A very interesting techcrunch article touches many of the questions I've raised here at atma. It debunks how Facebook will make gobs of money - a question I pondered in my new favorite business model post. It's very interesting - they hypothesize that it will primarily come out of the $60B advertisers spend on TV and not at the expense of google (another topic I discussed in my groupon post). They think brand advertisers will flock by the thousands since there is no good way to target demographic-based audiences online (text search by google is an agnostic algorithm at this point). Some good points they raise; I'm not sure if they are drinking the cool-aid after the new FB movie, or if in fact, the seismological shift from traditional media will happen as rapidly as they predict.
I think they are being a bit optimistic. Google basically came out of nowhere and swallowed billions of ad dollars. The market was not ready for search, particularly the quality of Google's engine. Do you think NBC doesn't know about Facebook? FB has been amassing over a half billion users over the years with more buzz than a reggae cafe. Don't get me wrong, I think they can win. There will be a lot more competition in its way which is why i think the shift will be far more gradual than the article predicts. I also don't think it will be the end of groupon or paypal the way they anticipate. Either way - FB just might be able to outmonetize its hype. And get an academy award while they are at it....
07 October 2010
29 September 2010
Southwest's Expansion M&A
M&A can work, just not for the elephants in the room. This week, I intertwine two topics I've discussed before in light of major events announced last week in the airline industry.
First, the good. I like to write about admirable companies; those that are profitable, well run, culturally hip, and leave a positive footprint on society. I wrote about Starbucks in great detail; and certainly Southwest Airlines is one that tops my list.
I've always had a soft spot for Southwest Airlines. They are the only airliner that hasn't lost money, filed bankruptcy, or use that awful hub and spoke model. They've posted profit every year of their existence, never had a single layoff (they didn't use their employees as pawns during the 9/11 crisis as others did), and still let your bags fly for free. Sure they make you find your own seat and sing showtunes every now and then. But its their playbook, and it works well. And they've done right to all of us. Have you ever priced out fares in markets that Southwest is in versus ones they aren't?
Southwest announced last week its buying Airtran for $1.4B. Its the largest risk in the company's history. They plan on eliminating many of Airtran's ancillary fees, increase flight routes, and adding 2,000 jobs over the next two years. The merger is predicated on growth and achieving greater scale. I think its smart. It's not too big that it's unmanageable, they can pool their plane orders, and Airtran's cost structure is actually almost comparable to Southwest. Despite my skepticism of large scale M&A, I think Southwest is looking at this as expansion M&A. An area that has at least has a chance to succeed.
Now the bad. They are the legacy, inefficient companies that look at M&A differently. They do deals despite the pitfalls I outlined in a prior post mostly for defensive measures. In this case, I'm referring to the United and Continental's $3B merger closing announced last week.
These companies, on the other hand, use lots of red ink (lost a combined $7B in 2008 and 2009), filed for bankruptcy 3 times, offer a customer experience that rivals governmental agencies, and require a 10 page manual to decipher all their fees. With their merger, they plan to cut heads, rationalize routes (i.e. delete), and try to somehow squeak out a profit in an obvious business model that doesn't work. Eliminating peanuts was the answer to your financial woes? Really ?
Who will prevail in the airline wars? I believe that the faster, nimbler horse will stay on top. Southwest has a sustainable business model based on efficiency, giving customers what they want, and treating their employees better than their executives. Southwest is looking to grow while UA/Continental is looking to retrench. Cutting costs is not a gateway to success, building a sustainable business model is. The basic rationale behind a deal will generally dictate whether they will work or not; Ones that attempt to defend market share, generally don't. Ones that are more offensive minded have a shot, in my opinion, if executed by a quality company.
First, the good. I like to write about admirable companies; those that are profitable, well run, culturally hip, and leave a positive footprint on society. I wrote about Starbucks in great detail; and certainly Southwest Airlines is one that tops my list.
