Azuki (And, Cable TV Is Almost Dead)

Congratulations, Team Azuki!

Telecom giant Ericsson last week purchased Azuki Systems, our first investment in Kepha 1. It was a very meaningful event for our first VC fund, and we’re very happy.

Xconomy’s Greg Huang wrote about the acquisition here. The BBJ’s Kyle Alspach wrote here about Ericsson’s big hiring push. Azuki technology can now go from enabling millions of devices to billions.

For me, I’m not allowed to discuss deal terms, but I can write about some other meaningful topics.

First, there is a vicious and rapid arms race to get to “TV Everywhere”–and, that is great for consumers.  For example, we’ve never had cable TV, and over time, it matters less. We stream iTunes, Aereo and Netflix on multiple pads, laptops and phones. I think one day paying for cable TV will be like the old days when we paid AOL for email.

So, you now are free to consume what media you want, when you want it, on whatever device you’d prefer.  You’re now in charge. Also, what is coming down the pike from Azuki will absolutely stun and impress you.

Second, I think some incumbents’ business models are completely at risk. Here’s the crux: many operators have spent billions of dollars laying down fiber and cable networks or putting up proprietary cell towers–but, TV Everywhere means many people will cut the cable TV cord. Consumers increasingly will pay for fast Internet but less so for cable TV. Cable companies are finding that their bundled packages (TV, phone, Internet) are relevant to a shrinking pool of consumers.

WARNING: SELF-SERVING COMMENTS BELOW

Third and last, I’m so happy that I could work with Azuki founders Cheng Wu and Raj Nair–and, the entire team there. Kepha was a founding investor. We and Cheng seeded it, and he and Raj spent their early days at the Kepha office.

It’s amazing to think that Cheng and Raj envisioned Azuki before the iPhone was launched. A true swing for the fences. I remember my biggest diligence question was this: will smartphones really take off?  Duh.

So much in the TV sector has changed so quickly, and, in just the past five years. But, we’re only at the beginning of this revolution. It’s an exciting time to be a VC and an entrepreneur.

Cable TV is nearly dead. Long live the Internet.

Cheng and Raj, thank you very much for the opportunity to work with you. Bruce, Steve, Rob, Lisa, Chris M., Kevin and the whole team, I look forward to staying in touch!

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