There was a rumor recently that Xobni was to be acquired by MSFT. I could certainly see that happening, Xobni is an email inbox on crack… I saw it at TC40… right now, it’s compatible with MSFT Outlook alone.
While MSFT remains a likely company to buy it (as does Google, believe it or not), I think Facebook should use some of that $240M MSFT money and offer to acquire Xobni. How much would it cost? I don’t know. Xobni has raised about $5M so even though investors want 5, 10, 100x return, I think they would sell for Facebook equity, even if it means at an inflated $15B valuation.
Why? The backers are: First Round Capital, Atomico, Khosla Ventures and I think those funds would love to get their hands on Facebook stock. Had they invested $10-50M, I would not say this, but a fat multiple on $5M in financing won’t make a change on their balance sheet or fund performance… but getting some Facebook skin (you can thank me for avoiding the reference to ’skin on Mark Zuckerberg’) would be preferred, I think.
Let’s face it, it beats cold hard cash from MSFT. Did I just say that? Yeah, scrap that last line… you know what I mean, hopefully. Of course, the initial thinking on this is: MSFT would not welcome this… but if you look yonder - way yonder - MSFT will eventually buy Facebook (no one else will, especially with a $15B floor price) if it does not build a business to IPO… then MSFT might prefer to have Facebook handle integrating Xobni.
All of this is Ash talking smack, of course… but the more I pontificate about this, the more plausible it all becomes…
Especially as MSFT ingests and integrates Yahoo!
Note: Long YHOO.
Related:
- Facebook vs. Google - Clash of the Titans - aka. email is the ultimate social network
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WatchMojo NewsletterObviously, this post is in jest, but too bad NYT settled its differences with Harbinger.
Jana Partners is hounding CNET… They own 25% of the outstanding stock.
Harbinger Capital Partners, a part of the Harbert Management Corporation, was doing the same to NYT. They own some 10%.
Here’s a crazy idea: why not merge? I know this has a “no chance in hell” likelihood suggestion hence why we’re making it.
But CNET is worth $1.25B… and NYT is worth $2.75B.
- NYT owns About.com and NY Times is one of the strongest brands out there in journalism…
- CNET is tech-oriented and its slate of advertisers would love to go more mainstream.
CNET owns about 30% of the new corporation and diversifies into lifestyle… basically buys into NYT at a low.
NYT owns 70% of the new entity and gets a shot in the arm in terms of digital.
And, they get the hostile crowd off their back? Any takers?
All right, enough madness.
2007 marked a euphoric climate for valuations and fundings in the digital space.
- Facebook kicked off the festivities with a $240M investment on a $15B valuation [our coverage].
- Slide finished off 2007 with an insane $50M investment on a $500M pre-money valuation [our coverage].
When Google tumbled from $747 to $430, I presumed that valuations for digital assets would follow suit (not that they should, but valuations are tricky, it’s a function of demand and supply for a given deal, admittedly, but the landscape and climate affects it, too).
But, they haven’t. It’s also not like we are seeing a flight to quality.
Yes, Federated Media has great sites and authors in its roster, but it’s a company with abysmal margins, paying out 50% off the top to partner sites. Federated Media is looking at raising $30M on a $200M valuation. This after supposedly turning down a $100M buyout offer. Is Federated Media worth $100M?
Then Meebo comes out raising $25-30M at a $200-250M valuation, too. Meebo streamlines IM, I see the value, granted… but would a company really pay $500M to acquire it? Maybe. Don’t know.
Then today, Slide competitor RockYou hints at raising money at a $400M range, as well. We know about the challenges and obstacles to monetizing social media… and even those who fueled the social media boom are unsure of the merits today.
I know that digital provides a sanctuary in a slowing economy… but I am nonetheless surprised at some of the torrid valuations these days.
A couple of days ago, Microsoft announced that they would adopt Adobe’s Flash Lite for mobile devices. This was smart, for two reasons: one is perceptive and another is strategic.
