Thursday, November 30, 2006

I Drove my Lambo Tractor thru Web Two Point Duh


Lambo Tractor
Originally uploaded by benbarren.
Just back from Sydney today and this week which started with presentations on Sunday thru Monday and Syd Tues-Wed keeps rolling. The one thing I'm finding is when it's your own business, and you can rely on yourself you push 110%. So that's nice to know. Even if it is painful. But not always, demo'ing technology and doing meetings creates an amazing amount of adrenalin which pushes the body thru the week (in a way even caffeine and sugar cant if u arent a great sleeper) The Bulletpoints driving my week are :

- Vertical Structured Blogging Communities going gangbustas
- Financing terms sheets and aligning the various parties
- API'ing Aussie Blogger Mentions of MSM + vice versa
- Defamation, Copyright + Moderation and practical means of dealing with
- Parking, Petrol, Airplanes, Trams and Trains.
- Reconnecting with the old 9MSN mafia.
- Trying to lock down all existing deals and work before XMAS which means by December 15th - when everyone u want to deal with is extremely busy

I cant wait for the 2nd test to start......

Monday, November 27, 2006

Google 15th Biggest Company in US. Next Veronica Mars.

I'm off to Sydney tomorrow which means 530am alarm tomorrow and finishing 3 presentations today ! (most of which luckily were built structurally during Australian Idol final last night which meant I had nearly 3 hours to manipulate PowerPoint.) I have some small windows (early Wed coffee for example / after lunch Tues around Surrey Hillsway) and not a crazy schedule (more followup from fortnight ago) Feel free to ping as annoying as I am to catch. (flickr is waay not working for me today and it's blogging api hasnt worked properly since redesign either... nor has rojo since acquisition.. i need new blogging tools)

I have to laugh at this Internet Stock Blog coverage of Barron's analyst : "Google now has the 15th biggest market cap in the U.S., and its P/E ratio (close to 40) is 3x comparable companies'. Earnings estimates for 2007 are $13.70 (+33%), which looks great, but is actually weak compared to 2006 growth of 81% -- and the 2007 number ignores $1/share of stock option expenses and gives earnings-Google Chart 26 11 06credit of $1/share for interest earned on GOOG's $10b stash of cash. U.S. search revenue growth, its mainstay, was down to 6% growth q/q in Q3, compared to double-digit growth a half-year ago."

Saturday, November 25, 2006

"Hedge funds are racing to quantify things — like newspaper headlines — that were previously immune from number-crunching."

State Election here today and I wouldnt be surprised if the Liberals won or got close. I've been amazed we haven't seen locally or globally more 2.0 versions of RagingBull.com. Anyone seen or using any structured finance blogging communities ?

NYT : "In the pursuit of previously undetectable patterns, hedge funds are racing to quantify things — like newspaper headlines — that were previously immune from number-crunching."

Friday, November 24, 2006

Britney Hearts Bigpond


bi besties
Originally uploaded by benbarren.
Yup, sounds about right. Electron Soup's got Pluto's Encore : "You could probably whip out the Trade Practices Act for this one, but it's likely just an oversight. Pete at intermaweb.net reports that the advertisements for Bigpond Music feature a snazzy-looking MacBook Pro. Only problem? Bigpond Music doesn't work on a Mac, owing to the crippleware it attaches to its files to stop you sharing them with friends."

I'm certainly over that TV ad where the kids get home from necking alot of X and say "Hey I can download this song to my mobile..... and now it's on my PC. Turn up the music. We are going to party like it's 1999." Sure is 1999. Classic example of marketers hoping there is a problem that really isnt, and then providing a solution, hoping if you buy enough TARPS on FTA-TV you will buy reach, thus sales. Nada. Try an all you can eat 3G data plan which includes downloading songs instead.

Anyway, so I'm back from Melbourne ($37 of petrol later), and lots of good happenings, not as good as Bono, Edge'n'rest (who are figuring out difference between Melbourne and Sydney in their sign off to audience) picking up $50m from their downunder tour. Or Brittney Spear's getting $15M for a 20 week set in Las Vegas. (should pay for the divorce with change) Fed-Ex has been offered $150K pounds to do Celebrity Big Brother. Neat.

Thursday, November 23, 2006

Jessica Alba Thinks AOL is "Fascinating"


sunglasses economy
Originally uploaded by benbarren.
Henry Blodget is much funnier as a Rising Phoenix, here using new AOL boss - - for some leadership theory. Seeking Alpha :

''I'm fascinated by the Internet space,'' Falco told The Associated Press. ''I see it as a very exciting environment to be in. It reminds me a lot about network television 30 years ago. It's a little bit like the Wild West. There aren't a lot of rules. That's what excites me about it.''

Blodget : "A "fascinating environment"? Yes. And I guess it's good that Falco's excited about his new job. But given that the next six months will determine whether AOL lives for a decade or dies in a year, one hopes that Falco's gee-whiz attitude is quickly replaced by an understanding that the Internet's wild west days are long gone and that there are crystal-clear Internet rules--one of which is that if you're not No. 1, No. 2, or, at worst, No. 3, you're toast."

The Sean Parker Story + Ashes Kick-Off.


A2B
Originally uploaded by benbarren.
I'm in Melbourne so if anyone wants to catch up tomorrow-morn' because you are a private equity tech-media buy-out guru full of brilliant ideas that u need to share, ping me I have a mid morning window in the city (which i dont visit much apart from Collins St finance :)

Isn't it awesome the Ashes have started and Ponting has a century. I'll be big time at the Melbourne Test, esp in the new comfortable surrounds and MCC Cricket Museum ! BTW I find it amazing (well i dont actually) that so much of my business involving external parties is done Wednesday and Thursday. Like clockwork ! It could be a self-fulfilling prophecy but having worked in the type of companies I am dealing with, I dont think so :D

Interesting ancillary details around Sean Parker (and Facebook) who "is definitely Jim Clark circa 1996, and the story is only going to get more interesting from this point onwards. If I were Michael Lewis looking for the next big book to write, I'd start spending time with Sean Parker."

Numair.com : "Sean Parker is the one who convince Mark Zuckerberg to turn Facebook into a real business, to move to Palo Alto, to take the seed money from his friend Peter Thiel (who gave him the generous terms needed to keep control of the company even after the VCs got involved), to hire former Napster employee Aaron Sittig to redesign Thefacebook into what we see on the site today; it was Parker who obsessively negotiated with the owner of facebook.com to buy the domain, as the "the" in thefacebook.com annoyed him to no end."

The untold story is always the interesting one eh.. I'm not sure Sean is building some monster boat yet which is controlled by computational astro-physics which is basically what the new new thing by lewis was about. I wasn't aware of the stream of companies Parker founded or advised - Napster, Plaxo, PBWiki, Facebook, etc. Anyway, who cares, it's great that the Aussies have pretty much won the Ashes already. You cant get Hussey and Ponting out on the first day with that type of bowling.. Just wish Tait would be opening bowling with Lee so the English really s**t themselves. hehe

Wednesday, November 22, 2006

Mr Ed in Red Lamp District


financial district, sf
Originally uploaded by emilychang.
A horse is a horse of course, unless of course the horse has the name of the famous Mr Ed (Schmidt) in The Economist : "Sophisticated browsers and technologies like LAMP or AJAX—not neon lights or Greek heroes but simple building blocks that enable people to produce and distribute content—are critical in this new world. They are the kind of technologies that transform audio, video, text and digital data into intuitive, easy-to-use services. They make Google, MySpace, YouTube, Gmail, Yahoo! and Microsoft Live possible, and they haven’t even entered adolescence."

$1.5 Billion Dollars Each for ninemsn + Fairfax Digital !


