Is Steven Spielberg scripting this shit?
He must be. I had to re-read the headline 4 times… I pressed refresh wondering what date this was all from: April 10th. This got even odder when I realized we are the 9th of April.
Anyway, this is getting interesting:
Microsoft Said to Be Talking With News Corporation About Joint Yahoo Bid
This does not even make sense, in some ways. I mean: MSFT is in bed with Facebook, Facebook is gunning for MySpace, owned by… you guessed it: News Corp.
Anyway… to me, this is akin to shoving 9 pounds of meat in a 5 pound bag. The result is interesting but lord knows what the bag - and its contents - will look like. Mind you, over at Alley Insider, Henry Blodget just took a hit off the pipe and seems to like the high:
Would this combination make sense? Sure it would make sense. Owning MySpace standalone isn’t doing Rupert any good–he’s getting his clock cleaned by Facebook. MSN’s dead in the water. But throw all that together with Yahoo and you could build a pretty honkinging global communications, social networking, and advertising platform.
Hmm… I’m not sure about that… but it shows that YHOO remains the best positioned company in display banners and video… and those are the “hot” growth areas in digital media. Perhaps, News Corp. is more concerned with a strengthened Time Warner. Or, maybe, seeing how Google complained loudly about “challenges in monetizing social networking sites (aka. MySpace)” this is Mr. Murdoch’s way to strike back at Google…
I don’t know. But this is getting really interesting.
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WatchMojo NewsletterIn 2006, a big company sued me. I was in a corner, on the verge of losing the company and in the week leading up the trial I reached out to all of their competitors and tried to line up a line of defense in exchange for something, anything, I could offer.
No one bit… in time. By the time some of the legal departments of those companies got back to me, I had won the case and was wondering why I was sweating in the first place.
Fast forward 2 years and Jerry Yang is on the verge of losing his company, too. Well, it’s technically shareholders’ company, but Jerry does not think so. From Feb 1 2008 until about a few minutes ago, I thought Jerry was wrong in not caring about what his shareholders wanted (to accept MSFT’s offer), but seeing him on the verge of securing a potential exit by way of a merger with AOL, I think that I actually understand Jerry. You know what, sure, he sold a massive chunk of his company to the public… but so what? It’s his company until the Board or shareholders take it away from him. And so far, neither the former nor the latter have dared do that… so guess what, if Jerry will try to maintain independence from MSFT, then so be it. It’s his right. Sure, it’s not really adhering to his fiduciary duty to shareholders, but welcome to the real world. If you don’t like it, go teach a class at your favorite B-School.
I’m not saying I agree with how Jerry has handled things, but guess what, a lot of people thought I was crazy when I entered the courthouse on June 16 2006 representing myself in a court of law against a legal machine. I won not because anyone else thought I’d win… I won because I believed I would win.
In the end: that’s what business and entrepreneurship is all about. This Jerry Yang was MIA from 1995 (when Yahoo! hired Motorola executive Tim Koogle) to February 1 2008. Even when Jerry took over for Terry Semel and launched his 100-day crusade to no-man’s-land, I don’t think anyone thought Jerry had a clue… but I must say… say what you want about his not honoring his fiduciary duty, this Jerry I like: a fighter, a resilient never-say-never fighter.
I like that. I remain long on Yahoo (about 12.5% of my stake as at Feb 1 2008), but even if I owned 100% of what I owned two months ago, Jerry is reminding me why I decided to start a company myself… though admittedly, he’s also reminding me why owning stock in a publicly-traded company plays second fiddle to being your own boss.
Mind you, seeing him go through this reminds me: don’t ever lose control… and don’t sell out unless you have to, I mean absolutely have to.
This is finally getting interesting. When I decided to keep some shares, I did so for the same reason a bettor keeps some money in the game: for entertainment value. I must admit: Jerry’s providing us some of that now, finally.
Here’s to hoping he doesn’t lose his mojo if and when he pushes MSFT back. Enjoy it while you can, cause a victory against MSFT will translate to a surefire lawsuit from investors. But you can worry about that in the morning… tonight, we torch the campus!
Update: Part 3: Maybe I was wrong - Where was THIS Jerry from 1995 to 2008?
MSFT reacted to YHOO/GOOG’s partnership.
Forget what the analysts and reporters will say, here’s how executives read today’s move by Yahoo! to let Google run ads alongside 3% of its search results.
- After investing billions in Panama, Google is now admitting that it can never catch up Google. We’re not talking about catching up Google’s in terms of market share, we’re talking monetization.
