Microsoft Yahoo Merger Good for Startups!

Marc Andreesen, successful entrepreneur (Mosaic, Netscape, Loudcloud) and investor (Digg, Plazes, Ning) provides a nice analysis of the potential effects of a Microsoft-Yahoo acquisition to the likelihood of smaller startups being acquired. His conclusion is that there will be no effect :

The Microsoft/Yahoo deal, if it happens, means very little for the entrepreneurial climate in Silicon Valley, or the opportunities available to you and your startup.

His reasoning (to summarize) is the following:

  1. Yahoo and Microsoft weren’t buying that many companies anyway.
  2. There is a broad spectrum of companies making acquisitions.
  3. Traditional media companies will make more acquisitions in the next two years.
  4. Entirely new companies can emerge quickly and make acquisitions.
  5. Building a startup with the goal of being acquired is a stupid idea anyways.
  6. The practicalities and logistics of a merger would prevent Yahoo and Microsoft from aggressively developing new products and services, improving opportunities for startups.

All in all, he generally paints an optimistic picture for the consumer internet space.

I’m pretty confident guessing that the level of concern and even panic among many traditional companies — particularly media companies — is only going to escalate from here, as traditional non-Internet businesses in various sectors deteriorate and consumers continue moving en masse to the Internet.

And from there, it’s not hard to guess that Internet M&A is likely to heat up considerably over the next several years, compared to the last several years, across a very interesting and surprisingly diverse cross-section of buyers.

While many people are talking about a web 2.0 bubble, I tend to feel that the general trends look very good for consumer internet. By looking simply at the scale of the rise in online spending, and broadband penetration, I am confident that there will continue to be many opportunities for startups to be successful. The internet is here to stay and there are still miles of room for innovation and improvement.

By the way, here’s another interesting post discussing the Microsoft Yahoo Merger suggesting an alternative to a full fledged acquisition…

Tagged: , , , ,

Published:
February 6, 2008 – 9:25 pm
Comments:
None

Strategy: Using Illegal to get to Legal?

Ashwin Navin, the president and founder of Bit Torrent Inc. gives a podcast describing how Bit Torrent Inc was started. Bit Torrent was originally an open source peer to peer file sharing protocol developed by Bram Cohen to deliver large amounts of data over the internet quickly. Initial users and evangelists of the protocol were developers distributing Linux. It was a perfect fit: Linux and Bit Torrent were both open source projects so the philosophies resonated, and Bit Torrent allowed Linux to be delivered quickly and cheaply.

However, Bit Torrent distribution really went through the roof was when it started being used for illegal sharing of movies and music. Millions of users across the web (including myself) wanted to get free mp3s. By installing the Bit Torrent client, we were able to download them quickly. It’s an interesting situation to consider:

You are developing a product with the best intentions, but your product is being used to break the law…

Of course, this was a law that most of us felt no moral obligation to… Nobody seemed to be getting hurt and it weas hard to feel bad for the pop-star millionaires complaining that they sold less records.

At some point, Ashwin left Yahoo to start Bit Torrent Inc. The basic idea was to leverage the broad distribution of the Bit Torrent client into a legitimate business. In his podcast, he describes his pitch to build relationships with large media companies:

Mr. Studio Chief… In the next hour that we’re going to be talking, about 70,000 of your movies are going to be downloaded illegally with my software… We got to do something about that…

Pretty hilarious! And for a large part it worked. Bit Torrent may be the closest competitor to iTunes in legal downloads. This is definitely a strategy not taught in Business School, but worth considering as I’d expect it to be repeated in many more new media companies. Consider the discussions online video and music sites such as YouTube, Pandora and Musicovery are having with studios and record labels. – we’re helping users get your content for free – let’s work together to monetize this…

Tagged: , ,

Published:
February 5, 2008 – 11:47 pm
Comments:
None

Credibility on the Internet

A recent article on the Wired Blog details the strong response E-Bay users have had to a recent change in E-Bay’s user feedback rules. Apparently E-Bay wants to make it harder for store owners to post negative feedback about their customers. E-Bay suggests that there is increasingly “retaliatory feedback”.

“We’ve seen a four-fold increase in unwarranted negative feedback left for buyers in a retaliatory way. Buyers have told us consistently that one of the strongest reasons for not using the site is retaliatory feedback,” says Lieberman. “If buyers have a bad transaction, that won’t drive them away. What does drive them away is retaliatory feedback.”