OC zombie
Originally uploaded by benbarren.
Afternoon paper read while listening to Hamish + Andy before afternoon beach run, and cant keep away from the business analysis on Private Equity's love affair with Australia's Media sector. It seems my valuation guestimates aren't too wrong.The extra interesting tidbits today from Alan Kohler esp includes :

- ninemsn and Yahoo7 potentially have similar book values for the PBL7-Media deals : $1.5 Billion each ! Now I assume Mr Kohler means 100% = $1.5 billion each, rather than the 50% PBL + Seven (and their new partners) have of these businesses. For Kerry Stokes, that's not bad for $10m in working capital plus some ads and offloading some very minor tech assets I can't even remember even though I checked their name yesterday.

- PBL Media earnings multiple after tax (NPAT) was around 25 times, while 7Media is at 37 times. The reason being 7 have 4 of the US' top rating shows lined up for next year as well as AFL. (and nine has some turkeys)

- Fairfax Digital and Austereo are about to announce a cross-marketing and content partnership that will "boost Fairfax's online websites with further entertainment news, such as celebrity interviews, from Austereo. In return, Fairfax Digital will sell advertising space across Austereo's 13 radio station websites, which include TripleM and 2DayFM."

I love all this : Private equity unlocking Traditional Media who are attacking Internet 1.0. To me, it's really just a question of timing as to when 2.0 assets are part of the mix. (remember Wikipedia, YouTube and MySpace are all top 10 websites visited by Australians)

The irony is the arsonist that lit this media fire (metaphor used in paper) was Minister Helen Coonan, whose Andrew Olle keynote address last week wasn't about casinos on Macau, or Fairfax's rivers of gold, it was all bottom up social media and politics. Biased example : All the best radio programming is run at 6-9am on competing stations in different states. I solve this by listening to the best of Austereo's programming (eg Hamish + Andy) care of gnoos indexing their podcasts, which are in the MP3 Podcast format (links are for Matt + Jo, The Cage, Kyle + Jackie O): Podcasts are delivered (and we index them thru) Really Simple Syndication. Consumers will increasingly use standards like RSS (whether they know it or not) to program and create their own media mix - whoever the publisher, amateur and/or pro.

This is what I tell myself anyway. These new standards can turbo-charge traditional assets or create new ones. Without a critical mass of audience adoption, the New York Times could be right and Australia may just bypass the Web 2.0 stage and enter Web 3.0 - which will likely involve a whole range of companies we cant imagine formulated by Generation Y. (tongue firmly in cheek....)

So with online advertising growing at 60% per annum from a $1bn base, shouldn't be too hard to sit on these assets for 12-24 months and pick up a couple billion to pay down some debt, and buy a new Gulfstream. (while u should never finish with some words between brackets - did anyone catch the AFR magazine a few weeks ago profiling Australians such as the Stokes - with their red carpet arrival and individual BMW limos - who have very well fitted out private jets : Not surprising that private equity almost invented the private jet as corporate expense regime)

A Prius Life in the Valley


day 50 Daryl Hannah
Originally uploaded by slash_ovlov.
Pre-Summer mini heatwave over. Back to work. NYT :I don’t want to live the life of a Boxster, because when you get a Boxster you wish you had a 911,” he said, referring to a much more expensive Porsche. “And you know what people who have 911s wish they had? They wish they had a Ferrari.”

Tuesday, November 21, 2006

Do You Want Me to be Honest With You ?


last night?
Originally uploaded by benbarren.
In the world of structured blogging partnerships with publishers, you can't avoid the flipside of Defamation (when your previously passive audience can now create blogs under a publisher brand and then write bad stuff which exposes Publisher) Followed by :

- Copyright (people upload content they dont have the right to like that video aggregation site today that is aggregating Australian TV shows on YouTube - Peekvid.com)
- As well as the standard online community concerns : Profanity, Sex of a too hard type;
- Crafty businesses as well as splogs, and biggest of all that write junk and then link back to their dodgey site
- Boring, bad quality user generated content that is not meant to be viewed as "media" content at all.
As The Dual Citizen-ship James Farmer (who navigates the Orange Building in Spencer St during the day and edublogs.org at night) has cheekily argued and polarised (to much amusement), there are only so many voices that warrant turning the Bose Heaphones up (mine are actually Sony's of yesteryear that work oh so much better than the Ipod white buds), rather than neutralising the White Noise. Creative Juice is finite.

In between writing business plans and waiting for bus dev deals to progress this week and scanning the blogosphere, I often have the daily papers next to my imac + ibook babies. I've been hearing about these potentially new impending copyright laws (and hoping they'd go away) that could make owning an Ipod with music on it, end up with you sharing a cell in the Collingwood lockup with the real grime'n'underworld.

So when I came across the blog : Weatherall's Law: IP in the land of Oz - written by a Lecturer of Law at Melbourne Uni, I thought I might find an easily quotable solution I could put into powerpoint to assuage any publisher jitters. As with everything in life, there is no black and white, just lots of shades of grey. There was a good link to the Law Reform on ABC, which incl a Transcript of a recent discussion with Professor Brian Fitzgerald who is the head of the School of Law at QUT in Brisbane.

It sounds serious. It is. And makes me envious of an economy like the US where they let services like YouTube, MySpace, Blogger and such grow, and only start dealing with the issues when there is a huge competitive acquisition of the startup, which brings in the lawyers who dont want competitors to have in effect an unfair advantage. (with the loser nearly always being the consumer, who then needs to stay one step ahead of the corporate law moves of the media co's) I've included some non-linear soundbites :

Brian Fitzgerald: "The amendments to the Copyright Act that are currently before parliament run for a couple of hundred pages, and a big chunk of that does relate to the criminal provisions. They introduce a very wide-ranging group of provisions that will apply in cases of strict liability, meaning that people could find themselves in trouble, even if they didn't really know what they were doing was wrong."

"I might have uploaded a video I've done in my bedroom of myself lip-syncing a pop song to something like Youtube or one of these user-generated websites. And because other people can see that and I'm infringing copyright in doing that, I could find myself with an on-the-spot fine under these new strict liability provisions."

"I think we would all hope that the real mischief here is to stamp out copyright infringement on a commercial scale, and that's what we hope the provisions will remedy. But unfortunately, the provisions are drafted in fairly broad terms, and really, if the government is minded to stop copyright infringement on a commercial scale, that's what we should be trying to put into the provisions. They're just too broadly worded as they currently stand."

"Someone could be running some sort of website or web interface and on that they might have some infringing copyright material, well that would be regarded as a distribution of infringing material. Does it prejudice the copyright owner? They would be all questions that would come up. So there's an enormous possibility and potential for liability here because copyright really"

BB : Jeepers. How each publisher interprets this is definitely going to be pretty broad. In terms of tested situations, I've heard some local publishers suggesting it's better to not moderate at all a site (minus automated and obvious errors post publishing), rather than moderate selectively. Others go with heavy post moderation. And of course pre-moderation.

What is missing so far is the technical, algorithmic and machine learning smarts which could wipe out dodgey content and keep the smart content automagically. Especially on the text/blog/defamation side. I've definitely included some of my 2007 tech budget to building these type of smarts to help solve publisher problems.

To end with a hypothetical, as we are talking about law here - it would be interesting to hear what the lawyers think about what it means for publishers practically (as well as the end consumer) :
- Imagine I got a "virtual space" from Publisher or Website Provider A (could be an ISP, a content site, search engine) and received X megabytes of storage space.
- And then all my electronic communications - whether they be emails, text messages, standard blog posts, photo and video storage, I uploaded/backedup to that virtual file directory so I could access them anywhere from any PC with the net and edit them on the fly.
- Each piece of content would have an internet/web address ;
- I would also leave the default "public" settings on this content so much of it could be viewed by public.
- There would be 2 more levels - one for friends, which could view certain files and communication, and another specific temporal authorisation because I was emailing/talking to someone and various content needed to be viewed on the web, privately. eg for a meeting
- I'm wondering where the new laws stand on that. It's definitely a case for samizdat7 and other wunderkind business affairs type that can see the opportunity through the legal mindfield. I'm thinking maybe if we change the name of "blogs" to "public email" maybe that could come under a different ruling ? Feel free to leave any notes.

