next best thing to being there.

Stuart Davidson is a Managing Partner of Labrador Ventures. He has been an early stage investor for the past 15 years and is active on the boards of Intruguard Devices, NextHop Technologies, Traverse Networks and Sentinel Vision. He may be reached at SDavidson@labrador.com.