- This does in fact reduce its value to MSFT. This actually gives MSFT a reason to really threaten to lower its bid.
- In search, data is everything. The EU just said that search companies must purge data after 6 months. If such a measure would ever pass, then the advantage that data miners such as Google have would be reduced. In other words, Google’s advantage - and share premium - relative to Yahoo! would fall.
- This is a not-so-tacit admission that Q1 was not so hot… and given that YHOO’s most senior brass has little Street cred left, I presume this will be the promise they try to push to investors when they announce Q1 results.
- Yet by opening up its kimono to Google in April 2008 as Microsoft is about to acquire Yahoo! means that Google will get a lot of data on Yahoo!, which in turn gives Google a far greater premium on Yahoo! than they did beforehand.
- Yahoo! should have done this deal by getting some kind of right over Google’s display business. I know this is dreaming… but Google would welcome some expertise on this front… and while I doubt it would have ever happened, any self-respecting dealmaker on Yahoo!’s side would have asked for this. This, in fact, could make YHOO’s shareholders consider remaining neutral and independent, though any alliance with search king Google makes Yahoo! less independent.
- Most importantly, YHOO is worth less relative to GOOG in MSFT’s eyes. In 2005, I was VP of Ad Sales for the largest men’s lifestyle publisher. Our bigger peer in the broader men’s publication space (one focused on video games and not lifestyle) wanted to buy us. As talks persisted, they eventually asked us open up our kimono for them to audit and confirm our traffic etc. But by doing so, they got all of the information in the world and inbound and outbound traffic and where users spent time etc. After that month, they got access on our business’ sweet spot. They could have acted in bad faith and used that info to invest and compete with us. The point is: Google will now use that 3% of YHOO’s inventory to get all of the data in the world on YHOO…
- This is a key, key issue: Microsoft could in fact make a direct tender to YHOO shareholders and say “if GOOG’s deal with YHOO goes forward, our offer drops by $1.” That is “only” $1.2B in the purchase price, but symbolically investors will fear it enough to pressure YHOO.
- Finally, MSFT is showing up on YHOO’s doorsteps viewing itself like a knight in shining armor… who just got pooped on by YHOO. Sooner or later, they’ll shove the carrot where the sun don’t shine and hit YHOO with a stick.
This might have been the tipping point.
Note: Long YHOO… Part 3: Maybe I was wrong - Where was THIS Jerry from 1995 to 2008?
See Part 2 : YHOO Just Checkmate Itself.
From the What Were They Thinking File:
Yahoo! got its ass served to it by Google by initially powering its search engine by Google.
Now, it’s about to let Google serve some of its ads… this is a dumb move strategically and tactically.
That’s not just desperate, it’s a plain dumb move. Remember one thing: when MSFT threatened to reduce its bid last week, one reason it cited was that YHOO’s cold reaction and the resulting proxy war would have an adverse effect on YHOO’s perceived value…
But now, by opening up its search inventory to Google - even if it’s only 3% of its inventory - does in fact reduce YHOO’s relative value to Google for a buyer such as MSFT.
I am really not sure what Yahoo! gets out of this other than pissing off a buyer.
Sooner or later, someone needs to take the keys away from Jerry Yang. In fact, both Yahoo!’s CEO, President and CFO along with the Board’s handling of this will go down as the worst handling of an M&A opportunity in recent history. What should and could have been a $50B sale to MSFT will go down as a low $40B’s exit.
Note: I sold 87.5% of my holdings but remain long YHOO. See Part 2 : YHOO Just Checkmate Itself.
This morning I found out Vidavee sold for $6.6M to Vignette - a CMS company. That’s not a large number by any stretch of the imagination… but it’s even more shockingly low when you realize that the company raised $8M in funding.
I know that a lot of VCs are pulling the plug on companies that don’t represent big payoff opportunities. Combined with the fact that the company is losing money (I presume this was the case of Vidavee), then usually investors will pull the plug, as they did, here.
Tack on liquidation preferences and I presume the managers, founders and employees got nothing and the VCs salvaged some of their capital to reinvest in better areas.
Mind you, sometimes companies sell for a little bit more than the amount that they raised (GameTrust), other times it’s for less than they raised (Revver). Usually, companies and investors try to spin it in a positive light. In this case I presume the VCs just wanted to kill the project or sell it. I am not surprised they sold it. The product may be good, but the markat is saturated and Vidavee had no leverage, let alone pricing power.
