clips: October 2007 Archives
See my post from last year here.
And the one prior which recapped a session with Mike Arrington, here.
an update via paidcontent. today:
On the final panel at the Future of Business Media Conference, ContentNext editor and publisher Rafat Ali and paidContent.org executive editor Staci Kramer discussed the meaning of "disruption", particularly as it relates to business and financial media. -- What is Disruptive?:
SeekingAlpha CEO David Jackson discussed how his company is changing the model of financial news, as the site aggregates content from more than 500 contributors, most of them bloggers. As Staci noted, a big part of what makes the site disruptive is its printing of conference call transcripts, which has opened up an entirely new avenue for investors to get to know companies. Jackson added that the key question any disruptor has to ask is "how do you compete with the Long Tail?" Either you're category killer or a platform. SeekingAlpha, by aggregating long tail financial content is the latter
Patrick Spain, CEO, Highbeam discussed the launch of the company's new site Newser. "We're trying to disrupt newspapers" by presenting news in a way that actually makes sense for the internet. --
Investing: Drew Lipsher, a partner at Greycroft, discussed what he looks for in a disruptive investment. "The consumer is the ultimate disruptor.... things that we invest in are things that are helping to change the way consumers are consuming media." "Fundamentally, you have to get a mass amount of people, you have to get them to change the way they interact." As for lucrative exits, Lipsher noted that it might be getting more difficult, in part because strategic buyers, like Yahoo, have gotten more sophisticated about how much to pay for deals. --
Competition and First Mover Advantage: "At the end of the day, it's about us being better at breaking stories than the rest of the industry", said Rafat, in reference to paidContent.org and its competition.
Scott Moore, SVP Yahoo, argued that Yahoo (NSDQ: YHOO) finance basically created the online finance industry and that Yahoo as a whole is still in an incredibly strong position. It gets lost that Yahoo is still #1 in several categories.
Patrick Spain asked whether Yahoo could still be a disruptor, since it's essentially an incumbent now. Moore argued that in the grand scheme of things, Yahoo still gets a sliver of total ad dollars and that there's plenty more to take. In the meantime, it keeps innovating.
Rafat also noted that disruption often is borne out of market downturns and often comes about accidentally. --
In five years, who won't exist?: Spain: there won't be any newspapers as we know them in 5-10 years.
This morning, between fielding phone calls, answering emails and writing blog posts, I have been watching TV, a lot of TV...on Hulu, the new online video portal backed by NBC (GE), News Corp. (NWS) and $100 million in funding from Providence Equity Partners. Before I go any further, a mea culpa: I mocked the service, and its backers, all through the summer. From the moment I learned about the new company, I was skeptical. And now, after spending three hours or so on the service, I am ready to eat crow. And not just any crow, but rotten, six-month-old crow: I have never been more wrong. Now to my first impressions: This is an awesome service
Read on...
Eager and ambitious potential employees -- dying for the opportunity or shot to be the next Max Levchin and score the next $100M payout (see NYTimes profile here from 10/28/07) select startup gigs partially by how much potential stock option upside the company provides. Get in low, ride it high.
As an example, someone who joined the Facebook team two years ago most likely received a decent amount of low price stock options, back when the company was valued well south of $15B. With last week's investment by Microsoft at $15B, those early option holders are sitting pretty as Facebook stock -- while still privately held -- is now worth at least 30-50x more than any early employee's options. (30x would be at $500M valuation).
But what about now? Is there still option upside at Facebook $15B? If you're a hot developer in the valley do you pick Facebook over hundreds of other recently funded startups? A few weeks ago the answer was absolutely yes for many -- the option upside was so clear. But now, with the $15B valuation of Facebook, the answer is not so clear. Do you join Facebook at $15B hoping it may be worth $30B someday?
As Facebook hopes to double its team in the next year, is recruiting the unintentional casualty of the company's new massive valuation?
The ever astute Becky Buckman at the WSJ highlights this today:
There is a little-noticed downside to Microsoft Corp.'s investment in Facebook Inc.: The deal will likely raise the price of stock options issued by the social-networking company and could make it more difficult to hire talented employees.