Basically, E-Bay contests that if a store gets negative feedback from a buyer, the store will give the buyer negative feedback. In the comments of the blog the debate rages on and on about who behaves worse, buyers or store owners, and it got me thinking a little more about the importance of having some measure of credibility online.

To improve our credibility measurement systems, we need to increase the accountability of people judging each other, and broaden our source of information. I can’t address the entire issue of online credibility, but I do want to discuss how consolidating a persons online persona touches credibility. I think we are in the middle of seeing anonymity on the web die, and self-twittering-expression emerge.

It’s almost like seeing the evolution of the wild-west where everyone was just passing through into a civilized nation with proper identification and reputations to uphold!

Widget companies such as Popego, Lijit, Profilactic, mEgo, and MyBlogLog, as well as the OpenID project are working to do just this. The effect of consolidating one’s online persona is powerful for several reasons:

1.) Online reputations will become portable.

When someone first joins a new social site, they don’t have any credibility. Nobody knows who they are or how serious they should be taken. However, with tools to consolidate ones online persona a person is able to bring their credibility with them on the web. The effect is that the “walled gardens” of credibility will be broken down. As an example, I would predict that a highly regarded E-Bay shopper be able to have some sort of instant credibility at Amazon, or other E-Commerce store.

2.) Anonymity will become less accepted.

As web users increasingly tie their online personalities together our expectations rise. We are already quickly suspicious of the myspace user that only has 2-3 friends and just one picture posted. Depending on the context of where we encounter someone online, we could come to expect to be able to browse a persons public Flickr photos, Del.icio.us tags, favorited Youtube videos, or their LinkedIn profile. If someone acts like they have something to hide, we will assume they do. Suspicions will rise and anonymity will be forced out as users compete for credibility.

3.) Fraud and misbehaving will become more difficult.

Take a look at forums. Forums have been around forever, and there are several million of them. One of the biggest problems that forums face is efficiently monitoring their forums. Two major contributors to this problem are spammers and flamers. The spammers create a forum profile and then post links to their websites – shameless advertising for products and services that the forum users do not want. Flamers are another problem. They create a profile and then degrade the quality of the forum by posting profanity, hate, or even racist comments. They don’t contribute to the forum in anyway except to try and start arguments and try to insult forum posters. Forum administrators have to spend considerable time filtering out these types of posts. The main reason this is such a problem in forums is that it is so easy to create a new account when the administrator finally shuts down your original one. As another example, read about what some of the latest drama in Second Life. As our total online persona becomes more connected online and we come to expect less anonymity, it will be increasingly difficult to misbehave online simply because it takes time and energy to build credibility online. Furthermore, as a web citizen I am less likely to misbehave when I know that my actions on one site will effect my credibility on another.


Tagged: , , ,

Published:
February 4, 2008 – 1:48 pm
Comments:
None

Stanford Technology Ventures Podcasts

I’ve recently become a fan of Stanford Technology Ventures podcasts of interviews with entrepreneurs. What a great source for information directly from the mouths of successful entrepreneurs. To hear these points of view, you typically have to go to an expensive conference (or enroll in an MBA program) and Stanford lets you download them for free. I don’t have much experience with podcasts, but really enjoy this method of learning about Silicon valley startups and the entrepreneurs and investors behind them.

Tagged: , , ,

Published:
February 3, 2008 – 10:13 pm
Comments:
None

Blogs Evolving from News Sources to Reference Sources

When blogs first began to get traction – not sure when exactly, but several year back, I remember that the headlines and discussion really centered around how blogs were going to replace corporate news sources. The idea that anyone could produce, publish and distribute content was proclaimed to provide an end to the publics reliance on (possibly) corrupt or inept news sources. Fine – maybe blogs did a little bit of that. Maybe some people today read blogs and no longer rely on traditional media for their news sources.