The Australian : "Peekvid, which The Australian understands is based in Perth, provides direct links to pirated content hosted on YouTube, with videos playing in pop-up windows... including episodes of Home and Away, The Simpsons, Prison Break, and Little Britain... Peekvid has already been the target of the music industry's local enforcement body, which has successfully requested takedowns of music videos from 50 Cent, Alicia Keys, Coldplay and Anastacia... 'It would be fair to say it's considered a large problem. There have been a number of issues for Australian artists' said Sabienne Heindl of the Music Industry Piracy Investigations group."

Update : There is a fantastic response, much appreciated, at Weatherall's Law to the hypothetical I posed. (i'll be digesting it once I finish my current excel chart) Let's hope Red Barren doesnt get shot down :)

Google Sees Search as a Boeing 747 not a DIY Submarine


the haight
Originally uploaded by benbarren.
A Google employee ex-Nasa thanku very much, whose expertise is Artificial Intelligence (+ is kinda bemused to be kewl but not to be top of class smart) talks about how new ala Powerset natural language search startups cannot necessarily compete in The New Arms Race : “Every time, they have maybe one small lever that they suspect is huge. They don’t realise that [all] they have [is] a better door latch on a [Boeing] 747. Now all they have to do is build a 747. None of those ideas I’ve seen are compelling.” (what is it with plane hatches these days in popular culture..)

Not everyone is working on 747s though. BoingBoing profiles a few people who made a submarine and were carrying a higher margin item than CPC ads : "Four individuals were busted off Costa Rica's Pacific coast smuggling 3 tons of cocaine in a DIY submarine. According to the Associated Press, the vessel floated along at 7 miles per hour at a depth of six feet. The giveaway were three pipes, apparently used to provide oxygen to the passengers, moving along the surface of the water."

A Delicious Flickring of Yahoo7 Fairfax Digital


nic knows
Originally uploaded by benbarren.
It was waay hot here yday in the afternoon, and will hit 36C again today before the change comes. I've got to do some quick errands but Yahoo7 has definitely assisted get a higher price/earnings multiple (13.3 times) than PBL Media did (11.7 times). You'd think they've got to want Fairfax even though they gotta deal with The Rupe first. Sure they want the print cashflows and the overall cross media platform, but dont discount the importance of the online assets.

KKR Exec Justin Reizes in today's Herald Sun : "Online is particularly attractive. We think that business has a really bright future."

Kerry Stokes in The Age today also says today he wants to expand Yahoo7: "It's one that the market in particular has misunderstood."

I'm not sure of the exact economics of the Yahoo and Seven deal ? but I remember each party was putting in $10m each of working capital (or similar) for 50% each of the joint venture vehicle. Similar to ninemsn, it would have equal board members (4+4) with an annually revolving chairman.

If there are no other upfront/ongoing (or substantial) licensing fees that Seven have to pay, Stokes is going to profit from all the hard work done over the Faure/Jones A+N/Rosenberg years. That's the benefit of owning a TV network : You can contra 30 second TVC's for Silicon Valley 1.0 + 2.0 Media Apps.

Hey, if someone gave me the reach of Yahoo and its new brew of social media assets - flickr, delicious, etc - I'd be expanding those locally too ! Throw in the Fairfax Digital assets and you have a killer online float worth a couple billion at least depending on whether Yahoo's 50% stake was included. (you just have to look at the value of Yahoo China, Seek etc)

Now just as PBL + 7 deals have dovetailed with private equity (and their online assets are structured the same), it's my punt that Seven + PBL Media(s) would (market conditions still positive) both spin out their online assets within 24 to 36 months : Private equity needs to get a mid-term exit, and their whole operation is about bundling and unbundling assets through exploiting different perceived value of assets on public and private markets.

You would actually have the Ecorp days back : You just have to look at the Australian stock market ASX and there lacks any large cap online media portal/aggregator/search engine. The large caps are vertical players seek, realestate, wotif - but no networks. As long as the entity had a reasonable EBIT of $10m+, investors would jump at the brands and growth story;

Online advertising is worth $986M for 2006 and growing 60% P.A, by the time the floats happened online advertising could be worth $2B and the prospectus for either float would write itself : Yahoo/ Microsoft partner with Australia's leading TV network - Seven/Nine. It could end up being a race.

Seven may aim to rather than being beaten by one month like they were this time, jump PBL and float in 1-2 years : Once some assets have been bought, integrated and market share/financials consolidated. Interesting. Possibly Fictional. But I dont really take private equity as writers of a novel. More like a prospectus.

"Yahoo and Seven have very complementary businesses and brands...This is the best combination to benefit from increased broadband penetration, rich media consumption, and the growing cross-media advertising spend," Yahoo Chief Executive Terry Semel said in the statement. (when initial deal was done, but it would read well for a float)

Monday, November 20, 2006

Yahoo May Need to Embrace the RockStar Programmer.


long weekend
Originally uploaded by benbarren.
Continuing my the Web as Hollywood Hitmaking riff, there is a nice LA 101 essay by by Arianna Huffington on fear, self-loathing and risk taking in creativity and art. It's quite elegant really. I like my postmodernism a bit more surreal, circus and dada, but hey, doesn't she have a blog network ?

The most interesting thing about Yahoo's Peanut Butter Monologue - which I agree with Dave McClure as soon as I read it I thought of Jerry McGuire and not in a good way, is not Yahoo's serious lack of new ad optimisation technologies, itsy sized acquisitions, or wrong internal structure etc : The biggest disconnect (as it always is) is between the suits and engineering. Engineers arent being empowered to take risks in the right areas.

Wouldn't Yahoo have renegade teams of 10 engineers working on new rich media advertising technologies; Another 10 on contextual display ads; More on behaviourial; Reporting; Search; Verticals; Moving beyond purely CPC which google's obvious weakness is, and why they bought YouTube but will take 2 years, if ever, to properly monetize that video asset. That's a window Yahoo could exploit. You can't tell me if you had 100 of the best ad optimisation engineers cordoned off from daily client campaigns, and working solely on new products, algorithms and tools that they couldn't drive better results.

The ad spec for Panama was likely one of those "I'll have what she's having specs" that contain no breakthroughs or elegant solutions, and through bad design are quickly out of date and 2 years later look 3 years old. Not that it's easy to trump Adsense at its core search/text ads for SMB's, but everything else is game on.

Semel may well not be the person nor want to be, nor think he should be as the CEO, the one which unlocks that Writer-Director-Talent relationship that in Portals is Product Planner-Producer-Engineer. This is where BTW Jerry McGuire's ideas on General Managers is right.

Even if the google cult is too heavily weighted to rockstar programmers, that ain't a bad thing with biggest automated advertising cashflow generator known as Adsense. (it's like a casino and optimising every ad page view creates huge bottom line impact)

Variety.com :
"As you may have noticed, for a town built on idiosyncratic vision and nonconformity, Hollywood is a shining example of the herd mentality at work. (Don't believe me? Try getting a new Prius in less than six months) This, too, is caused by fear -- the fear that our instincts and abilities and worth just aren't valuable enough. To prevent others from shutting us down, we do it for them. Trapped by our own fears, we then pretend we're incapable of having what we want, forever waiting for others to give us permission to start living -- or at least start filming our next movie. Pretty soon, we start believing this is the only way."

Also : Interesting to see Yahoo7 in Australia (a JV) rolled into a multi-billion JV between Ch7 and famous KKR buyout firm. I wonder what book value has been assigned to Yahoo7. Stokes has definitely been doing a carbon copy of PBL deals at moment.

How a Cinematic Hit-Making Approach Could Bring Something "More Like Fulfillment" to Mavericks + GEMAYA


Me and Amanda
Originally uploaded by caterina.
With all the talk about Vanilla Yahoo + Peanut Butter (and .com constituents wonder why the US is viewed um, differently, from outside it) Dave Winer summarises the ethos and working environment alot of us want to create and work under - but there are no guarantees whether you are within a smaller bootstrapped web 2.0 cheaper to start, easier to exit, business (with less staff on average than Dot Com companies did) or at a large public co' with endless product lines, armies of people and functional delineations.