Last week, Facebook appeared to score a major victory when Microsoft said it would invest $240 million in the Palo Alto, Calif., start-up, in exchange for a 1.6% stake. The investment values Facebook at $15 billion, up significantly from last year when a financing round valued the company at $525 million, according to a person familiar with the matter. Microsoft's investment cemented Facebook's reputation as one of the hottest Web start-ups in Silicon Valley.
With the rise in valuation comes a rise in the value of employee stock options. And in Silicon Valley, where stock options can be a major component of employee pay packages, more expensive stock options mean less potential upside for the option holders once start-ups go public or are sold. Stock options give someone a right to purchase shares of a company in the future, at a preset price. A lower price means more potential profit later.
Owen Van Natta, Facebook's chief revenue officer, acknowledged in an interview that recruiting employees with more expensive options is "a real issue."
Facebook is in the midst of an expansion. The company says it plans to boost its number of employees to 700 in a year, up from around 350 today. Its hiring binge comes as the Silicon Valley economy continues to rebound from the dot-com bust in 2000, and venture-capital investors are pouring money into new businesses, all of which are competing for talent.
Facebook board member Jim Breyer says that while "the valuation on stock options will absolutely rise" at the company, others -- such as Microsoft, Google Inc. and Cisco Systems Inc. -- were able to hire talent even "after they had public valuations in the billions." People familiar with the matter said Facebook may try to work around the issue by giving some new employees other types of noncash compensation, such as restricted stock grants.
It is unclear just how much more expensive Facebook's stock options will become. Silicon Valley start-ups generally rely upon outside financial firms to value their businesses and come up with an appropriate price for options. The price investors pay for stakes in the companies is one factor in determining how much the start-ups are worth, says Jim Timmins, a managing director at Pagemill Partners, a Silicon Valley firm that does valuation work. Other factors include a company's cash flow, the prices of other companies in the same industry, and merger and acquisition activity involving similar companies, he says.
In Facebook's case, its new value for the purpose of issuing options "isn't going to be $15 billion," Mr. Timmins says. "But it's going to be higher than it was before."
People familiar with the matter say that recently, Facebook had been issuing options in the range of $5 to $10 a share. In 2005, when Facebook had fewer than 50 employees and was worth far less than it is now, some new hires received options valued at less than $1 apiece, say people familiar with the matter. Facebook declined to comment on specific option prices.
Rafat writes:
So about 500 of us will gather in that gilded ballroom in Waldorf-Astoria, in about two business days from now, to discuss the "Future of Business Media", in all its rambunctious glory. It is CNBC vs FBN vs Bloomberg vs Reuters-Thomson, it is Portfolio vs Fortune vs BusinessWeek vs Economist vs Forbes, it is WSJ vs FT vs whichever camp you're in, it is Quadrangle vs Elevation, it is Yahoo (NSDQ: YHOO) Finance vs CNNMoney vs the rest, it is big deals vs Web 2.0-driven innovation, it is private equity vs venture hopes of disruption, it is tech media vs tech blogs, and above it all, it is Cramer vs Kramer. Or maybe there is no "vs" at all. We are all in there, one way or the other, and we love it this way.
Sample responses:
Mike Chapman suggests this expert on this topic:
I think that targeting and finding reliable resources is going to become even more complex. I could see someone spending many hours (can you say days?) going through a lot of useless junk to reach a qualified candidate. I would stress learning to navigate the social web ASAP to become acquainted with the language, environment, and tools that will save you lots of time and, more importantly, give you that edge over your competition. There is no question that the emergence of social media as a dominant platform of communication online provides many opportunities to those looking for an edge. Recruiters are brilliant at searching and obtaining valuable sources of info offline. However, the lines between the online and offline worlds are becoming increasingly blurry. In the next 5 years I see social networks become increasingly prevalent, I see vertical search becoming more advanced, and (as hardware advances) and I see more interactive media taking over (Second Life). Recruiters could be video conferencing with someone at the other end of the world, searching through their facebook feed , attending several virtual get-togethers at the same time.