But what I’ve noticed is that increasingly I am turning to blogs not for the latest news but for expertise on a particular topic. It seems to me that blogs are beginning to replace not just news sources, but books. When I search for information on a certain topic, I am not looking for the latest breaking story, I am looking for an authority on that specific topic. This becomes particularly powerful as you extend it down the long-tail to where there are all sorts of niches of expertise. Blogs can help you get vegetarian recipes, advice on horse breeding, inside tips on aquatic plant growing, or advice on traveling to argentina. This is a fundamental difference in how blogs are used and important to consider when organizing the information. I looked at some of the top sites that help someone find information in blogs and determined if they considered blogs as sources of news, or reference. It seems that Technorati, and Google Blog Search continue to regard blogs as news sources while some of the new entrants such as MyBlogLog and Lijit look at blogs more as reference sources, but perhaps still not as much as possible. If you really start to think of blogs as books and not newspapers, there seems to be some opportunity for a disruptive company here…

Tagged: , , ,

Published:
January 20, 2008 – 6:09 pm
Comments:
None

Bill Gates Last Day

Always impressed with how the celebrities of the world all know each other… [youtube=http://www.youtube.com/watch?v=3HA4lSUhlbw&rel=1]

Tagged: , ,

Published:
January 16, 2008 – 2:07 pm
Comments:
None

Better than Alexa?

I recently came across this site Quantcast - which seems to be a good tool for evaluating how much traffic a site is generating. From what I understand, Alexa measured a sites traffic by tracking how many people with the Alexa tool bar went to the site. I don’t believe quantcast has such a toolbar, so I wonder how it makes its measurements…

Tagged: , ,

Published:
January 14, 2008 – 8:00 pm
Comments:
None

MBA Commercializing Technology?

After over a year at MIT Sloan, I’m starting to believe that the the prospect of a young MBA commercializing science out of an MIT lab is not realistic (read impossible). More broadly, the prospect of someone with 3-4 years management experience and an MBA becoming CEO of any venture backed physical science company in the next 3-5 years is pretty far fetched. Maybe this is obvious – but this prospect was part of the reason I wanted to come to MIT Sloan and was advertised heavily as the thing to do within the Entrepreneurship and Innovation program.

Looking at current CEO’s of energy startups in well known VC portfolio’s, it seems they fit in one of three categories (please share exceptions):
1 – PhD. They are the inventor of the technology, or an expert with very deep vertical knowledge.
2 – Experienced Entrepreneur. They are a proven entrepreneur and have made successful exits of venture funded businesses previously.
3 – Ex Executive. Used to be a mid-level exec, or someone in operations of a company in the same space.

As Jeff Sabados experienced with Avanti, Micah Sze with Lightface, and I’m seeing with Clean Catalyst, as MBA students we can build a case for commercializing the technology, get people excited, maybe even win a business plan competition or two, but things usually end there. When a technology is so early stage, what it really needs is a professor and a couple grad students, or even a large corporation to work on it for a few years in a lab. Khosla and Flagship are funding and incubating many companies like this – no fresh MBA’s required – the leadership team is all PhD’s and investors.

On the flip side, if the technology is closer to being commercialized, and the startup really does require business expertise, or someone to help sell the product, it’s tough to justify that a fresh MBA is the one for the job. It would be ideal to find a technology relevant to our past experience, but its necessary to be more opportunistic when trying to find a promising technology. We likely lack deep industry contacts or a proven entrepreneurial track record, so we’ll either get no traction with funding or be encouraged to recruit someone from industry to be our own boss. Fine – many of us would be willing to take that route, but the reality is that not many technologies coming out of MIT are anywhere near commercialization, so good luck pulling this off.

In general, I’m optimistic about entrepreneurship in the physical sciences, but when you get into the details and specifics of the plan, I’m struggling to see it happen. More likely, any business plan development is just “a good learning experience” that can better prepare you to be head of biz-dev or director of sales and marketing at a startup, or even an associate at an energy VC fund. Idea’s are fun to talk about and play around with, but ultimately, if your goal is to be CEO of a startup within 0-5 years, commercializing technology may not be the way to go…

Tagged: , , ,

Published:
October 21, 2007 – 5:23 am
Comments:
None

Planning a Reunion Online – Reoonyun!

As the president of my high school class (graduated in 1998), I felt obliged to get involved with planning our 10-year high school reunion. I found myself really wishing for a service to help me do this online… I’m not sure how credible this is as a long term business, but there is definitely a lot of PAIN here that is not being well addressed. Here are some excerpts from an executive summary I put together:

Business Overview

Reoonyun.com is a web service for planning a reunion. According to Reunion Research, every year there are approximately 150,000 class reunions, of which the average attendance is 180, contributing to 27 million people attending a class reunion every year. Reunions are a unique type of event to plan for two primary reasons:

  1. The event planner does not have the contact information of everybody in the group. They may not even remember everyone’s name.
  2. It is highly desirable to select a date and location that accommodate maximum attendance

The internet lacks a quality tool to plan this unique event. Reoonyun is the solution to this problem.