I've always had a soft spot for Southwest Airlines. They are the only airliner that hasn't lost money, filed bankruptcy, or use that awful hub and spoke model. They've posted profit every year of their existence, never had a single layoff (they didn't use their employees as pawns during the 9/11 crisis as others did), and still let your bags fly for free. Sure they make you find your own seat and sing showtunes every now and then. But its their playbook, and it works well. And they've done right to all of us. Have you ever priced out fares in markets that Southwest is in versus ones they aren't?
Southwest announced last week its buying Airtran for $1.4B. Its the largest risk in the company's history. They plan on eliminating many of Airtran's ancillary fees, increase flight routes, and adding 2,000 jobs over the next two years. The merger is predicated on growth and achieving greater scale. I think its smart. It's not too big that it's unmanageable, they can pool their plane orders, and Airtran's cost structure is actually almost comparable to Southwest. Despite my skepticism of large scale M&A, I think Southwest is looking at this as expansion M&A. An area that has at least has a chance to succeed.
Now the bad. They are the legacy, inefficient companies that look at M&A differently. They do deals despite the pitfalls I outlined in a prior post mostly for defensive measures. In this case, I'm referring to the United and Continental's $3B merger closing announced last week.
These companies, on the other hand, use lots of red ink (lost a combined $7B in 2008 and 2009), filed for bankruptcy 3 times, offer a customer experience that rivals governmental agencies, and require a 10 page manual to decipher all their fees. With their merger, they plan to cut heads, rationalize routes (i.e. delete), and try to somehow squeak out a profit in an obvious business model that doesn't work. Eliminating peanuts was the answer to your financial woes? Really ?
Who will prevail in the airline wars? I believe that the faster, nimbler horse will stay on top. Southwest has a sustainable business model based on efficiency, giving customers what they want, and treating their employees better than their executives. Southwest is looking to grow while UA/Continental is looking to retrench. Cutting costs is not a gateway to success, building a sustainable business model is. The basic rationale behind a deal will generally dictate whether they will work or not; Ones that attempt to defend market share, generally don't. Ones that are more offensive minded have a shot, in my opinion, if executed by a quality company.
21 September 2010
do VC's make the world go 'round ?
I've often wondered how much value VC's really create. Not for the few that are allowed in, but for society as a whole. Are they the innovation engines as advertised, or merely savvy investors that realize above average returns ? Day traders or world changers?
First, I am surprised at how young the industry is. The first VC's started in 1972 with the founding of 2 of the marquee names even today, Kleiner Perkins and Sequoia Capital. Institutional funding didn't come in until the late 70's. The first home runs were with Apple and Genentech's IPOs in 1980. So we're really talking only 30 or so years. The 80s were a bust for VC's, so now we're down to 20 years.
The industrial revolution brought America to dominance with the byproduct being new industries and jobs. Let's assume for a moment that the VC/internet era (ie. the last 20 years) has had that same kind of impact. The internet has changed everything everywhere and created a better way of life for most. More importantly, it kept us ahead of the competitiveness curve (many US jobs created out of the internet revolution). One would think that VC's played a significant part in that correct?
The goal of VCs is to bring new ideas, technologies and innovation to the masses (and get paid handsomely to do it). They partner with entrepreneurs (sometimes with only an idea in hand), take a significant equity stake, and help them grow towards an IPO or sale five years later. They only look for visionary companies because they have to pay for the 9 other investments in their fund that went bust and still yield a 25% return to their limited partners after fees. Most of us remember the mayhem of the Netscape IPO in 1995; almost every household tech company you can think of (google, amazon, ebay,etc..) have VC fingerprints all over them. At the surface, it seems like they've been the thought leaders they're supposed to be.
But are they? An article written by 2 insiders argues that VC funding actually thwarts innovation. They point to, among many factors, the short life cycle of funds (usually 5 years), aversion to unproven companies, and the fact that there are more MBA's (64%) than there are Master-level engineers (29%) at the top funds. Not the usual source of technological breakthroughs (present company excluded of course).