Scripting.com : "Hanging out here with Doc Searls for a couple of days last week was like what I'm looking for, but I want ten Docs, and I want to be around them 200 days a year, developing ideas across disciplines. This is what my soul yearns for, not fame, or wealth, more like fullfillment."

In Australia, there we are seeing some financially driven rollups in digital (esp now Photon and Emitch are worth $100m+ more ea than was thought 5 years ago) : Mr Pascoe sent me BlueFreeWay's rollup which Bell Potter are floating, which aside from economics and exit, also exhibits the natural order to consolidation. People want to feel a part of something.

I found working as a Solo Freelancer (previously) sucked and employing one full time technical person is far worse for output and good feelings than employing two or three. It's great as a business grows to 6 to 9 people (a few geeks, founder/managers, a sales guy. admin, etc), and can then sometimes make a run at 15 but the per square inch brain power starts to decrease downwards from employee 10.

Growing from 15 to 60 is another whole exercise (podshow is around 60 employees now I heard on DSC recently) and I've seen many businesses implode at this level. However the best local online businesses (eg ninemsn, Seek, Carsales, Hitwise) have scaled extremely well to 150 to 300 staff. Exception that proves the rule. (remember DStore, Wishlist, Scape, Spike etc)

But back to Dave's original point, as he's not talking about traditional employees, contractors and collectives. I think of new web projects, and the related "Hit-Making" as similar to a film set; A group of tech specialists and talent form around an elevator pitch that a studio funds, which is turned into a script and then a shoot. 6-12 months of magic or dysfunction ensues. Then the product goes into distribution, and is ultimately absorbed into the media machine.

Playing the role of today's Studios are the VC's and angels, who are in effect middle men, who provide a bridge till the Networks pay a large acquisition premium for the latest successful beta. Wouldn't it be neat if YahooGoog could give decentralised Cell Leaders (like Dave and other leading experts) who then Exec Produced, and sometimes directed (but not always:) new projects. Basically, the Y-Combinator model funded by large customer aggregators. (it would be money better spent than some of the too far out R+D that occurs) Also similar to how Al-Qaeda works in a highly decentralised cell manner.

Compare new product development within a GEMAYA entity now and it's a very different proposition. If the model works for the film industry (the irony being private equity is getting increasingly into movies), why couldn't it work for Internet media ? Because by definition, the best people do not want to be employees in mature businesses earning salary plus fixed dividend like stock options returns; And sometimes being a Solo Entrepreneur or Maverick (with or without VC) isn't the way either. They want to be working on the New Thing. With Best of Breed people and friends.

Master of 500 Hats, a classic post by Dave McClure : "now & in the future: STEP ON THE FUCKING GAS ON THE DEALS, GUYS! do small acquisitions (<$50M) once or twice a month, do a large deal ($100-500M) every quarter, and bet big once a year ($1-2B+). buy LOTS of stuff, and do it FASTER -- then distribute it to your worldwide audience & monetize it using your own advertising engines. so far, Yahoo has only done a good job on the small stuff. they've whiffed on most other big deals since Overture."

"His idea of a cool product is much more than "I'm creating a niche version of MySpace using APIs and will make money with AdSense."


adriana 86
Originally uploaded by benbarren.
Start of the working week here - which if you're a startup - the days blur alot more. Monday means that you have more external email than Sunday, but it is also a day where you don't expect alot of external decisions and information flow to occur from the corporate land.

Anyone who thinks a startup is kewl because you are no longer corporate, is only about 15% correct : While you dont always have to endure conference calls in Monday morning gridlock while trying to ensure police dont nab you for talking on the phone, you still end up depending on customers, advisors, and real people in the real world, and dont expect much on a Monday. (real people are dealing with their emails, internal WIP meetings and the like ! corporates prefer to communicate with startups on Wednesday and Thursday - as these are the fun and less time pressured parts of week)

And while they may say it's going to be 36C degrees today in Melbourne : It's raining here on the Peninsula and more like 22C : I'm still planning my week, and as usual one high priority sequenced event that I'm dependent upon will determine all the level B + C level events. Because I commute, this also adds another level of logistics management into the loop.

At this point I'd be asking what the hell is the point of this post other than the Adriana Lima Pic ? and well there isn't : Except I liked this Guy Kawasaki line (made about Steve Wozniak co-founder of Apple), which reveals the Valley VC perspective on me-too businesses. There are lots of unique opportunities out there (not all of them are high growth investable ones) but better to be unique than imitative.

"His idea of a cool product is much more than "I'm creating a niche version of MySpace using APIs and will make money with AdSense."

Sunday, November 19, 2006

Minister Helen Coonan Goes Blogs, YouTube + Citizen Journalist Centric for Andrew Olle Media Lecture 2006 Keynote


push it
Originally uploaded by benbarren.
Not sure if anyone saw Minister Helen Coonan's Keynote Address on ABC for the Andrew Olle Media Lecture 2006. It was on last night around 1030pm downunder in which she spoke about the rise of blogs and citizen journalism (as well as YouTube) to a group of media proprietors. I would love to know who wrote the speech as it was very well researched and great to hear from someone so senior in Canberra go BlogTube to the local media execs and owners.

The fact is blogs cant just be ignored, nor can every single piece of communication (in the long term) go through manual pre-approval. (or if it does, there will need to be some machine learning tools to do the heavy lifting and smart 24/7 people coordination); What happens when blogging continues to morph into (1 to 1 + 1 to group) social networking, email and text messaging ala twittr like communication, that then requires manual approval in realtime ? And how does editing and versioning happen ? Indeed with private settings like on vox.com and multiply.com I wonder what the rules are about another person reading your private communication ? In the US its good to see leaders such as Craigslist doing the right thing in terms of community moderation (not to mention Fairfax's Cracker), and have legal rulings backing it up more rather than less.

So there's lots of legal, technical and operational work downunder about the defamatory implications of blogs, all happening while newspaper circulation goes Taswegian. Just like googtube there will need to be top level business decisions made about the real risks of blogs and ways to deal with minimising writs and maximising unique visitors ! As always in Australia, in a land of oligopolies things happen slowly, but the combination of incumbent publishers (newspapers with online divisions), market leading pureplay online players (in web-classifieds) and startups, means there should be enough friction to create greater local activity in 2007. (and hopefully over 06/07 Ashes Summer)

It's good to see Canberra talking up this stuff smartly and being proactive. Coonan said less regulation of blogs by media and government, is a necessary part of its growth. Top Address. If anything helps my parents understand what I do. (and reminds me sometimes being an apathetic politics major as one of my degrees :) Would love to know who wrote it.

Update : Full Transcript of speech on ABC, care of Andrew Online Advertising Guru of Downunder Pascoe.

Craigslist CEO : "A group of lawyers is suing craigslist over a handful of allegedly discriminatory housing ads posted by our users, ignoring the fact that craigslist is not a publisher, but rather a community-moderated commons run by and for its users, who self-publish and manage their own ads and use a flagging system to police the site. These lawyers demand that we impose ill-conceived, mistake-prone, and potentially illegal controls on the craigslist community, which if adopted would actually reduce fair housing opportunity, while eroding important free speech and privacy rights. In reality, the craigslist community already excels at ensuring equal opportunity housing, and continues to improve in this regard, earning praise from fair housing groups. This lawsuit will likely be dismissed as groundless, but more importantly the craigslist community will be recognized for its exemplary record in promoting fair housing for all, while fully respecting each person's constitutional right to free speech and free association."

Minister Helen Coonan : "At the moment the very lack of structure around blogs and opinion proliferating on the Internet may be its biggest drawcard. As soon as a website gets 'legitimate' or even too popular then it appears to suffer."