On the mobile front, MSFT is gaining traction:
- By adopting Flash Lite, its mobile strategy adds more utility;
- Apple adopted its Mobile OS for the iPhone in a clear attempt to wage war against Research In Motion’s Blackberry, but it also gives MSFT a foothold in the burgeoning handheld computing, wireless entertainment and mobile advertising space.
But on the Web - where advertising will become a $51B market in the US alone by 2012 - I can’t help but scratch my head.
Why? The next four years’ growth will be driven by video. Yet in video, MSFT seems clueless.
Today, I was scanning the online video landscape and decided to stop by MSN’s video platform, which I presume is Soapbox. I say presume, because for the love of me I can’t tell how MSN Video is different than Soapbox. By the sound of it, one would guess that Soapbox is the UGC site, right?
Who knows. It’s a shame that MSFT seems confused about its video strategy - like Yahoo! fittingly - because MSNBC.com is a leader in video streams. So why is MSN.com not a leader in video? Who knows. One reason? Their reluctance to use Adobe’s Flash. MSFT has Silverlight, but Flash is ubiquitous (reference: YouTube).
Anyway, memo to MSN Video, why don’t you allow for flash files?
Accepted file types: AVI, ASF, WMV, MOV, MPEG 1/2/4, 3GP, 3G2, DV, QT, DivX and Xvid.
Hmm… That seems off. If you want to be relevant in video and turn your back on flash files, that is pretty backwards.
Video’s biggest obstacle is that there remains a lot of friction in the ecosystem. I could write a book (note to self: do that) on the friction in video content and advertising…
MSFT could help reduce some of that, but somehow I think that by pushing Silverlight it will reduce it.
Because of that, instead of seamlessly enjoying 35 magical clips on NCAA classic basketball programming, we have to do them slowly… Here’s the first one: enjoy Michael Jordan at UNC here, embedded below:
Yahoo!’s message to marketers: “do as we say, not as we do”
Yahoo! will only win in search if
a) more marketers spend money in online advertising in general and search in particular and
b) if they spend more on Yahoo! than other sites, and of course
c) more users use it.
Clearly, neither one is going according to plan, as Google continues to kick Yahoo!’s ass. But now, to further hurt Yahoo!’s own chances, News.com is reporting (via SAI) that Yahoo! actually advertised on radio to achieve its objectives. Need we think of Ask.com’s wonderful billboard strategy?
Who, may I ask, is the genius who thunk this up? When I say, as a shareholder, that YHOO has no credibility and its upper management has lost its marbles, am I crazy or stating the obvious?
To be fair, some disagree with me: The Yahoo search ads seemed to have the desired effect on one blogger, Luca Filigheddu, who wrote: “I’ll be honest, it works. If I hadn’t listened to it today, (I) wouldn’t ever (have) realized that Yahoo search had improved so much. Good.”
But, want something very troubling? I have used Yahoo! less and less in the last 3 to 6 months. Over 3 years ago I began using Gmail and never went back to Yahoo! mail… though when I started WatchMojo.com I began to use gmail for work… so that had more to do with it.
But even the last bastion of Yahoo!’s defenses has recently failed: I used to live on My.Yahoo! and now I almost spend no time on it (it got buggy after they changed the design then simply stopped using it).
Yahoo! should spend 200% on getting users like me to use Yahoo! products when we’re online and spend 0% of its resources on anything like TV, print, outdoors or radio.
The adage is “it’s easier to retain a client than it is to gain a new one”, but the truth is, it’s actually hard to lose a client because consumers aren’t only right, they are lazy. So when a client decides to take his business elsewhere - and follows suit - then the merchant has really gone to great lengths to piss them off.
It’s nice to see billion dollar organizations offer gestures of customer service, especially when they do not have to.
Best Buy will be offering consumers who purchased HD DVD buyers rebates and trade-in’s. This wasn’t a matter of Best Buy rectifying its own error per se, it was Best Buy doing something to create goodwill and win over loyalty. Ultimately, Best Buy was a pawn in the broader HD DVD vs. Blue Ray war.