Vidavee was one of the many, many, many companies to pitch us their services. We passed. I thought Vidavee had some interesting features, but they were a victim of a rapidly moving market, poor execution, confusing market positioning and frankly: free alternatives. I’d say that the last variable created a rapidly moving market which forced investors/managers to change their spiel in the marketplace… and they simply did not execute well. It’s not my style to say anything when a company is operating and all (especially if I have some kind of contact with them), but now that they have sold… I figure it’s a good case study and the parties there should read this, no matter how much it hurts.
But I’m not sure this is management or investors’ fault [alone]. I’m not saying they’re not at fault, but I don’t think it would have mattered what they did.
Let me chime in:
1- There’s just not that much money in technology plays anymore… before you think I’m a crackhead, let me explain:
2- Even though there are the occasional grand slams, most of those are media-related (ie. some advertising component)
3- The risk / reward tradeoff between media and technology is starting to tilt favorably towards media.
Nothing better illustrates this than MSFT’s major effort to acquire YHOO. Or if you doubt me, even Google is an advertising-supported technology play. The answer to this problem is that a lot of companies try to develop ad-supported business models but they can’t pull it off (man, I’d like to name names here). Vidavee did not attempt that, they went with licensing sales, but they were even more dead in the water as a result. This is why I think #1 above is true: tech companies are in a bastardly catch-22 these days.
For # 1 - Sure, call me biased as a media entrepreneur.
For # 2 - Look at the recent exits and you will see that the exits come with the promise of advertising one way or another (YouTube, MySpace, etc). Vidavee never played up that card, they sold licenses to their software and that is really not a defensible position because there are countless alternatives in the marketplace… and nowadays, everything has a free alternative.
As per # 3 - media, content and advertising is the major opportunity because:
a) there are usually less competition (because VCs funded less players) and
b) it’s not a #1 or #2 takes it all kind of game.
For purposes of illustration: I could - pretty much with the press of a button - change blogging platforms from Wordpress to Movable Type seamlessly. That won’t change the value of this blog and this company… Admittedly, to WP or MT’s parent SixApart, the loss of one user does not change things… but therein lies the problem: you will have 1,000 wannabes who have to invest a lot of resources to become the #1 or #2 in the space, the others might as well not bother.
It’s really no different in video… and Vidavee was neither Wordpress or Six Apart…
This is why you are seeing more and more digital media/content funds - more here.
Vidavee’s fate shows one thing: platforms are a commodity, I don’t care what anyone says. What exasperates this is that everyone and their uncle wants to be a platform.
Here’s a new reality for all you wanna be financiers and entrepreneurs: technology, patents, blah-blah-blah. They’re not all that defensible in the “who cares” sense:
- either they are not defensible because cheap hardware and open-source software makes them not defensible, or
- they are but no one really uses the service or it’s not practical.
Hopefully Vidavee now has a home at Vignette. In the meantime, I could list 5 or 10 other companies that will end up like Vidavee this year… but I won’t, that’s not classy.
I’ve been meaning to write about this for a few weeks now, but as a content provider I figured I should shut my trap.
Anyway, Adobe just launched a new video player: “Underneath the hood, Adobe MP is a video RSS aggregator tuned for Flash media”. The navigation reminds me a bit of Joost’s (that’s a good thing), but the integration and ingestion was pretty impressive…
The company has always had an excellent track record in launching - then becoming ubiquitous in - new software segments.
This all the way back to Adobe Reader for PDFs and more recently Flash video. Of course, the entire suite of flash-based applications is something that Adobe inherited after it acquired Macromedia for $3.4B. Flash video really took off after YouTube enabled video embeds and it was only a matter of time before Adobe would think of capitalizing on the popularity of flash video.
Anyway, why I care so much about this is not because I think the industry needs one more player (though with the right bells and whistles, the market is actually ripe and open for a new contestant) but because WatchMojo.com was one of the many partners included…
I was going to mention this in our Q1 recap press release last week, but it was premature. But this past weekend, a few sources such as X, Y began to talk about it and I know that the company is very close to launching… so without any further ado, here is a screen grab of what it looks like.
A cool feature is that you can watch videos even when you’re not connected… more details to come tomorrow, I’m sure, but as a user, I can tell you that this makes Adobe’s player something I would have downloaded anyway…
I’m no techie, but here Adobe is leveraging one of flash video’s inherent advantages: being able to watch them even when you’re not connected to the Web… and with so many videos online being in flash, it will be able to amalgamate a dizzying array of content in a quick manner. How quickly? Well, WatchMojo.com’s entire catalog of 3,500-4,000 published videos are on it.
Here is a sneak preview of our content in the player (with the screen grab):
PLAY