Saturday, November 18, 2006

RDF WTF We Still Have the Time We Spent in Venice.


missing pupils
Originally uploaded by benbarren.
The Venice Project, the post Kazaa and Skype play by its billionaire founders, has some of the tech team starting to blog. Now all I need is a business translation about what it all means :) Anyone RDF WTF ? :)

LeoSimons.com : "We convert from RDF to different specialized XML formats and back again. We convert from RDF to excel spreadsheets and back again (ugh). We have our jira instance hooked up to our RDF store. We convert RDF to other kinds of RDF. We have custom RDF visualization tools. We have custom RDF store crawlers that do efficient validation. We have RDF schemas that control the behavior of other distributed systems by adding intelligence to the core schema. We do triple timestamping. We do intelligent schema-driven indexing. We have custom libraries to make doing wicket-based, RDF-based web application development easier. Oh, we do RDF-based web applications. In short, we do more RDF than you can shake a stick at. So not a day goes by without some of our developers swearing about "RDF" or "metadata", since in many ways RDF still isn't exactly mature technology. But we'll fix the warts, and contribute those fixes back to the open source community."

AFR Cover 1.0 Aussie Survivors + Winners.


LLo Karan
Originally uploaded by benbarren.
Aagh dejavu, where is Davnet and the army of day traders when you need them ? Web 2.0 is not yet on the cover of AFR, but it's increasingly creeping in, and the online industry is holding its own (online advertising to be worth $986M this year - only less than TV and newspaper advertising : and online is growing at 60% per annum)

So today's AFR mentions MySpace (the #6 trafficked website in Australia - not to mention YouTube + Wikipedia are also in the top of sites visited by Aussies), within an article on Rupert's visit downunder : As has been mentioned online, MySpace could now be worth $6B according to Rupe.

There is also a very positive investment focused article (no link sorry) looking at values of local internet companies eg seek $1.5b, Wotif $814m, Realestate.com.au $630M etc The only equation now is the local economic effect (over time) of Web 2.0 on these 1.0 players (will it extend or defend, cannablise, make a little, no or a large difference)

Obviously I think that the next wave of businesses will change the new incumbents (both positively and negatively depending on their 2.0 operational partnering and corporate expenditure programs :) as much as they changed the previous establishment. I also remember alot of meetings over the years that said seek and others were overvalued when they were doing their Series B/C funding at less than 10% of their current value.

So it's all in the eye of the beholder I guess : And alot of players have a definite attraction/repulsion, attack/ignore polarisation when it comes to new technology (esp when it comes to User Generated Content and "defamation" :); Just as happened in 1998/9 when alot of the companies mentioned in AFR today were setup.

Survival in the Digital Concrete Junglee.


scarface grind
Originally uploaded by benbarren.
Saturday here while I figure out what to do with my day (probably physically pound the week out of my body I'm guessing) and ping out to Duncan Riley, like I say to anyone leaving any job "Congratulations" ; I'm sure the other side will end up great. Being master of your own destiny is something which (I learnt the wrong way last time) shouldn't be conceeded so kick ass dude.

So I'm breathing today between the week that was, woh !!, given I'm splitting time at the moment between "corporate/capital" (what advisors/directors do I want to work with and take business forward) and "business development/revenue + traffic" (what clients do I want to work with, grow and get paid by) Fred Wilson has some as usual dead-on points re what a 2.0 Survivor will look like (and probably any high growth early stage funded business)

I'm a Survivor.
* Lower burn rates
* Business models, revenues, and customers
* Good venture syndicates with real VC firms (as opposed to strategic investors, amateurs, new funds, etc)
* Realistic valuations (as opposed to valuations that could not be sustained when the market broke)
* Committed entrepreneurs who were in it for more than just money
* Long time horizons for everyone involved (entrepreneurs, investors, employees)
* Reasonable exit expectations
* Less capital raised and less preferences on top of the founders

NB - I didnt realise Fred/Union Square were investors in the smart etsy play, so when I read this list I view it with this type of InvesteeCo in mind.

What is interesting with higher valuations and more VC, other than outliers and exceptions that prove the rule like GooTube, there is still no evidence of a volume of $200m-$1B acquisitions. Sure google buy irows, and Yahoo MyBlogLog + Bix over night, but if any of these companies had had tens of millions of dollars of investment, an acquisition wouldn't have even covered the principal :) So Lucky they didn't. Hence Fred's Rulez.

Thursday, November 16, 2006

Reddit unWired : "By lunch time I had literally locked myself in a bathroom stall and started crying"


kfed litterati
Originally uploaded by benbarren.
Reddit Post-Wired-Acquisition Early Stage Team Member Blues : I may have missed the part of Aaron Swartz's post which says "I woke up and it was all a nightmare" - which for most people, the selling of a business isn't. Although the post-natal M+A blues is waay common, and this is definitely a good chapter in the (someone will write it) Web 2.0 Playbook. (will Paul Graham play Darth Vader and Aaron - Luke Skywalker. Steve Huffman the founding founder as Hans Solo has already commented "Speak for yourself, man.")

"Wired has tried to make the offices look exciting by painting the walls bright pink but the gray office monotony sneaks through all the same. Gray walls, gray desks, gray noise. The first day I showed up here, I simply couldn't take it. By lunch time I had literally locked myself in a bathroom stall and started crying. I can't imagine staying sane with someone buzzing in my ear all day, let alone getting any actual work done. Nobody else seems to get work done here either."

"Then they issued us company-approved laptops: terribly-slow iBook G4s complete with Conde Nast desktop and screensaver with spy software pre-installed. When they gave us the machines we didn't even have administrator access on them. The clock was set to the Eastern time zone; I needed an IT department person to change it to show me California time."

"Finally at 5 the office empties out and I can go home where, to compensate for the dullness of the days, I brighten up the nights."

Just One More Meeting before Paddington Hails All Over Me.


997 techartTT
Originally uploaded by benbarren.
So I'm back from Sydney and it seems the 7 degree morning in Melbourne Tuesday, followed me with the hail to Sydney on Wednesday. I managed to avoid a face to face downpour so until I got soaked in Paddington today (when I could have gone to airport 30 mins earlier and been totally dry). As I've learnt at the footy before, brown suede loafers are not suited to hail !

So the momentum is good to rocking, and the brain is melted till tomorrow. I can always read some good copy on Stuttgart tho. Jalopnik : "People who buy the 911, especially the Carrera 4, bling-heavy Turbo, or in the worst instances, a Cabriolet, don't do it because they want the best everyday sportscar in the world. They get that bit for free, by accident. What a Porsche driver wants is to get look slick; he wants something U-ro-peen, he wants the Porschhha -- the big one -- which explains why that abomination of a Cayenne even got a foothold on this world. Now trying to explain to such hair-gelled urbanite that they could buy the small one, trick it out and make it faster than the big one would be like teaching religion to a robot."

Sunday, November 12, 2006

Web .666


baudrillard not
Originally uploaded by benbarren.
If we make a full rotation, with Nick Carr heartily welcoming NYT's Web 3.0, maybe Steve Jobs can invert the 2.0 + 3.0 versioning into V 0.2 or 0.3 - As the cycle accelerates, judgement will arrive with Web 6.66. (Version .666)

Rough Type : "Web 3.0 promises to give marketers, among others, an uncanny ability to identify, understand and manipulate us - without our knowledge or awareness."

"No! No, no, not 6! I said 7. Nobody's comin' up with 6. Who works out in 6 minutes? You won't even get your heart goin, not even a mouse on a wheel."

Jung on Job : "The Book of Job is a landmark in the long historical development of a divine drama. At the time the book was written, there were already many testimonies which had given a contradictory picture of Yahweh - the picture of a God who knew no moderation in his emotions and suffered precisely from this lack of moderation. He himself admitted that he was eaten up with rage and jealousy and at this knowledge was painful to him. Insight existed long with obtuseness, loving-kindness along with cruelty, creative power along with destructiveness. Everything was here, and none of these qualities was an obstacle to the other. Such a condition is only conceivable either when no reflecting consciousness is present at all, or when the capacity for reflection is very feeble and a mote or less adve­ntitious phenomenon. A condition of this sort can only be described as amoral."

