Master of 500 Hats

The Force is Strong in This One...

  The Force is Strong in This One... 
  Originally uploaded by dmc500hats

My friend & uber-entrepreneur James Hong has written a really awesome & inspiring post that is a recipe for startup reinvention & equity-fueled motivational success.

both James & Max are killing it right now, with both Slide & HotOrNot have produced several of the top apps on Facebook Platform.  Max is also the former brainchild & CTO behind PayPal, and has been known to bust a move or two on the dance floor & the ultimate frisbee field.

these two alpha geeks should certainly be on anyone's list of top entrepreneurs in silicon valley.  fer shur, the Force is very strong in these dudes :)

I am Tiger Woods, aka Jay Adelson.

  I am Tiger Woods, aka Jay Adelson. 
  Originally uploaded by dmc500hats

while i was up at Foo Camp this weekend, a friend of mine asked Jay Adelson if he would 'digg' one of her blog posts... since he didn't have a pc with him, he ended up using my MacBook.

something was flaky with the wireless, and for some reason it was taking forever to finish refreshing after he dugg her story.  as i was leaving to head home, Jay mentioned i should logout on the off chance his account was still logged in.

imagine my surprise & satanic delight this morning when i fired up my machine, and discovered i was *still* logged in to Jay's Digg account.  Talk about temptation -- i could have Dugg my own blog posts, more HD-DVD cracker codes, favorite YouTube videos, random child pornography sites...  the opportunities for corruption & blackmail boggled the mind ;)

staggering & drunk with power, i paused for a full sixty seconds before deciding the cops would eventually find all the bodies... and then i logged out.

sigh.

foo camp talk on microfinance

here is the site for the Silicon Valley Microfinance Network (SVMN.net), a monthly user group i help run to educate people about microfinance topics: 

• http://www.svmn.net

here are two microfinance presentations from Kiva & Unitus (2 groups i help)... i won't have time to go over these in detail at Foo Camp, however you might want to check them out:

• Kiva overview, Q4/06
• Unitus overview, Q1/07

microfinance works.  help make it happen!

Facebook: World Domination Ahead (note to Google & Microsoft -- don't pull a "Semel")

  Facebook: World Domination Ahead 
  chart by WSJ

people keep talking about how Facebook platform is taking off (or not), and is Facebook catching up to / beating MySpace, but they're missing the real story.

imho, with the launch of Facebook Platform, they've not only already eclipsed MySpace, but also eBay, Amazon, & Yahoo... and in fact are now contending with industry juggernauts Microsoft & Google for the title of Most Valuable Monopolist (MVM) and the most likely to achieve World Domination.

Over the past 20 years, here's my list of successful MVMs:

• Intel = Most Valuable Monopolist, The IC (1980's-curr.)
• Microsoft = Most Valuable Monopolist, The Desktop (1990's-curr.)
• Cisco = Most Valuable Monopolist, The Network (1990's-curr.)
• AOL = Most Valuable Monopolist, Email + Gated Internet (1992-2001)
• Yahoo = Most Valuable Monopolist, Search Act I (1994-2000)
• Amazon = Most Valuable Monopolist, Books + New Goods (1995-curr.)
• eBay = Most Valuable Monopolist, Used Goods (1995-2004)
• Craigslist = Most Valuable (but mostly free) Monopolist, Classifieds (1998-curr.)
  
• PayPal = Most Valuable Monopolist, Online Payments (2000-curr.)
• Google = Most Valuable Monopolist, Search Act II (2000-curr.)
• Apple = Most Valuable Monopolist, iTunes + iPod (2003-curr.)
• MySpace = Most Valuable Monopolist, Social Networking Act I ==(2005-May 2007)
• YouTube = Most Valuable Monopolist, Online Video (2006-curr.)
• Facebook = Most Valuable Monopolist, Social Networking Act II (June 2007-curr.)