Just think about it. Ebay was not the first auction website, just the first successful one. Google came out of Stanford's lab, the internet roots were from the US military (and Al Gore). VC's didn't only invest in Google and Yahoo, they invested in 100s of search engines (don't get me started on my infoseek investment). How many biotech companies are they now investing in? How many will even survive much less cure diseases? They tend to invest in clusters; a sign of "me too" investing, not extreme innovation.
But they've monetized it. Have they ever. Sequoia turned $12M into almost $5B with Google. Not too bad, eh? But lets face it, without VC's, these emerging companies would not have reached the masses as quickly and deeply as they have. Google, and the many others, have brought information and commerce to the masses and completely changed the world for the better.
So mad scientists they are not. Mad capitalists they are. It's just too bad that my address is not on sand hill road.
First, I am surprised at how young the industry is. The first VC's started in 1972 with the founding of 2 of the marquee names even today, Kleiner Perkins and Sequoia Capital. Institutional funding didn't come in until the late 70's. The first home runs were with Apple and Genentech's IPOs in 1980. So we're really talking only 30 or so years. The 80s were a bust for VC's, so now we're down to 20 years.
The industrial revolution brought America to dominance with the byproduct being new industries and jobs. Let's assume for a moment that the VC/internet era (ie. the last 20 years) has had that same kind of impact. The internet has changed everything everywhere and created a better way of life for most. More importantly, it kept us ahead of the competitiveness curve (many US jobs created out of the internet revolution). One would think that VC's played a significant part in that correct?
The goal of VCs is to bring new ideas, technologies and innovation to the masses (and get paid handsomely to do it). They partner with entrepreneurs (sometimes with only an idea in hand), take a significant equity stake, and help them grow towards an IPO or sale five years later. They only look for visionary companies because they have to pay for the 9 other investments in their fund that went bust and still yield a 25% return to their limited partners after fees. Most of us remember the mayhem of the Netscape IPO in 1995; almost every household tech company you can think of (google, amazon, ebay,etc..) have VC fingerprints all over them. At the surface, it seems like they've been the thought leaders they're supposed to be.
But are they? An article written by 2 insiders argues that VC funding actually thwarts innovation. They point to, among many factors, the short life cycle of funds (usually 5 years), aversion to unproven companies, and the fact that there are more MBA's (64%) than there are Master-level engineers (29%) at the top funds. Not the usual source of technological breakthroughs (present company excluded of course).
Just think about it. Ebay was not the first auction website, just the first successful one. Google came out of Stanford's lab, the internet roots were from the US military (and Al Gore). VC's didn't only invest in Google and Yahoo, they invested in 100s of search engines (don't get me started on my infoseek investment). How many biotech companies are they now investing in? How many will even survive much less cure diseases? They tend to invest in clusters; a sign of "me too" investing, not extreme innovation.
But they've monetized it. Have they ever. Sequoia turned $12M into almost $5B with Google. Not too bad, eh? But lets face it, without VC's, these emerging companies would not have reached the masses as quickly and deeply as they have. Google, and the many others, have brought information and commerce to the masses and completely changed the world for the better.
So mad scientists they are not. Mad capitalists they are. It's just too bad that my address is not on sand hill road.
15 September 2010
woot and amazon
I dont usually comment on an individual news event unless it has a broader meaning, but i could not help to do so with the acquisition of woot by amazon a few months ago for a reported $110M. especially since we were on the grouponomics topic anyway.
For one - i love woot. I bought my first digital camera from them years ago ("you've seen the best, now try the rest" was the product description). They are a much hipper, quirkier, less sexy version of groupon that pioneered the deal of the day concept. If you have the time, you should read CEO Matt Rutledge's view on the Amazon purchase. Among other things they did the deal "every company that becomes a subsidiary gets two free downloads until the end of July" and that Woot's employees are partnering with Amazon, the "billion-dollar company that could buy and sell each and every one of you like you were office furniture." They headquarter a few miles my place (another plus), and mastered the art of selling junk and "over-witting" most other sites with their beat writing skills. Its too bad groupon built a better business model, but I don't expect the wooters to care too much. They expect to be profitabile in 2043.
