Divvio: Not your average Web 2.0 start-up

Eslambolchi is about as far from the “grad student with lots of friends that like his cool idea” as it is possible to be.
Peter Burrows

There’s lots of interesting things about Divvio, the start-up we introduced in our story this week in the magazine. For sure, they’ve got an interesting, big idea. I’m a big fan of discovery engines, when they work well. I love Pandora Music’s ability to create personalized playlists that I can continually tweak to my liking, and just got introduced to Stumble Upon, a browser plug-in that lets you find interesting URLs you’ve never heard of with a single click, based on recommendation from two million or so “stumblers”. Indeed, former eBay executive and current Stanford Institute of Design professor Michael Dearing turned me on to StumbleUpon in the course of reporting this story. Thanks, Michael!

So how is Divvio different?

For starters, it hopes to be the uber-discovery engine of all Web Media—from music to silly YouTube stuff to professional TV and Hollywood fare. Not only that, they want to blast through arbitrary media-based boundaries on the Web today (you know--go to iTunes for music, go to YouTube for video, go to Google to search for articles), and pull all of them together in a new delivery mode that feels more like today’s familiar broadcast methods (TV channels, radio stations) than clicking around the Web.

If it works—and that’s a big if--users will be able to set set up various “channels” for themselves, each of a specific time duration and type of content, to meet various needs in your daily schedule. I could imagine creating a ten-minute long “Humor” channel that grabs last night’s John Stewart monologue, followed by any other new or old bits to watch while standing on a grocery line or wherever. For sure, I’d want a 30-minute audio-only “Morning Commute” channel with local traffic conditions, breaking business news stories, and then a grab-bag of blog posts (both some trusted favorites, with some serendipity mixed in). For a cross-country plane trip, maybe I’d create a six-hour channel with any free Web concerts by favorite bands, to webinars on fly-casting to movies and TV shows (assuming Divvio lands the licensing deals to get past DRM issues). (Note: While the site at first will only offer some pre-canned channels for consumers to configure, that are available only on the PC, they’ll roll out more roll-your-own flexibility and support for other devices over time. At some point, Eslambolchi hopes to even add text-to-speech, so Divvio could read this post to you.)

More than its audacious goals, what sets Divvio apart is the people involved. Among Web 2.0 founders, Eslambolchi is about as far from the “grad student with lots of friends that like his cool idea” as it is possible to be. During his nineteen years at AT&T, he was credited with more than 800 patents. Okay, that’s probably not humanly possible, and probably is due mostly to the fact that he got shared credit as head of AT&T Labs and other organizations within Ma Bell (He won’t say how many are his alone). Still, you get the point.

And Eslambolchi isn’t just a technologist, but an accomplished manager—someone with a proven ability to figure out smarter ways of doing things, and then (and this is the tough part) doing them. This was a big part of his work in converting AT&T’s vast legacy networks into what many felt was the state-of-the-art IP-based network earlier this decade. Yes, he helped design the new architecture, which let AT&T slash the number of servers, routers and other gear it needed to buy and maintain--while at the same boosting the speed, size and smarts of the network, to be able to handle new services such as VOIP.

But the biggest cost-savings came from rethinking how to take advantage of these smarter pipes—say, the process changes that helped the company reduce the time to deploy a new T1 line from 130 days to around 20. If nothing else, Eslambolchi is a process maniac. He even tracks his “mean-time email response” to be sure he’s getting back to people quickly (He claims it’s under four hours—but that’s including sleep and airplane travel!). Former AT&T president Dave Dorman says Eslambolchi routinely interviewed line workers on details of their work—to the point of asking why they had to hit the return key so often when doing routine tasks.

In the end, this led to vast efficiency improvements that enabled AT&T to slash the payroll of its network services unit from 66,000 to 10,000. That made Eslambolchi more than a little controversial; union supporters once put a big inflated rat with his name on it in the AT&T parking lot. “He was viewed as my evil scientist” by union members, says Dorman. Still, those efficiency gains and the capabilities of that IP network were a main reason Dorman was able to sell the company to SBC Communications, at a time when wondered how Ma Bell would get out of her death spiral. Says Dorman, “We had to radically reengineer the business, and we had to execute and deliver. Hossin did a truly remarkable job.”

Such discipline will be critical if Divvio is to achieve its goals. Divvio’s secret sauce will need to be out of this world, if consumers are to really get “Fresh Content Served Daily” —as opposed to irrelevant content and broken links. But if Divvio does take off, there’s no better person to have in charge to handle the scaling issues that plague so many other Web companies. “Hossein brings an understanding of scale that doesn’t exist in many places. That’s part of his unfair competitive advantage: he can look at fifty million users and say, what’s the big deal,” says Bob Ackerman, a partner with venture capital firm Allegis Capital, which is a Divvio investor.

Besides his own capabilities, Eslambolchi is bringing plenty of other firepower to this start-up. Some of his top lieutenants from AT&T have joined up to build the technology. Former eBay-er Dearing is advising the company on how to perfect its ambitious customer experience, as is former Yahoo chief product officer Geoff Ralston (who is also investing in the A-round). Dorman, as well, is playing rainmaker to help Divvio land deals with content makers and carriers, as is Sachio Semmoto.

I was somewhat embarrassed not to have Googled him before interviewing him for this story, but Semmoto is one of Japan’s most accomplished entrepreneurs. In the 1980s he created KDDI, which went on to become Japan’s second-largest phone company. He then created eAccess, one of Japan’s fastest-growing, most innovative broadband ISPs. Now, he’s trying to carve out the pole position in Japan’s mobile broadband market with eMobile Ltd.—and seems to think Divvio could be an important part of his strategy. “We can be potentially be big clients of theirs,” says Semmoto, who is helping Divvio build a local team for the Japanese market, and helping it develop its corporate infrastructure and strike deals with the right Japanese content owners.

I was impressed not only by the caliber of Divvio’s backers, but by their willingness to talk to me at length about the project (Dorman gave me all the time I wanted, while sitting poolside in Negril). Maybe they were just doing it as a favor to Eslambolchi, but I did sense some serious excitemetn about what Divvio is trying to accomplish: to make the Web manageable for Average Joes, but in a way that still takes full advantage of what’s out there. Says Yahoo’s Ralston: “It’s unquestionably going to be one of the major issues for the future of media: what do people do when they no longer can rely on the Thursday night primetime lineup?” He complains that he never has time to figure out which of his 95 bookmarked blogs to look at, and “I don’t have 45 minutes to figure out what to watch for 25 minutes.”

I'll also be very curious to see how Eslambolchi does as an entrepreneur. He's long wanted to cash in on Silicon Valley fame and fortune, say friends. In fact, he joined Cisco Systems in 2000--but was lured back to AT&T just a month later. But after presiding over vast budgets and operations (I'm told he had spending approval authority up to $100 million at AT&T), how will he enjoy working from a non-descript office park in Menlo Park? And will he be able to scale back his grand ambitions, to actually stake out real territory in the crowded digital media market? "Hossein is extremely brilliant, and very aggressive—especially compared to past presidents of AT&T Labs," says Semmoto. "He's a friend, but frankly speaking, he has a lot to learn [about managing in start-up mode]. That's a risk factor."

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