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March 23, 2011, 12:52 AM EDT
By Ari Levy and Emily Chang
March 23 (Bloomberg) -- Bill Gurley, a venture capitalist whose investments include OpenTable Inc. and Zillow Inc., said AT&T Inc.’s planned purchase of T-Mobile USA Inc. will hamper innovation among startups that sell services to mobile carriers.
Fewer wireless-service providers may mean diminished demand for new mobile-phone applications and other products, Gurley said in a televised interview with “Bloomberg West.”
“It has already become very difficult to seed ventures where the primary customer was the carrier,” said Gurley, a partner at Menlo Park, California-based Benchmark Capital. “It just becomes a more stodgy oligopoly.”
AT&T’s agreement this week to buy T-Mobile for $39 billion would combine the second- and fourth-largest U.S. wireless providers. The acquisition may take a year to receive government approval, as regulators determine whether the transaction will reduce customer choice.
Even before the proposal, many venture capitalists wouldn’t invest in wireless-equipment companies because the carriers have “too much market power,” Gurley said.
Sprint Nextel Corp., the third-biggest U.S. mobile provider, is concerned the combination would harm the wireless industry, Chief Executive Officer Dan Hesse said in an interview. He also cited concern that the deal “would stifle innovation.”
AT&T and Verizon Wireless will hold 79 percent of the U.S. market if regulators approve the deal, Hesse said. T-Mobile is owned by Germany’s Deutsche Telekom AG.
OpenTable, Zillow
Most of Gurley’s investments are focused on companies that distribute their products and services on the Web. OpenTable, which operates an online restaurant-reservation service, first sold shares to the public in 2009 and is now valued at $2.17 billion on the Nasdaq Stock Market. Zillow, an online real- estate information service, has hired Citigroup Inc. to manage its initial public offering, three people with knowledge of the company’s plans said last week.
Benchmark, which gained prominence from its early bet on EBay Inc. in 1997, is also an investor in social-networking service Twitter Inc., question-and-answer forum Quora Inc., and Yelp Inc., a local business-review site.
--With assistance from Cory Johnson and Brian Womack in San Francisco and Greg Bensinger in New York. Editors: Thomas Giles, Jillian Ward
To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Emily Chang in San Francisco at echang68@bloomberg.net
To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net
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March 23 (Bloomberg) -- Bill Gurley, a venture capitalist whose investments include OpenTable Inc. and Zillow Inc., said AT&T Inc.’s planned purchase of T-Mobile USA Inc. will hamper innovation among startups that sell services to mobile carriers.
Fewer wireless-service providers may mean diminished demand for new mobile-phone applications and other products, Gurley said in a televised interview with “Bloomberg West.”
“It has already become very difficult to seed ventures where the primary customer was the carrier,” said Gurley, a partner at Menlo Park, California-based Benchmark Capital. “It just becomes a more stodgy oligopoly.”
AT&T’s agreement this week to buy T-Mobile for $39 billion would combine the second- and fourth-largest U.S. wireless providers. The acquisition may take a year to receive government approval, as regulators determine whether the transaction will reduce customer choice.
Even before the proposal, many venture capitalists wouldn’t invest in wireless-equipment companies because the carriers have “too much market power,” Gurley said.
Sprint Nextel Corp., the third-biggest U.S. mobile provider, is concerned the combination would harm the wireless industry, Chief Executive Officer Dan Hesse said in an interview. He also cited concern that the deal “would stifle innovation.”
AT&T and Verizon Wireless will hold 79 percent of the U.S. market if regulators approve the deal, Hesse said. T-Mobile is owned by Germany’s Deutsche Telekom AG.
OpenTable, Zillow
Most of Gurley’s investments are focused on companies that distribute their products and services on the Web. OpenTable, which operates an online restaurant-reservation service, first sold shares to the public in 2009 and is now valued at $2.17 billion on the Nasdaq Stock Market. Zillow, an online real- estate information service, has hired Citigroup Inc. to manage its initial public offering, three people with knowledge of the company’s plans said last week.
Benchmark, which gained prominence from its early bet on EBay Inc. in 1997, is also an investor in social-networking service Twitter Inc., question-and-answer forum Quora Inc., and Yelp Inc., a local business-review site.
--With assistance from Cory Johnson and Brian Womack in San Francisco and Greg Bensinger in New York. Editors: Thomas Giles, Jillian Ward
To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Emily Chang in San Francisco at echang68@bloomberg.net
To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net
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