(i may be missing a few but i think i've covered most of the notables... feel free to pile on in the comments, and/or make corrections to dates above)

So it's been much discussed over the past few months about how Terry Semel fucked up by not buying Google for $3B in 2002, or more recently not buying Facebook for $1.6B last fall.  I'm not sure they really had the money -- and certainly not the balls -- to pull the trigger on either of those, and hindsight is always 20-20.  Ditto for eBay & PayPal, at least the first 3 times Meg Whitman tried to buy them out.  She finally did the deal only *after* the PayPal IPO, and probably paid a shitload more than if she had decided earlier.  But unlike Semel, at least she *did* make the right call eventually... and now she looks like a genius.

Now let's compare Facebook's fast-approaching domination of [personal] social networking & consider potential liquidity events, of which i'm pretty confident there are only 3 left:

• IPO in next 12 months
• get bought by Microsoft in next 12-24 months
• get bought by Google in next 12-24 months

Reviewing the history of PayPal's IPO & subsequent M&A, it's been said Meg passed on paying the price Peter Thiel wanted the first few times they met. Only after the IPO set a floor of ~$700M for the company (and after a perhaps ill-timed insider secondary offering a few months later set a ceiling) did eBay finally agree to buy PayPal for ~$1.5B.  Again in hindsight, it was a steal -- PayPal has easily contributed 5x in value to eBay the past 5 years, and PayPal is now responsible for up to a full 1/4 of eBay's revenue.  Meg may have balked thrice, but in the end she still got a damn good deal for eBay shareholders.

Fast-forward to today: Yahoo is now acutely aware of their error in not buying Google or Facebook when they had the chance.  Perhaps in Semel's defense, it really wasn't clear Google & Facebook were on their respective paths to World Domination at the time Yahoo had opportunity to cut a [very expensive for them] deal.  However, it's now become apparent that Facebook is absolutely an Irresistible Force & is quite unstoppable.  What might have seemed expensive @ $2B a year ago now seems like a steal for $10B. (if you want to follow the lesson of swallowing your pride & making a good call the 2nd time around, talk to David Sze at Greylock.  very. smart. dude.)

Yep, you heard me right: $10B with a capital 'B'.  If you only consider the Facebook-Microsoft advertising deal alone (~$900M over 3 years sorry my bad that was MySpace-GOOG deal... anyone know actual terms?... let's guess ~$50-100M/yr), those are the kind of revenues that makes it easy to think Facebook can do an IPO.  And what kind of IPO would that remind you of?  Hmm, i'd have to say it sounds similar to something named GOOG.  Now i'm not an analyst, but with their growth & revenue, i wouldn't be surprised to see high-single to low double-digit billions in market cap for them... at least at the close of the first-day open.

Alright, so now let's consider alternatives to IPO... who's left who could buy them out?  Well assuming Zuck is willing to sell to *anyone* -- and it's not clear that he would -- there are probably only 2 players remaining who would be motivated & capable: Microsoft & Google.  They both have the dollars, and they both probably don't want to be left out in the cold on social networking.

Now, are either of them willing to buy Facebook for a $10B+ number prior to IPO?  Very unclear.  But if i'm Eric Schmidt or Steve Ballmer, & i'm even considering that deal, i'm REALLY WORRIED the retail market will go ga-ga over Facebook, and set an unrealistically high # after they go public.  I'm talking like $25B+ unrealistically high... think about it.  Aside from the go-go late 90's, when has the public jumped back into Internet stocks?  You got it... GOOG again.  And they piled in.  And it went up.  And they piled in some more.  And it went up.  And they're still on board at $500/share.

So if that's the most recent example, what's to stop the public market from kicking Facebook's market cap up to some nosebleed numbers post-IPO?  Absolutely nothing.

Now Mr. Schmidt & Mr. Ballmer: how much is Facebook really worth to you?  $5B?  $10B?  more?  And how long are you willing to wait?  Until after the IPO?  The price is just gonna keep going up.  I'm glad i'm not either of you guys, because just like Terry you'll be criticized either way.  But that's why they pay you the big bucks, right?  Big Decisions require Big Checkbooks... not to mention Big Balls of Steel (clips).

Just remember in these situations: better to pull a Whitman than a Semel.