But Amazon certainly will. It's early to tell, but i like Amazon's acquisition strategy so far. They are gobbling up highly unique companies with extremely loyal customers (they bought Zappos for $1B and Audible.com for $300M recently). Amazon has mastered the logistics of online commerce - I for one was a huge doubter when they spent hundreds of millions in the early 00s to build distribution centers. But it worked, they executed well. And I think they see the marriage between their operating excellence with great online sales models of the companies they are acquiring.
So i'll give Amazon a "woot" for their strategy - let's see how it plays out. As for woot fans like myself, don't fret about upcoming changes. The site will "continue to be an independently operated company full of horrible, useless products and an untalented jerkface writing staff, same as it ever was."
For one - i love woot. I bought my first digital camera from them years ago ("you've seen the best, now try the rest" was the product description). They are a much hipper, quirkier, less sexy version of groupon that pioneered the deal of the day concept. If you have the time, you should read CEO Matt Rutledge's view on the Amazon purchase. Among other things they did the deal "every company that becomes a subsidiary gets two free downloads until the end of July" and that Woot's employees are partnering with Amazon, the "billion-dollar company that could buy and sell each and every one of you like you were office furniture." They headquarter a few miles my place (another plus), and mastered the art of selling junk and "over-witting" most other sites with their beat writing skills. Its too bad groupon built a better business model, but I don't expect the wooters to care too much. They expect to be profitabile in 2043.
But Amazon certainly will. It's early to tell, but i like Amazon's acquisition strategy so far. They are gobbling up highly unique companies with extremely loyal customers (they bought Zappos for $1B and Audible.com for $300M recently). Amazon has mastered the logistics of online commerce - I for one was a huge doubter when they spent hundreds of millions in the early 00s to build distribution centers. But it worked, they executed well. And I think they see the marriage between their operating excellence with great online sales models of the companies they are acquiring.
So i'll give Amazon a "woot" for their strategy - let's see how it plays out. As for woot fans like myself, don't fret about upcoming changes. The site will "continue to be an independently operated company full of horrible, useless products and an untalented jerkface writing staff, same as it ever was."
03 September 2010
grouponomics - is the search over ?
Its no secret that the advertising landscape is changing. Newspapers are folding one by one. TV content and advertising is moving online. I just got an ESPN magazine offer for 96% off the cover price, and it's still 4% too high for me to pull the trigger. We know where the lion share of the shift is going. Google's run-rate revenue based on its last quarter is a whopping $24B. But has Google's core business peaked ? Is paid search advertising dead ? Already ?
A few weeks ago Groupon featured a fairly innocous deal of the day : "Gap $50 certificate for $25." It got almost 500,000 purchases, before they had to literally turn down the site. Nice way to reach a targeted audience (young, affluent, savvy) for Gap eh? Groupon's take: roughly $7.5M.
Groupon, a primarily local-advertising "deal of the day" website (and others like it) have become increasingly relevant. It charges anywhere from 30-50% of the advertised value per purchaser, with no upfront fees. Smart in my opinion - its the broker's model. Take nothing upfront and charge more than your service is worth on the backend for a product you know will move. It's a work of art - it's simple, scalable, and has tremendous upside when you take into consideration campaigns such as Gap. A pure money grab for Groupon if you ask me.
So was it worth it for Gap ? It cost them $40 a pop or ~$20M when you take into account the 50% discount they offered. Its debatable. Were these existing customers? Either way it came out of their fixed marketing budget. They took it out of tv, print, and perhaps Google search.
Others also see this shift in online advertising. Social marketing sites such as FB or Groupon have more captive eyeballs, higher conversion rates, and are cheaper (right now) than Google's PPC. In the case of Gap, they were guaranteed business (they paid per customer). I personally don't know if i'd trust a friend over google, but the number of users are startling -- FB is at 500 million; even Groupon is at 3M in just a few short years. Yahoo and AOL's search businesses are down sequentially, and Google's growth rates have slowed - so it's still unclear if paid search has already declined. Google could answer that question definitively for us as they use an auction model to price their search ads. If prices came down, so did demand.