“The DVD format war has divided our customers in a way we haven’t seen since Betamax took on VHS more than 20 years ago,” said Brian J. Dunn, president and chief operating officer for Best Buy. “At Best Buy, we understood and shared our customers’ frustrations as they were being asked to choose one format or the other. Now that the format war is over, we hope these gift cards will reassure our customers that we will help them make a smooth transition into the right technology for their needs.”
This is going to cost $10M, which frankly, is nothing more than smart marketing. Some companies spend $10M on advertising, Best Buy is planning on spending it on PR, basically. Kudos for them.
I have in the past chronicled Customer Disservice, including experiences with HP, Dell, Seagate and a few others. Ultimately, I get what I want because I am a ball-buster who doesn’t shy away from a fight. But I am in the minority, most customers ultimately don’t bother, they simply go elsewhere.
As a consumer who rarely buys much at Best Buy, I can say that even though I’ve never bought a HD DVD product, I will start buying things from Best Buy.
Too bad I can’t say the same thing about Staples after my Logitech heist. When I say “my heist” I actually mean their robbery. But I won’t get into that (who hates mail-in rebates?). I’ll just stop shopping at Staples and won’t buy Logitech…
Hmm… wonder what other brands of accessories Best Buy stocks in its stores.
Basic marketing 101: it’s easier to retain a client than to win one.
What the…?
Mary Meeker is publishing reports and covering Internet companies, Henry Blodget is reporting news, and not one to be left out, one time investment banking star Frank Quattrone is back with Qatalyst Partners (how Web 2.0-ish to drop the u, I presume). Via Tech Crunch. See the press release here. Original story here.
Qatalyst Partners is a boutique investment bank that will focus on technology M&A and advisory services.
Now, it could be argued that Quattrone is extremely late to the party, it re-entering at the right time. In fact, one could argue that what we saw happen from January 2000 - Summer 03 (to correct the excess of the second half of the 1990s) basically took place from December 2007 to March 2008 to correct the excess of 2005-06.
Time will tell, but the storyline gets more and more interesting.
I’ve been following funding in online video for some time. Check out a fairly complete list, here.
Yesterday, some were asking: has Web 2.0 investing peaked? Yes. Just ask the VCs themselves.
But I doubt it was ever significant. Were it not for Facebook’s massive $240M deal last year, investment in the space went down in 2007, with a 3% decrease.
I do not really spend much time covering Web 2.0 funding, because it’s usually small, angel-ish rounds and frankly, I do not see much exits in the space. Admittedly, someone should throw a flag on that statement and say “Ash, what is a Web 2.0 investment?” - generally, this is what I mean:
What we refer to as Web 2.0 projects were never companies, they were applications and features. VCs do not really get excited when there is little requirement of capital AND little exit returns. But, don’t take it from a schlep like me, take it from an actual VC: see Paul Kedrosky in this Wallstrip interview. Mind you, it should be stated that other successful VCs, like Fred Wilson, have made tidy fortunes from Web 2.0 investments. But, I do not really see Feedburner, for example, as a typical Web 2.0 investment because there was some meat on the bone there.
But my point has to do in general with the following. VCs look for meaningful exits, be it IPOs or M&A. But what if one of the leading architects of the biggest Web 2.0 acquisition says the ship has sailed?
What on earth am I referring to, check this out:
Continuing the discussion of the ever-evolving internet, Jon Miller, the former chairman and CEO of AOL, explained that the progress of the internet can be divided into three ages: the early to mid-90s marked an era of communication, the rise of instant messaging. The early part of this decade saw the rise of search while now, with the dominance of social networking sites like MySpace, Facebook and Twitter, is the age of convergent content communication, a blend of the previous eras.
Continues Ross Levinsohn, who was president of Fox Interactive when when News Corp. acquired MySpace, jumped in to talk about virtual worlds and their relevance to the younger generation of internet users, but emphasized the importance of looking beyond, looking for what comes next, instead of jumping on the social media bandwagon now. He stressed that he “would not be investing in another social media site, just as [he] would not invest in a YouTube competitor, just as [he] wouldn’t invest in another portal… it’s idiotic.”