Mark Speirs suggests this expert on this topic:
What an awesome question!
1. I see people becoming more comfortable with the concept of a real web identity. There will develop more ways to verify you are who you say you are on the web. People who are familiar with MySpace, Facebook, LinkedIn, and Xing, will have a real advantage with branding themselves (the me.Inc) concept - if they are ligit.
2. Look for resumes to be converted more and more into XML format. The resume DTD already exists but the apps to take advantage of it are slim to none at this point. With XML you'll be able to reassmble a winning team from 5 years ago. Fancey fonts will disappear. Resumes will start to carry more weight as more details will be verifiable.
From today's Ken Radio mail:
Social Media's Population
Social networking sites will enlist 230 million active members by the end of the year and will keep attracting new users until at least 2009, according to an analyst report. But investors are still wary--and for good reason, as long-term growth is by no means certain. Revenues from social-networking services will hit $965 million this year, swelling to $2.4 billion by 2012. Growth in the membership of social-networking sites varies dramatically by region, Asia Pacific will account for 35% of global social networking users by the end of this year, followed by Europe, the Middle East and Africa with 28%, North America 25, and the Caribbean and Latin America 12%. Parks Associates found that 80% of broadband users aged 18-25 use social networking sites on a monthly basis, but monetizing these users is proving to be difficult even for leaders such as MySpace.
72% of social networking users would stop using a site if they were required to pay a monthly fee of as little as $2. Advertising looks like the obvious alternative, but the research suggests that nearly 40% of respondents would stop visiting a social networking site if it contained too many ads.
They hold the distinction of being the only company I know of to have scored a launch at both the TechCrunch 40 last month AND the web 2.0 conference this week.
Arrington offered up a nice shout out yesterday on techcrunch
If You Are A Frequent Traveler, You Are Going To Love Tripit
Tripit, one of the companies that launched at TechCrunch40 is an extremely useful application for frequent travelers. It's dead simple to use and it keeps you organized - all you have to do is forward confirmation emails to them when you purchase airline tickets, hotel reservations, car rentals, etc. Tripit pulls the relevant information out of the emails and builds an organized itinerary for you. You can send emails in any order, for multiple trips, whatever. It just figures everything out and organizes it. The best part is you don't even need to register to start using it. Just take an email and forward it to plans@tripit.com. Within seconds you'll get a confirmation email back and you go from there. If it doesn't recognize the email format from the seventy travel companies they currently support (orbitz, united airlines, marriott, etc.), you can add the information in directly on the website.Today at the Web 2.0 Summit CEO Greg Brockway is launching a new feature that makes the service even more useful, particularly on a mobile device (what you have with you when you travel). You email a basic command to the service and it responds with relevant information. "Get Flight Today" will return today's flight information, for example. Or just "Get Trip" to get full details of your most current trip. Or just email "Help" to get a list of possible commands and modifiers.
San Francisco-based TripIt has raised $1 million from O'Reilly AlphaTech Ventures.
NEW YORK It's been six months since eBay and Google each launched online systems to buy and sell TV ads. So far the results have been markedly different: Google is off to a promising start while eBay last week admitted it is "disappointed" by the early response.
Mike Steib, director of TV ads at Google, said the company's system has sold more than 100,000 spots to "dozens" of marketers, including several of the top 10 advertisers from key ad categories (autos, packaged goods, entertainment, etc.) since its May launch on satellite carrier Dish TV. "From a business standpoint, it's been really successful and encouraging. We're off and running," Steib said.