I like Groupon's model than others because its easy for traditional advertisers to understand and its far more lucrative per user. Also, its a direct solicitation model (people know they are going to be "sold" something) versus companies like FB, where you have to trick people into being advertised. I read somewhere that a blueberry company paid Zynga to use their brand of blueberries in their Farmville game. That's ridiculous. And more importantly, harder to monetize.
I'll miss the kids jumping in Denim on TV, and i'm certainly not predicting the demise of Google. But Groupon just got $20M of Gap's budget in one day. So perhaps tomorrow's deal might be 50% off Google Ad Words for Organic Blueberries ?
YC6BAVAJTNVE
A few weeks ago Groupon featured a fairly innocous deal of the day : "Gap $50 certificate for $25." It got almost 500,000 purchases, before they had to literally turn down the site. Nice way to reach a targeted audience (young, affluent, savvy) for Gap eh? Groupon's take: roughly $7.5M.
Groupon, a primarily local-advertising "deal of the day" website (and others like it) have become increasingly relevant. It charges anywhere from 30-50% of the advertised value per purchaser, with no upfront fees. Smart in my opinion - its the broker's model. Take nothing upfront and charge more than your service is worth on the backend for a product you know will move. It's a work of art - it's simple, scalable, and has tremendous upside when you take into consideration campaigns such as Gap. A pure money grab for Groupon if you ask me.
So was it worth it for Gap ? It cost them $40 a pop or ~$20M when you take into account the 50% discount they offered. Its debatable. Were these existing customers? Either way it came out of their fixed marketing budget. They took it out of tv, print, and perhaps Google search.
Others also see this shift in online advertising. Social marketing sites such as FB or Groupon have more captive eyeballs, higher conversion rates, and are cheaper (right now) than Google's PPC. In the case of Gap, they were guaranteed business (they paid per customer). I personally don't know if i'd trust a friend over google, but the number of users are startling -- FB is at 500 million; even Groupon is at 3M in just a few short years. Yahoo and AOL's search businesses are down sequentially, and Google's growth rates have slowed - so it's still unclear if paid search has already declined. Google could answer that question definitively for us as they use an auction model to price their search ads. If prices came down, so did demand.
I like Groupon's model than others because its easy for traditional advertisers to understand and its far more lucrative per user. Also, its a direct solicitation model (people know they are going to be "sold" something) versus companies like FB, where you have to trick people into being advertised. I read somewhere that a blueberry company paid Zynga to use their brand of blueberries in their Farmville game. That's ridiculous. And more importantly, harder to monetize.
I'll miss the kids jumping in Denim on TV, and i'm certainly not predicting the demise of Google. But Groupon just got $20M of Gap's budget in one day. So perhaps tomorrow's deal might be 50% off Google Ad Words for Organic Blueberries ?
YC6BAVAJTNVE
24 August 2010
the rise of starbucks and its business philosophy
One of my primary goals on Atma is to write about the intersection of sound philosophical principles with successful emerging business models. Its my core belief that business, grounded by moral values, is the most efficient way to improve society.
Starbucks is prime model of this philosophy. With the rise of the gen-y (and beyond) generation into the business world, you see profit as not the sole motive behind corporate actions (this could also be a cause of the free business model trend). Starbucks has taken the lead in many of the arenas - and they did it earlier than others and in a very old distribution medium.
First - let's commend starbucks on creating an innovative fast food concept. In a world of value menus and homogenous offerings, Starbucks brought the cafes of Verona to Hillsboro, TX (and even adopted it for drive-thrus). Somehow they were able to create a brand new successful fast casual concept that convinced the masses of the "third" place after work and home. Since perhaps Subway or some of the other sandwich chains, many have tried and few have been successful creating a large-scale sustainable business in this arena. They also taught us that a "tall" is really a "small".
