Tibco Ponies Up $195M For Analytics' Spotfire
Thursday, May 10, 2007
Analysis: The New Math - How Did MySpace Value PhotoBucket
With that in mind, we think the discussions over the valuation of PhotoBucket and other big deals are somewhat important. If the deal is officially confirmed at $300M, that is 50x trailing revenue and over $17 per monthly unique visitor.
Mike Arrington calls the $300M (with earnout) that MySpace paid for PhotoBucket a steal. His logic is that: + Google paid $1.65B for YouTube. By the time the deal closed, the Google stock was worth nearly $1.8B. MySpace paid 1/5 of that. YouTube had little revenue, while PhotoBuckets projects it will make $25M in 2007. Photobucket has 80% of the visitors that YouTube had when it was acquired. + MySpace got a discount when it cut off PhotoBucket's users before the deal to show who wears the pants.
+ In a more recent post, he hedges, however, that PhotoBucket and MySpace might have 100% user overlap, so for $250M its gets no new users.
+ Valleywag accuses TechCrunch of being a shill for PhotoBucket's iBankers Lehman Brothers. We don't have any way of assessing this information.
Henry Blodget takes the case even further, arguing that PhotoBucket could barely give itself away, a dramatic statement he agrees.
Counterpoint is Microsoft's Don Dodge who instructs Blodget and Arrington to come to their senses:
"At some point the end user of all these free services is the same user and they can't be monetized any further no matter how many new services are added. Advertisers will eventually figure this out. Ad rates will drop. Revenues will drop...and stock prices will drop. It is all about the stock price. No one cares about real revenues and earnings as long as the stock price is high.When stock prices drop everyone along the chain starts to rethink their assumptions about value and ROI. The changes ripple all the way back up the food chain. The individual stockholders get more conservative and move out of bubble stocks. The Internet companies stop acquiring because their stock price has deflated. The entrepreneurs stop agreeing to acquisitions because the rewards are less. The VCs stop funding new startups because the risk/reward ratio doesn't work.
We have seen this before. It was the nuclear winter that lasted from 2000 to 2003. It is amazing how quickly we forget. As I always say "fear is temporary...greed is permanent"
HipMojo joins the naysers arguing that PhotoBucket is no YouTube. His point here is that Photobucket is just a utility and does not command attention.
(Over) Counting Widgets
I got an email from a friend the other day.
"Did you see that Clearspring has served 3bn widgets in the past five months?"
I hadn't actually seen that news, but here is the press release my friend was referring to. It's clearly an impressive number and Clearspring is doing some great things in the widget market.
But before we start putting Clearsping in McDonalds territory (billions served), let's get something straight. Serving widgets generates huge numbers quickly.
All you need to do is look at Photobucket, Slide, and RockYou's numbers for their photo/slideshow widgets to see how powerful the widget model is. I don't have access to the actual numbers for these three photo widget services and I'd prefer not to print the rumors I've heard, but I'd venture a guess that their numbers for widgets served each day will make Clearspring's 3bn number look tiny.
I do know the numbers for FeedBurner's widgets and they are well north of what Clearspring is serving. But this post is not about whose you know what is bigger than whose.
It's about the challenge of understanding what is what in the widget market.
Max Levchin, Slide's founder and CEO, is one of the most thoughtful people in the widget market and I've had some conversations with him about the challenges of measuring widgets. He's frustrated that there isn't good third party data on the widget market. I've also talked to the team at comScore about this issue because it's starting to become an issue everyone is paying attention to and there just isn't good data yet.
You can get unique visitor counts from comScore on widgets like Photobucket, Slide, and RockYou, but what does it mean? Here is the comScore data on the photo widget sector (the top three players).
Are those 18mm uniques that are attributed to Photobucket being seen on Photobucket.com? Or are those 18mm uniques the number of people that are being exposed to the Photobucket widget wherever it is being embedded (MySpace, Beebo, etc). I don't know the answer to that simple question, but it's an important one.
And what's the right number to look at? Should Photobucket get credit for having an audience that sees its widget on other services pages? When that page includes five to ten other widgets? Or should it just get credit for those who interact with the widget in some way?
The bottom line is we need better numbers on widgets, we need some standards, and we need them now.
Wednesday, May 09, 2007
17 ways to beat Google - Search innovations and who is doing them
Nitin Karandikar sent me a link to his post on "Top 17 Search Innovations outside of Google" which reviews 17 different approaches to web search innovation. He also lists some of the companies leading the way in each area. Web search is a very popular topic for writers and bloggers. Charles Knight maintains a list of the Top 100 Alternative Search Engines and updates it monthly.
Web search is big business. Microsoft's Live Search is third in market share with about 10% of all web searches and it generates hundreds of millions of dollars in revenue. It is no wonder that VCs and entrepreneurs are investing lots of time and money to discover The Next Big Thing in search.