At eBay, the initial results have been far less encouraging. When the auction site unveiled plans in August 2006 for an electronic marketplace to buy and sell TV ads, it had hoped to attract a broad swath of cable networks to participate. This was in addition to a handful of charter advertisers who had earmarked $50 million to the project, said supporters of the initiative at the time. So far the eBay service has fallen short of those expectations. Only three networks are known to be participating--Oxygen, Ion (formerly Pax TV) and TV One--and only Home Depot and Intel are believed to have purchased time through the system. EBay declined to comment on whether other networks or advertisers have conducted business on the system. A representative said that, to date, advertisers had issued requests for ad time totaling "several million," but it is unclear what percentage of those orders have been fulfilled. Howard Rosenberg, director of eBay trading platforms, declined to be interviewed. But in response to queries, the company issued a statement that said, "We've been disappointed by the lack of broad engagement by cable networks. This has caused the initial testing to be slower than expected."
Despite the lackluster response, eBay stressed that it is not giving up yet. "We're continuing to test and evaluate the system, and we encourage other networks to participate in making offers," the eBay statement read. Why the different degrees of success coming out of the gate? In a follow-up statement, eBay offered its own theory: "It seems that the cable networks who are not participating still fundamentally misunderstand how the marketplace works ...
Some seem to believe that it is an auction marketplace in which the high bidder wins and the network loses control over setting their own prices. That is not the case." Rather, eBay explained, its system is RFP based, with advertisers requesting proposals and networks responding. Then a negotiation takes place through an exchange of e-mails, and the parties either come to terms or they don't.
But others offered a different reason for Google's greater success: It is tying its auction ad sales data to viewing information generated from Dish TV set-top boxes. And it's sharing the combined data with participating marketers and agencies free of charge. (Marketers don't have access to competitors' information, however.) With the Dish TV data, an advertiser will know the day after ads run what percentage of households tuned out of ads and at exactly what point (down to the second) a viewer changed channels to avoid an ad. Marketers can run their spots across 94 different channels aired by Dish, including big cable networks such as Discovery, Lifetime and ESPN, niche channels like CSTV and regional sports networks. This allows advertisers to compare different tune-in-tune-out levels for their ads across an array of networks, programs, pod positions and dayparts. The CEO at one major media network said the agency and several of its big clients were participating in the Google auction, and not the eBay system, because Google was sharing data that the eBay system does not provide. "We're not sure if the ad auction model is right, but we want to learn from it," the executive said. "Google is offering data that may advance our consumer insights and make transactions more efficient. With eBay, it's a marketplace change with no benefit."
Great post.
Developers are the key to victory in the upcoming Social Platform Wars. The 15 billion dollar question is how do you attract developers to your platform? Facebook and their VC partners announced a $10M fund and claim that over 80,000 developers have registered so far. This is an impressive number but Facebook opened the door to a new industry. Out of the gate, will the next platform released garner as much attention? This is difficult to predict. This is a new industry so you may see the same early adopters evaluate a competing framework.
So far, social application service providers have been able to quickly monetize the Facebook platform and this will remain an important factor in driving developer support. Tools and libraries will also be essential. Facebook started this by introducing the Facebook Markup Language or FBML. FBML provides XML tags that enable application developers to embed UI functionality in their application that is consistent with the Facebook UI. This can be compared to the tools available in Visual Basic, PowerBuilder and other similar technologies. By providing developers with tools and libraries that allow them to efficiently work on business logic you reduce the time to market and the technical aptitude required to build the application. Portability is the one caveat of platform specific libraries; although, we don't see this as a difficult technical problem. The smart ones will embed their business/application logic in reusable components or services so they only have to port pieces of the UI.
Everyone is jumping on the Facebook "open platform" bandwagon, but LinkedIn can at least say it was among the first to issue copycat-intent statements shortly after the Facebook event. Richard MacManus covered the possibilities offered by a LinkedIn platform here in June.
Now LinkedIn CEO Dan Nye has done an interview with the New York Times where he laid out some of the vision for the company's upcoming outreach to outside developers. It won't be a very warm welcome compared to the Facebook lovefest. Though this should be unsurprising, LinkedIn's platform will require permission from the company before developers can get in on the action.