Second - They did it right (see caveat below). They kept an uber-focus on quality from raw material sourcing to the end to end customer experience. They successfully balanced an offering that could be replicated throughout the country with an individual customer experience. They didn't compete on price, they made coffee shops cool everywhere, and grew the entire industry. Indepedent coffee shops actually grew 40 percent during 2000-2005 (the starbucks boom period). They never franchised (which would have helped profit), used only cash from operations to open new stores, and grew solely through word of mouth (didn't spend a dime on advertising until recently).
Third - They did good. They instilled the NW vibe throughout their business. They were the first company to offer health care to all employees (including part-time). Although expensive (particularly starting out, VCs didnt like it), they never wavered on this point. All of their beans are bought at prices HIGHER than commodity rates through fair trade (and generally direct from producers); they spend alot of time and effort to help the small plantations throughout the world. They have a foundation thats fairly large in helping the communities they impact.
Overall - I think Howard Schultz did good job of taking care of their employees, community and building a game changing business. CAVEAT: Sure there were issues that people can point to during their expansion years (reports of predatory pricing,etc..), but by in large, the benefits they created far outweigh the negatives. And I know that in the present, from a business standpoint, they face tremendous challenges (over expansion, increased competition). But at the end of the day - they built the business soundly from a business and cultural standpoint, and I think they will endure.
Let's hope Google truly "does no evil" and the next generation of big business embraces the Starbucks way. I think its a model that can work and hope its the rule and not the exception.
Starbucks is prime model of this philosophy. With the rise of the gen-y (and beyond) generation into the business world, you see profit as not the sole motive behind corporate actions (this could also be a cause of the free business model trend). Starbucks has taken the lead in many of the arenas - and they did it earlier than others and in a very old distribution medium.
First - let's commend starbucks on creating an innovative fast food concept. In a world of value menus and homogenous offerings, Starbucks brought the cafes of Verona to Hillsboro, TX (and even adopted it for drive-thrus). Somehow they were able to create a brand new successful fast casual concept that convinced the masses of the "third" place after work and home. Since perhaps Subway or some of the other sandwich chains, many have tried and few have been successful creating a large-scale sustainable business in this arena. They also taught us that a "tall" is really a "small".
Second - They did it right (see caveat below). They kept an uber-focus on quality from raw material sourcing to the end to end customer experience. They successfully balanced an offering that could be replicated throughout the country with an individual customer experience. They didn't compete on price, they made coffee shops cool everywhere, and grew the entire industry. Indepedent coffee shops actually grew 40 percent during 2000-2005 (the starbucks boom period). They never franchised (which would have helped profit), used only cash from operations to open new stores, and grew solely through word of mouth (didn't spend a dime on advertising until recently).
Third - They did good. They instilled the NW vibe throughout their business. They were the first company to offer health care to all employees (including part-time). Although expensive (particularly starting out, VCs didnt like it), they never wavered on this point. All of their beans are bought at prices HIGHER than commodity rates through fair trade (and generally direct from producers); they spend alot of time and effort to help the small plantations throughout the world. They have a foundation thats fairly large in helping the communities they impact.
Overall - I think Howard Schultz did good job of taking care of their employees, community and building a game changing business. CAVEAT: Sure there were issues that people can point to during their expansion years (reports of predatory pricing,etc..), but by in large, the benefits they created far outweigh the negatives. And I know that in the present, from a business standpoint, they face tremendous challenges (over expansion, increased competition). But at the end of the day - they built the business soundly from a business and cultural standpoint, and I think they will endure.
Let's hope Google truly "does no evil" and the next generation of big business embraces the Starbucks way. I think its a model that can work and hope its the rule and not the exception.
06 August 2010
my favorite emerging business model......free
LinkedIn and Facebook are the next blockbuster IPO candidates. LinkedIn's recent equity investment valued them somewhere around $2B an (on reported revenues of $200M). Facebook is worth around $35B based on a recent private transaction on revenues less than $750M. So with eyepopping valuations resembling the late 90's, guess what is most startling to me ?