Unique. Unique. Unique.


Cl 600 V12
Originally uploaded by benbarren.
In 1st and 2nd year uni (jeez was that 15 years ago ?) we were made to buy Michael Porter's strategy book, which (if rote memory can elicit it) said you needed to be a low cost competitor or have a differentiated strategy : You never wanted to be "stuck in the middle." (which is probably the biggest takeaway I have used) Anyway seems Porter has some lines which 15 years later I'm increasingly agreeing on :

Knowledge@Wharton : "When Porter started out studying strategy, he believed most strategic errors were caused by external factors, such as consumer trends or technological change. "But I have come to the realization after 25 to 30 years that many, if not most, strategic errors come from within. The company does it to itself.".. Companies should strive to be unique, he added. Managers should be asking, "How can you deliver a unique value to meet an important set of needs for an important set of customers?" (BB : What do say ? Cliches are sometimes cliche' because they are true.)

Saturday, November 11, 2006

"Here, we’re so far ahead of the curve, it’s a race to see who can be cynical first."


implanted implosions
Originally uploaded by benbarren.
Hehe, brainmush today, but alot of exercise has helped supplant some depleted chi with endorphins : Over in the Valley though, they have $3k Web 2.0 Summit tickets, Lou Reed and the corridors of conversation.

It all reminds me of the start of Michael Wolff's Burn Rate, which by memory starts in a near identical Dot Com Conference although I do like Intel's SuiteTwo depending on how the implementation of the different API's work - And similarly Pluck getting $7m for their social media suite is also interesting incl Reuters as an investor.

Liz Gannes @ gigaom : "Here, we’re so far ahead of the curve, it’s a race to see who can be cynical first." (on a per square foot of brain space, there may be a higher output of sustainable deal value at the other Web 2.0 Summit, which had at least 1 more person supporting it than the current US government incumbency :) I did listen to Marissa Mayer's classic search principles soundbites too reported by Greg Linden : "Half a second delay caused a 20% drop in traffic." (dont i know it)

Thursday, November 09, 2006

"US share of world internet users falls from 37% to around 20% in 2007."


junk time
Originally uploaded by benbarren.
NewZealandic MacDaddy of 2.0 The Grand Royale Himself RRW is at (u guessed it) Web 2.0 Conf'. I guess I should be happy about 1.0 Internet Cheerleader Ms Meeker pumping International, as long as it doesnt make non-US continents cursed; I mean, like, "duh" already, international markets are like waaaay important. (just dont send us Kate Bosworth again to our Spring Racing Carnival, she used to look great in that bgrade surfing movie Blue Crush) Lindsay is so not a party grrl eita. Paarty it up New Web Impresario.

RRW :
"International markets are becoming crucial, as US share of world internet users falls from 37% to around 20% in 2007. China obviously, but also India and Russia are noted by Mary."

Anne Marie: What do I want? Oh my god, I want Penny to quit smoking and go to college. I want, I want to be able to pay the phone, electric and rent in the same month. I want a girl to be on the cover of Surf magazine. It would be great if that girl were me, but any girl would do. I want... I mean I wish my mom would come home, and I really, really want to win pipe masters tomorrow, that's what I want.

"The lesson for entrepreneurs is don't have preconceived notions about how your product/service will be used."


me media
Originally uploaded by benbarren.
I'm off to Melbourne today, with the business not abating, working on 5 or 6 significant deals. I'm glad this space is getting some traction downunder, although that could be related to bus dev effort :)

The new like.com "likeness" search engine targeted at women is an interesting proof of concept ("Laura said, “Don’t worry we will get there.” Lisa seemed a little scared of me. "), when they are crawling all the worlds (fake + real) Rolexes for example (from ebay, craigslist, amazon etc), it certainly is an interesting mechanism for browsing. And who wouldn't be envious of the engineering team they have working on this problem, even if that does dial the burn rate up to "pretty damn hot."

If I was a VC in this deal though, I'd be praying to Buddha that I came out the other side. The search results do look nice and it does cluster preset categories pretty well. As for being Body Shop meets Google (or was that Virtual) Earth, I'll be keen to see what happens once the build out categories with a meaningul and comprehensive list of items. (They say they're "adding 30K items a day") To be Liked.comthe service needs to go inch wide, mile deep : It's still in alpha, so more few inches wide, a few inches deep.

Don Dodge has the juice
on riya, oops, like.com : "The lesson for entrepreneurs is don't have preconceived notions about how your product/service will be used. Test with lots of different customers to discover where they see value. Remember, it is not about the technology...it is about the problem it solves."

Tuesday, November 07, 2006

50,000+ Feeds = $300M+


nwa eazye
Originally uploaded by benbarren.
$6,000 per feed as a ratio to market cap is Krazy but good krazy, esp when backed up with users, revenue and profit. Topix is a great business. I realised they were bought ages ago by the newspaper group (with the founders keeping 25% which i forgot because hey it's less than 50%), but didn't realise it's current valuation on VC round was $300M. (so founders seem to, tell me, are still running it like a semi-independent po·lyg·a·mous entity ?)

PaidContent :
"Despite all that, getting $15 million for giving up little less than 5 percent is at a damn good valuation. The company, with the new money, wants to double the 25-person staff over the next year...it also plans to develop and market new consumer news services, as well as increase its exposure among online news consumers. It certainly needs exposure… "

Japanese Quinella in Melbourne Cup


ugly betty
Originally uploaded by benbarren.
Coz I'm in Melbourne Oz, It's a Public Holiday.
But not in Sydney, hence fruitful discussions.
Only 7% of you are from Melbourne anyway.
So I dont have to worry about whether to work or enjoy race.
TV on in background, watched the last 2000 metres.
Japanese horses - 1 + 2, the quinella.
Back to the Macs, and a wakko pic from a non-ugly Ugly Betty.
When u got the cash and the views, you can just order catering and lease the projector.
Today just another day to get ahead, and make future retrospective sense of it.
Hollywood actors dont like TV, but I did stay up till 12am to watch Sopranos last night. Great fkg episode.

PaidContent and new head Mr Smith of CBS Interactive
: "Back to M&A, how do you define a small deal? Smith: “Well, look, one of the things I was really worried about in this announcement that if people assume I’m just looking for the next YouTube that we’re not also looking to invest in larger deals. There’s no real way to define a small deal anymore, particularly in this market. There’s metrics. There’s headcounts. There’s valuations. There’s all kinds of ways to look at these things … We’re going to look for the technology and services that best fit us. We’re going to be looking to partner more than we’re going to be looking to acquire—and to take ownership positions.”

Monday, November 06, 2006

Monday Morning for Newspapers.


crack boho
Originally uploaded by benbarren.
It's one of those in between Melbourne days (Derby Day Saturday gone - Melbourne Cup tomorrow) making email quite locally, but not from those in Sydney. Gotta say I totally agree with Jason Calacanis re newspapers and the opportunity. Blog related businesses make alot more sense connected to the world of newspapers. (and vice versa)

JC : "Sometimes I wish I was unemployed, because if I was I would get my own investment group together and start buying a couple of these distressed properties and turn them around. This is one of the best opportunities in business today..."

NYT on GOOG's 50 newspaper ad auction trial : “We have tens of thousands of advertisers we deal with face to face,” said Michael C. Lemke, the senior vice president for sales and marketing of The Seattle Times, which is participating in the test. “They are talking about an exponentially larger base that can do business on a self-serve basis. These are clients that metropolitan newspapers have a hard time getting to.”"

Sunday, November 05, 2006

Not a Car for Hairdressing. F599 GTB.


DSC01926
Originally uploaded by thatjonesboy.
AOL : "We're 15 percent of where we want to be"

MySpace : "We just launched in London a couple of months ago and we're already up to 6 million users and adding 17,000 people every day.''

The Story Begins Where it Used to End.