Why this is interesting and why it speaks volumes is because Ross Levinsohn is the executive who got Rupert Murdoch to spend $580M on Intermix, MySpace’s parent.
For the guy who sent the entire Web 2.0 crowd into a frenzy to say the opportunity has passed, you start to understand why VCs realize that Web 2.0 ain’t worth getting excited about, either. But then again, was it ever?
For as long as I can recall, Rafat Ali does not stoop down to the blogosphere’s level of mixing personal topics (even if they are related to his business) with business topics he covers, even when he / his company are in the news.
This morning, that stopped. Michael Arrington commented on how blogs should not raise financing and instead merge to take on CNET (I agree raising VC for most blogs is crazy, and Rafat’s VC round was more angel money than VC funding, but I digress). He suggested that Ali was looking at raising money or selling. Ali countered, vocally and publicly.
CNET is currently duking it out in the courts against Jana Partners, but the company has ventured into blogs hard and remains a $400M a year revenue generating machine. I respect all of these blog publishers who have created mini-empires but I think this is Arrington’s smart way of generating noise and grabbing attention, the very same techniques that have propelled him to the elite of technology-oriented blog networks.
Revently, we ranked these blog networks, and Ali’s Context Next Media ranked #2, Arrington’s Tech Crunch ranked #3? Who was #1? The answer to that question reveals - why I think Arrington posted what he did.
Diversification Counts
From my vantage point,
- the vast majority of blogs rehash and repeat the same underlying content, the elite might not, but what passes as an elite blogger is a rather subjective topic, and Arrington, to his credit, outlines the intangible barriers and politics that define one as such;
- moreover, a few fail to offer any material analysis, meaning that long term they lose relevance;
- not only is the content repetitive, the massive overlap in users is amazing and from an advertising perspective, this is the key…
This is why - Henry Blodgdet’s brand notwithstanding - Silicon Alley Insider has made strides because it talks about something other than the latest API.
And yes, to some extent, the overlap in audience and readership has shot up since TechMeme weaves these blogs together. Were it not for Gabe Rivera’s site, would you really know what would be going on in half of these sites? I would not. As more and more turn to Tech Meme to distill their news, they read the same stuff from the same people with the same slant. Over time, these blogs lose authority and relevance, they do not gain it.
Do not get me wrong: I think Ali, Om Malik, Michael Arrington, as well as the publishers of the other blogs are NOT going anywhere, but while some of their sites will merge or sell… the fact remains that the houses they have built remain hollow for the massive concentration in focus on technology. So the people have made their marks but do we need 8 blogs covering video? Or 6 covering Web 2.0? I don’t think so.
I criticize VCs 24/7 because as a online video content producer, I find their lack of understand of media, publishing and advertising sales frustrating. But that is my problem for launching a company that does not fit with traditional VCs profile. In the same vein: I agree with Arrington that VCs and blog networks do not go hand-in-hand.
But to suggest that merging into a colossus is equally foolish. In fact, because the barriers to entry in the blog space is non-existent (we’re talking a Wordpress/Movable Type blog and getting on Tech Meme) then VCs balk at the concept.
Exasperating matters, I think, is the that after a few years of accelerating technology-oriented ad sales, the rise in options for media buyers has made some of them take pause and re-assess where to place ad dollars in Q1 2008.
This reality probably explains Arrington’s post, I think.
Ultimately, in publishing, it’s not even what you say, it’s that fact that you say something, and that you get others talking about it. For that reason, I am sure that all of these blogger entrepreneurs will be fine, but adding 10 technology blogs together does not seem like a smart thing, if you ask me…
As per toppling CNET Mike, leave that to Jana. Oh wait, you are a lawyer, too. Who knows, maybe this is the latest lobby in Tech Crunch/CNET’s M&A dance?
Anyway, who was #1 in that Elite Eight Tech Oriented blog networks?
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