Of all the approaches described by Nitin and listed by Charles Knight, I think three are promising; Natural Language Processing, Local Search, and Cell Phone Voice Search.
Natural Language Processing (NLP) has been around for a while. The idea is to get users to ask questions in conversational style, and then parse that question using NLP techniques to divine meaning and context. The problem is that most users only enter two words in a search...sometimes three words. No matter how sophisticated your NLP technology is you aren't going to gain a lot more context from two or three words. The real secret power of NLP is realized by applying it to the search index...not the search term. Meaning, analyze all the web pages in the index with the NLP and add lots of meta tags, meaning, and context to the index. Then when search queries come in you can match the keywords to the much richer index. Powerset is doing some ground breaking work in this area.
Local Search is a huge market. The easy part of local search has already been done. The big search engines have developed crawlers to crawl all web pages, parse and extract local identifying information, and cross reference it to other online data. The problem is that over 50% of small local businesses don't have web sites. A great local search experience requires that ALL local businesses are included and that the index be updated regularly. CitySquares Online is a Boston based startup attacking this problem.
Cell phone voice based search is an obvious opportunity, but very hard to do. It requires great voice recognition technology, a well organized local search index, a high quality voice response system, and special screen rendering technology to display the results on the cell phone screen. Parts of the technology exist today, but no one has combined all the pieces into a great user experience. This is a huge opportunity with no clear leader.
OK, now back to Nitin's list of 17 search innovation areas. Please go to his site to get more detail on each one. Unless you are a search geek like me you may find this stuff boring, but here are the categories;
- Natural Language Processing
- Personalization
- Vertical Search
- Multimedia Search
- Restricted Data Sources
- Domain Specific Search
- Parametric Search
- Social network filtering
- Human directed search
- Semantic search
- Discovery linked search
- Classification, Tags, Clustering approaches
- Results visualization
- Results refinement and filters
- Specialized search platforms
- Related searches
- Search agents
What do you think? Who will be the next Google? Which approach to search will provide the most value? Place your bets and you could be the next search billionaire.
Writings on Starbucks Cup Upsets Customer
Controversy is brewing around a religious quote printed on a Starbucks cup, which has turned at least one customer off from the brand.
An Ohio woman was offended by one of hundreds of comments submitted by customers and celebrities that appear on the cups as part of Starbuck’s The Way I See It program. The program is meant to spark discussion and get people thinking about a variety of topics, including religion, the company said.
The offending quote reads, "Why in moments of crisis do we ask God for strength and help? As cognitive beings, why would we ask something that may well be a figment of our imaginations for guidance? Why not search inside ourselves for the power to overcome? After all, we are strong enough to cause most of the catastrophes we need to endure."
The comment was made by Bill Scheel, a Starbucks customer from London, Ontario, who describes himself as a "modern day nobody."
The Ohio woman, Michelle Incanno, told news outlets that she would not return to Starbucks.
Starbucks has been printing comments from celebrities, notable figures and customers on its cups since 2005. It has collected more than 250 writings since the initiative launched. By yearend, the company expects to feature about 300 different comments.
"Our goal with The Way I See It is to promote a free and open exchange of ideas and thoughts on a wide variety of topics," Starbucks spokesperson Tricia Moriarty said. "We think this tradition of dialogue and discussion is an important facet of the coffeehouse experience."
The fact that Scheel's comments are sparking dialogue "is the original intent of the program," she added.
A disclaimer on Starbucks.com/WayISeeIt says the authors' opinions do not necessary reflect those of the company.
"Starbucks frequently receives feedback on many of the quotes as people express their thoughts and views on the different quotes and contributors," Moriarty said. "We highly value all of our customers and never wish to offend anyone. The objective of the program is to encourage open and thoughtful discussion."
This particular quote may have gained a head of steam because numerous media outlets picked up on it.
Despite the negative feedback, Starbucks has no plans to remove any of the writings from its cups, Moriarty said.
Only a few comments cover religion. But those that do have different points of view, Moriarty said.
For instance, musician Mike Doughty, wrote, "It's tragic that extremists co-opt the notion of God, and that hipsters and artists reject spirituality out of hand. I don't have a fixed idea of God. But I feel that it's us—the messed-up, the half-crazy, the burning, the questing—that need God, a lot more than the goody-two-shoes do."
Others have a humorous tone. A quote from Joseph Palm, a Starbucks customer from Oshkosh, Wisconsin, said, "Scientists tell us we only use 5% of our brains. But if they only used 5% of their brains to reach that conclusion, then why should we believe them?"
Customers can share their thoughts about the cups or submit a quote of their own to Starbucks.com/Retail/TheWayISeeIt_Comments.asp. Starbucks said its posts responses on its letters to the editors section on the Web site.
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