Michael Robertson on Gizmo5, and How the World Has Changed for Internet Startups

Just a few weeks ago, Michael Robertson sold his Web-based phone service venture, Gizmo5, to Google for a reported $30 million. So he was in a good mood when we sat down yesterday to talk about what might be next for San Diego’s patriarch of Internet startups.

“One of my goals for the year was to sell my company so I could work less,” he says. He remains involved with a couple of local startups (more on that below), but also talks about easing off “working six and seven days a week and for big hours.”

At the outset, however, Robertson says he’s constrained by multiple confidentiality agreements with Google, so he’s prohibited from saying much about the Gizmo5 deal or about Google’s plans to integrate Gizmo5’s VoIP (Voice over Internet Protocol) technology with its emerging Google Voice phone service.

Robertson says in many ways he’s more proud of Gizmo5 for what they managed to accomplish than of MP3.com, which became an icon of the dot-com revolution and was one of San Diego’s biggest IPOs at the time it went public in July 1999. Two years later, Robertson still owned roughly 27 percent of MP3.com when the French media conglomerate Vivendi paid $372 million to acquire the company.

“If you’re one of the big guys like eBay, Facebook, or MP3.com, you get that network effect going,” Robertson explains. “Business is very easy. But if you’re an also-ran, you have to be more strategic. If you’re not that leader, it’s a totally different business dynamic. You have to source the business opportunities, chase the partners, and work for every deal.”

Gizmo5 had only about 6 million subscribers at the time of Google’s acquisition. That contrasts dramatically with Skype, which has more than 405 million registered users and currently ranks as the largest VoIP provider. That seems likely to change, however, once Google absorbs Gizmo5—which will enable Google to provide phone service directly to Internet users without going through a telephone service provider like AT&T or Verizon. When combined with the sheer scale of Google’s operations and with Google Voice, the application that allows users to have a single phone number that connects to a variety of features, including conference calls, phone call recording, and text messaging, the implications could be ominous for both Skype and the telecoms that provide phone service.

As Robertson told me last year, “The public switched telephone networks are crashing into PC-Internet technology, and the Internet is going to win because it’s better, cheaper, faster and easier.”

It is a little-known fact that Robertson had been working for years as a help desk technician at the San Diego Supercomputer Center (and writing a local advice column about Apple computers) when he founded MP3.com with Greg Flores in 1997. Even when he was answering … Next Page »

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Bruce V. Bigelow was the editor of Xconomy San Diego from 2008 to 2018. Read more about his life and work here. Follow @bvbigelow

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One response to “Michael Robertson on Gizmo5, and How the World Has Changed for Internet Startups”

  1. JB says:

    It seems to me what he’s saying is the market has matured to the point you must have a ‘fit’ company. This is a good thing.

    I personally would not underestimate the telco’s. That’s been a graveyard for many, many, many, many firms. The entrepreneurship and then there’s business. Should be interesting to see what google does, but history is not with them.