Marketing Strategy

Due to enthusiasm to reconnect with old acquaintances and the average US high school class size being 768 people, Reoonyun will be able to scale virally faster than most other social networks. With just the founder’s personal network, Reoonyun will be able to register 100 classes of 500 people for a total of 50,000 registered users. Reoonyun will also launch an online marketing campaign consisting of:

  1. Full time search engine optimization and Google Adwords campaign
  2. Facebook application and Myspace widgets integrating with reoonyun.com
  3. Large amount of blogging and searchable content by founders with promotion to Techcrunch and other technology review companies

Product

Reoonyun will be the ‘one-stop-shop’ for a reunion planner providing all of the key web capabilities necessary for planning a successful event. One can easily imagine what these basic event planning features entail and to stay concise they are not all listed. However, Reoonyun will incorporate four additional features specifically designed for planning reunions: Viral Contact Gathering, Collaborative Event Planning, Reunion Planning Wiki, and Online Donation/Collection.

Viral Contact Gathering

The viral contact gathering feature will make collecting contact information effortless for the reunion organizer. This feature will work in the following fashion:

  1. Organizer performs initial setup of the reunion details and enters in the names of the invitees she can think of. Reoonyun searches through the users contact book and suggests contact information for each user including email and mobile phone.
  2. Organizer sends a message to the invitees via email and sms. The message encourages users to visit reoonyun.com and confirm their info.
  3. As the invitee signs on to the site they are prompted to import their contact book to continue virally marketing the reunion to the rest of the class.

*Note – this viral marketing feature is a key and unique feature of Reoonyun that will allow it to scale faster than typical social networks. For every reunion planner Reoonyun acquires, an average of 500 new users will be registered to the site. Due to the social aspect of reunions, invitees being contacted by old friends will feel obligated to signup.

Collaborative Event Planning

Reoonyun features a voting and polling area where users can vote on details such as date, location and type of entertainment. This will ensure maximum attendance by the group and take pressure off the event planner to make independent decisions that the group will agree with.

Reunion Planning Wiki

As hundreds of reunions are planned on Reoonyun.com in cities around the world, a wealth of user generated reunion planning advice will be collected in the wiki to further assist future users.

Online Donation/Collection

Typically members of a class or group will contribute money to pay for the events upfront costs. Reoonyun will provide an integrated feature to allow attendees to transfer money to the organizer.

Sales Strategy

Reoonyun could achieve revenue from the following sources:

  1. Affiliate payment programs with travel companies offering incentives for coordinated flight, car rentals and hotel accommodations.
  2. Lead generation payment from photographers, venues, and entertainment.
  3. Lead generation from people locator professionals and services such as ussearch.com
  4. Small transaction fees for transferring money to organizer via Reoonyun.
  5. Premium features – such as subscription to maintenance of contacts records for future years or the ability to export all your classes contact information to your address book.

Competition

Existing reunion planning forums such as classmates.com, reunion.com, and myevent.com market themselves as online reunion planning sites, but are old and out-dated. They lack integration with dominant social networks and intuitive user interfaces, and they require subscription fees early on, dissuading most reunion planners from signing up.

Existing event planning websites such as Evite and Mypunchbowl lack the collaboration tools to engage the entire group in planning the event and have no mechanism to find old contacts virally.

Social networks such as Facebook and Myspace lack flexible event planning tools and, although user adoption is high in younger generations, the perceived stigma of these sites continues to prevent older generation users from joining, making them ill-suited for planning a reunion.

Professional reunion planners offer perhaps the most convenient way to plan a reunion, however these professionals come at an expense that most classes or groups cannot manage to afford.

Financial Plan

Reoonyun desires to raise $250,000 in angel funding. With this funding, Reoonyun will be able to develop its site, secure relationships with affiliate partners, and conduct an aggressive Google Adwords campaign towards anyone planning a reunion. Reoonyun will achieve breakeven within 6 months.

If you think this project sounds interesting, please let me know.

Tagged: , ,

Published:
August 11, 2007 – 4:28 pm
Comments:
None