ZAPPED by ZapMeals! (thanks Wayne :)

Hungry for some good ol' Web 2.0 home cooking?

See ZapMeals.com & enjoy our startup fakester demo @ Supernova :)

(thanks Wayne!)

for the full story, checkout the ZapMeals blog + Dan Farber's Supernova coverage.

Om & Mike in USA Today: GigaOm & TechCrunch are "real businesses" (who knew?)

  Om Malik & Michael Arrington 
  Photo by Scott Beale, Laughing Squid

Two of the people i respect the most in the worlds of tech & journalism, Om Malik (GigaOm) & Mike Arrington (TechCrunch) are profiled in USA Today piece on tech blogs that are real businesses. 

No surprise there, except it took USA Today two years to realize what the rest of us already took for granted -- these guys are the Walt Mossbergs of our generation.

There are others like Matt, John, Dan, Rafe, Richard, & Nick^2 who also deserve high praise for chronicling the world of geek; still it's no coincidence these two in particular have had great success -- they both work as hard (or harder) than any of the entrepreneurs they cover. 

aside from being interesting to read & having their fingers on the pulse of Silicon Valley, they are both good people. yeah, i know some folks think they can be rough & tumble occasionally, but if you spend time getting to know them -- w/o always pitching them -- you'll find their hearts are bigger than the Grinch's on xmas day :)

so here's a toast to Mike and to Om, and let's hope when they get bought out for millions they don't decide to stop blogging...  cheers guys.

this week @ Under the Radar & Searchnomics

as mentioned earlier, june has been a month full of great conferences & events... this week i'll be attending two 1-day events designed specifically for startup geeks & search nerds like me:

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Wed 6/27: Searchnomics 2007 is a whirlwind 1-day search conference on a variety of topics (schedule, register).  Speakers include Marissa Mayer, Ram Shriram, and Avinash Kaushik.  Topics covered:

• Search Engine Marketing (SEM)
• Search Engine Optimization (SEO)
• Design and Development
• Branding and Promotion
• Web Analytics
• New Innovations and Opportunities

i'm moderating a panel on video search in the afternoon... drop by & say hi :)

UPDATE: register here (use code = "mcclure") to save $200+ off.

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Thurs 6/28: Under the Radar: Entertainment & Media features ~30 startups with cool new tech who plan to be the next Insanely Great Thing (schedule, register).

VC & geek friends David Hornik, Jeff Clavier, & Chris Pirillo among others will be judging demos from these companies:

Adap.tv | Bunchball | ChaCha | CrazyEgg | Criteo | Cruxy | Doppelganger | FlowPlay | Fora.tv | Hothead Games | iLike | Kaneva |  Kongregate | Meez | MOG | mPire | Multiverse | Pluggd | PolarRose | PowerReviews | ReverbNation | ScanScout | SplashCast | Splicemusic.com | ThisNext | Ustream.TV | Vidmeter | Visible Measures | Wize | XLNTAds | YuMe Networks | Zattoo

UPDATE: register here to save $100 off normal price.

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Product Marketing for Pirates: AARRR! (aka Startup Metrics for Internet Marketing & Product Management)

Here is a brief powerpoint deck on startup metrics from a talk i gave at Supernova called "Product Marketing for Pirates: AARRR!". It's about how to develop a model of your customer behavior, and then use conversion metrics / web analytics to assist your internet marketing & product management efforts.

The basic concept is based on 5 types of measurements of user behavior:

• A: Acquisition - where / what channels do users come from?
• A: Activation - what % have a "happy" initial experience?
• R: Retention - do they come back & re-visit over time?
• R: Referral - do they like it enough to tell their friends?
• R: Revenue - can you monetize any of this behavior?

(... otherwise known as "AARRR!", and thus the "Pirate" designation ;)

i'll post more on this later -- for now, here are a few pretty pictures:

ps - National Talk Like a Pirate Day is September 19... AARRR!