DSC01924
Originally uploaded by thatjonesboy.
I've been pondering the notion of a newspaper "printing" stories, both online and offline. So here are my 3 facets of the modern "story" which newspapers should be covering online (feel free to add) :

1. The Story Itself : the actual source itself, often linked to. Extra marks for first report, and in other cases for incisive analysis.

2. Blogger Mentions : of the story itself. (external to newspaper site and syndicated back but also linked out)

3. Audience Participation : Votes, Tags, Comments, posts itself by newspaper website members.

In effect the story begins, when it's been published. Stating the obvious in the 2.0 echo chamber, but in reality Guardian Comment is Free aside (which is doing some basic type work on above) there's alot of work to go. Esp on delivering white-label solutions around the above. OK back to powerpoint and the Father Bob/Safran Triple J show :)

An Itsy Bitsy Note on The Scale Mirage in Product Factories.


hidenseek
Originally uploaded by benbarren.
Yoick wrote a great riff on the Product Factory supply chain re : ObviousCorp and Charles River QuickStart that I wanted to delve deeper into. I'm wondering whether these centralised ideas attached to funding and resources can result in the "investee" company become commodified and losing the chance to have a unique value, culture, and business model. My question is do these models help create a hit or do they in fact hinder ?

In some of the cases it's watered down venture investing : Less money and time per investment, but more deals. (means VC partners can almost too easily solve the problem that web 2 funding deals are too small) Where it gets different to normal VC is if The Parallel Entrepreneur ala Bill Gross/Evhead comes up with the idea/opportunity, and then recruits a (can u call them an) Entrepreneur. Who is closer to a Project Manager with the title (i guess) Chief Executive Officer thankyou very much. I wonder how the Founder Title will work. ("Im the - penultimate - founder but I didnt come up with the idea.")

Griffin Mill: I was just thinking what an interesting concept it is to eliminate the writer from the artistic process. If we could just get rid of these actors and directors, maybe we've got something here.

Odeo and Twitter for example, while in different segments - podcasting vs group sms - still display similar ethos (same founders and management team), interface and free business models with some goog ads. While this product portfolio doesnt suit VC investors looking to build specific portfolios, it makes obvious sense to obvious; A portfolio of kewl web apps that may have value together or as single entities. With Odeo playing the 2.0 role of Pyra, and Twitter being Blogger.

Now lets compare google, ebay, yahoo and amazon as a way of understanding what it takes to be successful (im hoping this post will come together rather than go further away) - All are survivors and winners of the last 5-10 years of the internet; One sells search ads to small business, the other facilitates auctions for consumers, and then you have a diversified online media company with an etailer.

My point is that picking the next Amazon, Ebay, Google etc - involves betting on different disruptive business models. Sure alot of business models are based on advertising, and shared hosting is shared hosting. But the best companies seem to do things, all things differently. The cults of Amazon and Google for example are scientific orientated but still different enough in their operation : One runs physical logistics and fulfillment centres : The other has dark fiber it may use one day for the Super Web O/S :) They are different enough that if their DNA was shared, would have the same adult been born ?

So If I've got a 2.2 product factory, there seems to be a skew towards freemium-esque, LAMP run, widget'y playz that get Crunch'd then see if they can turn the initial bump into a run. Then they go for funding, expansion and move from baby to teenager. To me, they may skew too close to the mean if I could bet on it, and not be disruptive enough. The proof will be in the pudding I guess. There may be enough bets that enough succeed. "Please God, just One More YouTube" is a lulu T-shirt waiting to be made for the parallel inclined.

So sure there is going to be lots of reddit like plays when $100k is optimised into a sale to an old media company. And this could mean that Obvious and Quick build alot of these consumer widget businesses that use the same hosting and google ads.

But my hope would be that doesn't mean that the true innovation, disruption and NEW idea, wil be able to leverage all this shared infrastructure. (will recruited staff be to obvious or to the investee co's in reality ? will the cultures diverge ? to use an australian example at moment kkr will aim to unbundle the 15 years of coles myer centralisation rather than vice versa - ok i wont use anymore offline regional retail examples :)

I was in a meeting the other day with a business partner/client, and they asked how much hyperlocal advertising was there really on the Internet, esp in the land of oz. Outside some of the directories businesses and Goog/Yhoo Local etc - which are still small too - I said he was probably right, it is still fairly small. Doesn't mean it isn't a great opportunity - waiting for disruption : Hyperlocal advertising online not just taking a stream of google ads.

Anyway, so what point am I making here ? Even I know I'm not making much sense : but I think incubators of yore, and product factories of now, risk overestimating the benefits of scale efficiencies, esp if the trade-off is a slightly commodified offering. It's the intangibles of hit making really. The great films come from a confluence of people, events and capital. Outside the box. Hard to bottle. Not shrinkable.

As Jeff Jarvis said the other day, when a newspaper starts outsourcing certain of its sections that are commodities, and in the example it was the business section being outsourced, it's a case of how much of a newspaper does a publisher have to do itself.

Similarly, product factories change the life cycle of a new company as rather than being a bootstrapped startup that needs funding : Instead you have a parallel entrepreneur, with another good idea that invests her money in a project team and shares some resources.

Hopefully the business will be able to craft it's own identity, unless of course the real plan is a more portfolio/keiretsu orientated (eg IAC or Intermix/Myspace originally : 5-20 sites which become a network) : Use the same adserver and google group ad agreement. Bang you are on your way. (As Jason Calacanis says you need a couple million page impressions/users to justify your own salesperson so thats one benefit of scale)

From the perspective of the parallel entrepreneur doing multiple businesses (that are at different stages) it makes total sense to justify - (heck what alpha male doesnt want to be a parallel entrepreneur :) - esp if you have already made your first $20m, which they say is the hardest :) From a fund perspective it also means that they can invest the same total amount of money in a sector (at an earlier stage) and then hope the total amount of deals is manageable and that there are some scale efficiencies.

But there will be alot of roadkill. However when compared to internal product development at GEMAYA it may still end up being alot more efficient or at least complentary. That is of course if stock prices keep increasing that make small acquisitions of the survivors easy to make. I think the ObviousCorps may end up being more like a WebLogsInc with Odeo its Engadget, or was that Twitter :| but whether new hits can be consistently made, every1 will be watching.

Double or Nothing Your Brand Budget with GOOG CPG


oopsee
Originally uploaded by benbarren.
I was talking a few days ago with a publisher re google's search driven market cap funded simultaneous attack on brand advertising (thru goog video + youtube) and Microsoft's software business (thru gmail, goog docs, jot, etc) : Publishers are certainly watching with a fair degree of trepidation meets awe. ("Could they really ? It doesn't sound so far fetched really does it. Do you think ? We're all stuffed if that happens...")

Google's new Consumer Packaged Goods blog seems to endorse this discussion and Goog's strategy to get brand advertisers, who until now havent really had a strong solution for brand and TV spends.

Google CPG Blog : "Likely you've been seeing the Coke + Mentos video on YouTube since sometime last summer. These are tricky times for marketers, having something so big that's out of your control... Check out this 3-minute video that Diet Coke just launched... We love it for the entertainment, but let's not forget the marketing at work here for both Diet Coke and Mentos. (Coca-Cola sponsored this project.) Who won't share this with at least one friend? How much time will be spent by people stopping to enjoy this video, playing it back and forth and talking about it with co-workers? How many people are going to search for [Coke and Mentos] in the coming weeks? How many additional 2-liter bottles of Diet Coke, not to mention packages of Mentos, is this going to sell? It looks very promising to us. Stay tuned as we track this campaign."

BB : Yup google are going to spend the next 5 years getting 20% of the advertisers brand spend currently going to the TV networks who at same time they are negotiating tens of millions of dollars pre-payments to not be sued for YouTube infringements. (Cuban said $500m of the $1.6B is allocated for such uses) This share will change the premium and power of TV networks big time.