Though Facebook apps do need to be added by Facebook to the app directory, a quick look through there shows that the bar is low enough that it may as well be open to all. I've talked to many companies holding out for a future opportunity to score real estate on LinkedIn profile pages. Nye says in this interview that the average income of a LinkedIn user is $140k per year - it's a real injustice that such high-quality human beings won't have easy access to all our widgets. LinkedIn will focus its platform on letting developers tie LinkedIn functionality to outside services (Salesforce is the example given, surprise surprise) and to adding buttoned-up business functionality to LinkedIn itself.
It's Not a Social Network! Nye also told the Times that LinkedIn doesn't consider itself a social network, either. That's funny, that's what Facebook loudly insisted on to its developers pre-platform launch, too. They weren't allowed to mention MySpace or the phrase social networking in their PR. Facebook is a social utility - they insisted. That was an eye-roller at the time and sounds even sillier now. We'll see what the LinkedIn platform looks like when the rubber finally hits the road, but when it happens - don't quit your day job to be a LinkedIn app developer.
[boarding a plane, 3 hours delayed so sorry don't have time now to write anything more about this.]
Courtesy of TechCrunch:
Shelby Bonnie left the company he co-founded with Halsey Minor, CNET, just about one year ago. This morning he launches his next startup, PoliticalBase. The site, which focuses on local, state and national elections and other political matters, is timed perfectly to take advantage of the 2008 presidential elections and the estimated $4.5 billion that will be spent on advertising to promote candidates and issues. PoliticalBase is a structured Wiki that encourages research and debate. Users can edit most of the text but can't change the underlying database structure. That allows the site to slice and dice data for comparison purposes (something that can't be done with the free-for-all Wikipedia) but still gives the site's community the ability to create and edit content.
read on...
From today's NY Times.
Thousands of software developers are creating features for Facebook, the rapidly growing social network, many hoping to strike it rich alongside Facebook's own employees. Facebook, based in Palo Alto, Calif., opened its service to outside developers this spring, inviting them to create tools for the site and to try to profit from them. Since then, more than 4,000 "applications" have flooded onto the site, spicing it up with games or whimsical programs called widgets that let you turn your friends into virtual zombies and more practical tools that let users display images of their favorite books, music, movies and wine on their profile pages. The wave of attention from users and developers has sent estimates of Facebook's value soaring into the dot-com stratosphere. Last month, there were reports that Microsoft was considering a $500 million investment that would value the three-year-old company at up to $15 billion.ahem! This reporter must not have received the memo on Jobster on Facebook, where more than $500k in real revenue has been achieved in the past few months for delivering real services connecting real employers with real members of the digital generation on facebook. really.
Now it appears that such exuberance has infused the expanding Facebook universe, even though no one has yet proved it is possible to build a profitable business with sustainable revenues on the site. Some developers report earning tens of thousands of dollars in advertising with the applications they have created. Yet their applications are mostly running ads promoting other Facebook applications -- a situation that recalls the earliest Gold Rush miners, who earned a living selling shovels to other miners. And developers must cover the cost of hosting the applications on their own Web servers. [read rest of article here.]
For nostalgic hippies in the SF bay area, this was the 40th anniversary of 1967's famous Summer of Love. But for every Silicon Valley developer, entrepreneur, and VC who has a pulse it's been the Summer of Facebook. While it's easy to put aside geeky exuberance over the latest insanely great technology, it's impossible to ignore the growing size and scope of Facebook, and the impact it's having on internet startups and traditional businesses alike. Over half of Facebook's 43 million users visit every day, spend an average of 20 minutes on the site, and view over 54 billion total page views per month. In a few short months Facebook has quickly become one of the most impressive user acquisition channels on the web, rivaling SEO & SEM strategies for priority with new startups. Over 60 Facebook applications have more than 1 million total users, and over 40 have at least 100,000 daily users. With the groundbreaking launch of the Facebook Platform this past spring, and the subsequent runaway growth of Facebook Apps adopted by millions of users this summer, the question on everyone's lips (including Google and Microsoft) has been: "So what's your Facebook strategy?". If you're still scrambling to figure out yours, read on.