The fact that LinkedIn has $200M of revenues. Or Facebook makes a dime on the topline. How ? Where does linkedin make money? It's not from me. I dont know anyone that has a premium membership or even knows what services it provides. How many web marketing people that you know pay for advertising on Facebook ? Profiles and chats and most of the useful marketing tools are free. Even for corporations. Really ? $200M?
As i've watched web businesses mature and the market move from internet bubble to web 2.0, i've wondered how all of the things we use most are..well free. As a consumer, its great. Ten years ago, i could never have imagined all of the information and services I have at my fingertips -- all real-time, and all free.
GPS? No need to attach one to your car thanks to Google. Mail ? Gmail and FTP sites. TV ? Justintv. Product Reviews? C-Net. Stock quotes? Name your site. Found my house on zillow. Movies and Music ? Uh - my attorney won't let me answer that one :). Just think of all the tools you use on a recurring basis and how much money you spend on these items. My guess is that you won't need both your hands to count the outflows.
Craigslist was the first to puzzle me. How in the world could they displace the entire classified ad industry (which was actually the only place newspapers made money) for free ? It took down most of the local newspapers and really got nothing in return. Ebay bought a stake years ago, tried to make money, and Craig and company sued them. They actually sued them for trying to make money! EBay backed off.
Wikipedia. I have no idea the level of accuracy that Wiki offers, but I don't think it matters. It's the most used reference source in the world. No need for encyclopedias. No reason to pay for some specialized website to attain what you are looking for.
I love it. It still never ceases to amaze me. But to all my readers out there (because i have so many), this is the best its going to get. Get ready to reach for your wallets. NBC, part-owner of Hulu.com, implied they are going to start charging for content. Google and Verizon are in talks on how to priortize net traffic (see my post on net neutrality). Facebook and LinkedIn will get some serious pressure from either private or public investors to monetize their huge membership base. Google will start charging for some of its services once their near-monoplistic search ad rates come down.
But until then, let's consume as much free content and services we can. If only there were a free site that turned my stock portfolio into something recession-proof...
The fact that LinkedIn has $200M of revenues. Or Facebook makes a dime on the topline. How ? Where does linkedin make money? It's not from me. I dont know anyone that has a premium membership or even knows what services it provides. How many web marketing people that you know pay for advertising on Facebook ? Profiles and chats and most of the useful marketing tools are free. Even for corporations. Really ? $200M?
As i've watched web businesses mature and the market move from internet bubble to web 2.0, i've wondered how all of the things we use most are..well free. As a consumer, its great. Ten years ago, i could never have imagined all of the information and services I have at my fingertips -- all real-time, and all free.
GPS? No need to attach one to your car thanks to Google. Mail ? Gmail and FTP sites. TV ? Justintv. Product Reviews? C-Net. Stock quotes? Name your site. Found my house on zillow. Movies and Music ? Uh - my attorney won't let me answer that one :). Just think of all the tools you use on a recurring basis and how much money you spend on these items. My guess is that you won't need both your hands to count the outflows.
Craigslist was the first to puzzle me. How in the world could they displace the entire classified ad industry (which was actually the only place newspapers made money) for free ? It took down most of the local newspapers and really got nothing in return. Ebay bought a stake years ago, tried to make money, and Craig and company sued them. They actually sued them for trying to make money! EBay backed off.
Wikipedia. I have no idea the level of accuracy that Wiki offers, but I don't think it matters. It's the most used reference source in the world. No need for encyclopedias. No reason to pay for some specialized website to attain what you are looking for.
I love it. It still never ceases to amaze me. But to all my readers out there (because i have so many), this is the best its going to get. Get ready to reach for your wallets. NBC, part-owner of Hulu.com, implied they are going to start charging for content. Google and Verizon are in talks on how to priortize net traffic (see my post on net neutrality). Facebook and LinkedIn will get some serious pressure from either private or public investors to monetize their huge membership base. Google will start charging for some of its services once their near-monoplistic search ad rates come down.
But until then, let's consume as much free content and services we can. If only there were a free site that turned my stock portfolio into something recession-proof...
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