It's hilarious; this is really one big maths equation about content, advertising, on and offline, and the marketshares of the players (with google having the potential for much bigger shares than individual networks or content owners) - This all suits google fine; Pay the TV guys to make content; Put it on the internet (illegally to start with but that was youtube ok ;) Then gradually take over the Fortune 500 brand advertiser relationship. Offline TVC's wont be going away (eg to launch a product on Sunday night to broad demographic) but it will be just one smaller and smaller part of the brand schedule. Cant be long till they buy SpotRunner. (another GoogSpot)

Update : Ironically what got this conversation started wasnt me (attraction/repulsion is my rship to goog) it was my publisher friend mentioning goog's UK results and how good they were) Anyway, so blaagh blaagh (remembering 44% of goog's revenue in Q3 2006 was international and UK is their biggest market outside US I think historically - not sure if anyone knows their breakdown for markets in Europe eg Germany, Asia - China etc) Even in UK market Google is overtaking TV stations already on a dollar for dollar basis. BBC : "Google is about to overtake the UK's main commercial TV channels in the race for advertising revenue, a study says. It found that the US internet search giant's 2006 UK revenues are expected to surpass Channel Four's predicted £800m ($1.5bn) returns. Google will then overtake ITV1 within 18 months, advertising buying companies Mindshare and Initiative told the Financial Times."

Friday, November 03, 2006

"All old-media dogs are going to have some more sleepless nights."


halloween
Orig
inally uploaded by benbarren.
What a fn week ! This has been a locknload period if ever I've seen one. (yday i travelled for hours, only to get to sleep by 2am to wakeup at 5am for first meeting in city at 730am) All very Circa 2000/1. In a good way too. Damn it, the pace back then was something which was enjoyable if u were in the zone. (generally Australia is great climate/culturewise but a bit zombie speed for business - Deals here take for ever to implement, even when closed)

Melbourne will be half shut down next week with Derby Saturday, Melbourne Cup Saturday and Oaks Thursday (I think Im totally out of racing loop; im at least 24-48 months from getting invited to the real racing VIP parties : and alot more work to go, which is at least lining up nicely; as say they its a numbers game - more meetings, equal more opportunities - as long as u r meeting with cheque signers, decision makers and/or babes - as i say).

So Friday and nice vignette from Barry $20 Billion Diller who others are saying should buy Zillow.com for a benjamin of $M's. Newsweek and note the appearance of Jack Welch ex-GE : "The wonderful thing is that the window of opportunity on the Internet is not going to close any time soon.. All old-media dogs are going to have some more sleepless nights."

Thursday, November 02, 2006

Reality TV Script or Buyout Interview

Today on Reddit - The script writes itself really. Via MattSparkes.org :

Matt: So, I presume I can’t ask about money, and that everyone asks you that?

Alexis: Yes and yes. :)

Matt: I thought so. I presume that you’re not going to ever have any money worries again though?

Alexis: You know, I’ve been pretty fortunate growing up.

There are plenty of kids who had to worry about things like paying for school, etc., but all the parttime jobs I’ve worked have been for money that just ended up in my savings acct.

Matt: Fair enough, so you won’t be splurging then?

Alexis: But, hopefully, there won’t be any money worries in my future.

You know, there really isn’t much I need that I don’t already have.

I’m going to have to treat my mom to something though… just need to figure out what…..

BB : Then one of the other Reddit founders writes a nice little piece :

"I sat reloading TechCrunch, then wrote a script to do it for me. Finally the notice appeared, elaborating as time went on. Then I posted it to my blog and others to theirs. It started seeming real. Finally, I dashed downstairs to an ATM machine and asked it to print a slip with my balance. "Would you like anything else?" it asked. "No," I said, and grabbed the slip. The numbers were big; the money was there. I started grinning and dashed back to the apartment."

The Business of Business and The Business of Raising Capital


aussie wrecka
Originally uploaded by benbarren.
I was taught at school and learnt in real life (at a 1.0 company that raised $50m+) that there is the business of business, and the business of raising capital. The role of the entrepreneur is to get the balance right. A Secret Life of Us (or should that be Tripping Over) analogy is that in the triangle of your relationship(s), work and health - you may be able to optimise 1 or 2 of the variables but never 3.

Similarly you can successfully raise a large amount of capital and forget to build sales, technically execute and instead schmooze the high net worths. Alternatively you can evangelise, sell and invest in platforms, products and people, but if you want to accelerate your investment plan because you are running ahead of plan and the size of available opportunity is increasing faster than expected : then you need to raise some dough as you aren't going to fund hypergrowth out of cashflow in the first 24-36 months. (the brad feld colorado podcast on this is really brilliant, esp their 3rd class of businesses which are ones that dont deserve to exist - harsh but true)

I'm one for finding smart people who can pull the trigger and provide perspectives and solutions on whatever the problem or opportunity be, : Whether corporate (capital structure related) or product, technology, and business are rare but valuable when you find them.

As an entrepreneur you may be focused on your baby 16 hours / 6.5 days a week, but the likely mindshare of those outside your cult is more like 1.6 hours a week - unless or because you can provide something back to them that matters. And those outside the cult are the ones that will drive success duh. Um customers, partners, and prospective employees y'know.

It's amazing how if you have the right formed question, and reach out to a network you can find a person with not just the answer, but the ability to execute. Theory and ideas have negative net worth in this game, as they drain your day. Talk is cheap. (people wonder why i dont do phone) The only thing worse than not getting the balance right between the business of business and the business of raising capital, is the business of nothing. The dance of hope. That it will just happen. Which it doesnt. Hello 2001 downunder.

A clean canvas is a good thing, and not sullying that is key. Expanding right is so important, even if it takes you alot longer than you thought. (as vc bloggers say : expect revenue is lower than expected and slower to ramp, keep your costs down, and assume big deals wont close) Shipping successfully is important as that is something you can almost control. It all gets down to the people around you, and whether they can really assist you, or are more bystanders, which is fine, as long as there is no confusion when push comes to shove. 95% of startups is people. Damn those ineffective robots.

Getting each micro-stage right is key. To stay in the present. Many creative minds jump ahead too many stages, bite off too many non-core activities while others simply lack the ability to define priorities.

Knowing as a startup who you are dependent on is everything; Understanding their incentives (company and personally) as to why they will enter into a relationship with you. Some entrepreneurs and people in startups arent really that empathetic which is not great when u r trying to cut a deal with someone with more resources - you dont want to be seen as the dog at the shelter vs visiting your local porsche dealer which is their trade-off cost. Appeal to greed of upside and fear of missing your deal at an early stage. And make people feel smart.

Product factories like Obvious Corp and Charles River's Quick Start are smack bang in the middle of the business of business and the business of raising capital. And instead of one venture, they aim to expand anything from 2-20 businesses in a quick period of time : Each with their own infrastructure, scaling, revenue models and customer orientations.

That's alot of complexity to optimise. With the punt being that back end consolidation and scale will assist rather than hinder new venture success. Does this model create multiple new independent unique value companies ? Or is it one type of product with 5 or 6 interepretations ?

The incubators of last time promised "We'll let you share our offices; Help you raise money (ie we dont have the money) and get you on your way, and maybe here are some servers and a Herman Miller - now give us 20%". This time the play is slightly different, with high IQ IP being offered in addition to Pizza Money as Tom Evslin calls it. Kinda like an Indie Art House Film Division. (with Obvious Corp playing Miramax circa 90's and Charles River more a Fox Searchlight)

The one quote of Evhead's which does hit the nail on the head of the serial internet genx'er - which totally concurs with the group of people I know : "Nearly everyone I know in the Internet business is either at one of the giants, wishing they were at a startup, or at a startup that hopes get bought by a giant." The Grass is Always Greener Thesis.

Basically product development is being moved outside the organisation. (Google Docs/Office Suite for example is going to largely be some acquisitions stitched into gmail yeh ?) It will be interesting to see if the Google'esque 20% rule (which they seem to be winding back now to focus on building product suites incl some bought and some built products) applied to the investing market works. Throw some money at the wall and see if it works. Watch what works, and bottle it.