Fri 7/22 Virtual Goods Summit @ Stanford + a few thoughts on digital goods & platforms

So many great conferences going on this month... i'll be up in Sebastopol at Foo Camp this weekend, however i'm bummed i'm going to miss the Virtual Goods Summit being put together by Charles Hudson & Susan Wu.  Susan also just posted a terrific summary of the digital goods market opportunity on TechCrunch.  Susan is one of the smartest young VCs in the valley and put together a terrific panel at the Web 2.0 Expo conference a few months ago, and Charles is a really sharp BD guy over at Google i met in Tokyo last fall (and *almost* recruited into one of my startups, dammit!).  They both have a great intuition for interesting new trends, and this conference is just another example of them being on the cutting edge of internet technology.

I definitely agree digital goods & payments is a huge, growing space that's been overlooked by startup entrepreneurs in Silicon Valley.  When i was working at PayPal managing the PayPal Developer Network several years ago, the digital goods business was already big -- several individual PayPal merchants were transacting millions of dollars exchanging currency for Sony Everquest, buying Sims accessiories, & conducting commerce for other MMO's.  At the time i was a bit disappointed eBay/PayPal didn't go after this market more aggressively, given the size & growth potential.  In spite of the volume, PayPal wasn't really supporting -- and in fact was almost actively discouraging -- digital goods payments, primarily because of fraud concerns and the inability to verify "delivery" for a virtual item.  (i actually suggested a possible hack to a few folks: if you mailed a physical copy of the receipt for digital goods payment, you could theoretically use it as proof of delivery and get PayPal to handle the transaction normally according to its standard policies for physical goods... check here for more PayPal Hacks ;).

Anyway, since PayPal wasn't as focused on digital goods back then i ended up directing a lot of customers to one of the guys i recruited for our PayPal Developer advisory board, Shannon Sofield, who had built out a digital goods payment service called PayLoadz.  PayLoadz added a lot of functionality for managing digital good payments on top of PayPal (and now also works with Google Checkout as well).  There are other services like EventBrite (for supporting event payments & ticketing) that function similarly, by additional functionality around PayPal for specific vertical or horizontal markets.  

There were and still are many 3rd-party service opportunities that PayPal was too busy to address, and in fact this was part of my job running the PayPal Developer Network; to help identify & support new market development (or occasionally in gaps in our product features) by evangelizing PayPal as a payment platform other entrepreneurial startups & developers could build on.  In hindsight, i'd have to admit we were only modestly successful with our platform efforts... we did get thousands of merchants & developers using PayPal, but we barely scratched the surface of all the platform opportunities in digital goods, subscriptions, events, storefronts, and many many other areas. And although PayPal is still a huge force in the payments market, at least as far as digital goods goes much of that innovation has been happening in other companies (see Susan's overview) & geographies (Korea, China, Japan, etc).

I'd still love to see PayPal open up further as a platform, and support the growth of digital goods as well as several other related markets.  It will be interesting to see if eBay does more to push PayPal in this direction, or if other platform competitors such as Google (with Google Checkout, Google Analytics, & other Google APIs), Amazon (with payments, storefronts, digital publishing, & Amazon Web Services like S3 & EC2), and now most recently Facebook (with Facebook Platform), end up eating their lunch.  Also somewhat missing from this platform discussion: Yahoo & Microsoft.  Marc Andreesen, Jeremy Liew, and David Sacks (Geni.com) have some great posts on platforms recently... worth discussing further.

Attention Mr. Briggs: NOT the best way to silence your competition.

note to fading monopolist: physical intimidation from a once-dominant internet company could be interpreted as a sign of insecurity, and perhaps a lack of any other notable competitive strategy.

companies with great products don't have to bust the kneecaps of their competition... or in this case, the kneecaps of 3rd-party developers building on top of Google's Checkout.

seriously, this story has played itself out before with PayPal & eBay... when are you folks going to learn that trying to forcibly shut up competitive alternatives will only draw greater attention to them?

admittedly i'm a little shit D-list blogger, and my posts don't likely influence your market very much ... but why bother motivating folks like me to write these kind of posts ripping you a new one?  get a clue.