"So You May Not Want to Know This..."

I came across this article about a new, well, relatively new start-up called inSpot. inSpot allows you to communicate to previous sexual partners that you have been infected by an STD and that they should get themselves checked.

It's a pretty basic concept, you pick the type of pre-designed card you want to send, personalize the message, type in the email address of the person whom you want to send it to and send it. The point of the message is to tell your ex-partner that they should get themselves checked for an STD. More than 750 people visit the site daily and nearly 50,000 emails have been sent through it.

I don't think this is necessarily a bad idea, but I'm unsure how it could be effectively used to make money. The site has no ads on it. Yes, it provides a lot of information, and it provides a valuable service (and allows people to play malicious pranks on one another), but it does little to show how it can build sustainable revenue.

In order to be effective and increase it's longevity, the site owners may want to consider partnering with a non-profit such as planned parenthood or a government agency, to provide it with the funding and resources it needs to get it's message and idea out to the community.

Is One of These Things Unlike the Other?

I'm not sure how I feel about being in such esteemed company:














Picture courtesy of the SF Chronicle

Managing Your Way out of The Storm

Lots of people with thoughts about how manage there way through the current financial crisis. I have my own thoughts but plan on sharing them at another time. Regardless, Charlie O'Donnell had a great post about how his company is weathering the storm and thought I would reblog it here (and for the record, I agree with every word of it):

Any startup that needs to severely "buckle down" now or any VC firm that needs to do a 180 on their investment strategy wasn't doing it right in the first place.

From the day we took our first investor checks, we've been operating in emergency cashflow management mode--not because we thought the environment was bad, but because of the following:

1) We didn't raise too much money--$350k.

2) Building a new service is hard. The longer you can last, the more features you get to, the more traction you'll have, and the more time you'll have to fix the mistakes you're sure to make.

That makes it a simple equation: Spend less, survive longer, live to die another day.

How do we do that? Well, there's the way we've been doing it all year:

- I teach two entrepreneurship classes on the side to make ends meet.

- We run on four servers we got for free... Two we got from a friend at a startup that blew up and two we got through a big hardware company who seems to have forgotten about the fact that we have them. Lately, we've been asking companies we know who may be upgrading to see if we can grab a few more.

- The servers sit in a old rack we wheeled from 14th and 8th to 23rd and Park when we took it off the hands of someone giving it away on a Unix user list. We now know how many city blocks server rack wheels are meant to travel. The answer is about half the distance to our office.

- We squat rent-free in the small back conference room of one of our investors--soon to be moving into a smaller office across the floor. We're just grateful--we'd work out of the coat closet if they asked us.

- We run some third party software in our stack that would otherwise cost us about 50k/year. We got that we got for free in exchange for kicking the tires on it and getting the company some data.

- When we travel to the West Coast on fundraising trips, we crash with friends instead of staying in hotels.

- We incentivized our developers when we hired them to forgo some current cash compensation for either additional compensation after our next financing or additional equity--and gave them the choice of how much they wanted to do that.

What I'm saying is that, even before the gloom and doom, we watched every penny and saved where we could.

And now, we're out fundraising for our first venture round. If you read the echo chamber, you might think all the VCs have packed up shop and gone home. We've been out talking to VCs and we've generally heard some pretty level-headed thinking. They want to make sure that our burn rate plans are reasonable and that we're giving ourselves enough of a runway--but that's really something they should always be thinking about, right? Good investors have had multiple funds over many cycles and will continue to put money to work in a time-diversified way.

Our current fundraising round is meant to take us from four to eight people (not twenty eight) and give us a full 18 months of running room... And that was also the plan long before the doom.

Anyone who splurges on big fancy offices when they don't need 'em, or who takes ridiculous salaries as founders probably deserves to go under. As Gary Vee said, "This isn't a party. We're building real businesses here."

I think this whole doom and gloom thing is a farce. I mean, don't get me wrong, Sequoia has an amazing track record but they also find a way to stuff 5 million into every first round that they do. Companies should be ultra conservative about cash anyway... The idea that suddenly companies now need to do a 180 on strategy means something was wrong to begin with.

At worst, most companies should need an extra round of financing to weather an additional 18 months. As long as your previous rounds were priced reasonably, this shouldn't be a tremendous issue--certainly not catastrophic. Unfortunately, that's not the case for a lot of these companies. Many, financed by the same VCs that are most likely to sound the alarms, cut off their flexibility by capitalizing at too high a price or ramped up too fast. If you've raised over $10 million, have a headcount over 30, and you don't have a stable revenue stream yet, well... your shipment of fail has just left the factory.

Playing Among Giants

Earlier today a friend asked what my thoughts were about starting a small online business during a recession. While I was thinking about it, I came up with a larger question, which is, why would anyone start an online business these days? With Google branching out more than ever, it's impossible to become involved in something that they aren't currently involved in or haven't thought of. In fact, a lot of Venture Capitalists commonly ask, "Well, what if Google decides to do 'X'?"

I think there are a lot of ways to answer that question, and the proper way to answer it obviously depends on the product in question. Google is a large company with almost a limitless reach to money and talent. Competing with them on any level is going to be difficult and will take a lot of hard work and money.

Obviously, Google's core product, search (and with it, search advertising) has allowed it to dominate the web. One thing Google has done wrong is expand past their core product offering. By necessity to survive, Google expanded from search (and advertising) to mobile, email, web analytics and more recently video and social networking. Because of this they have become a company that is a 'jack of all trades, master of one'.

So how do you compete with Google? The simple answer would be to find their weakness and exploit it (obviously this is oversimplifying it, but bear with me). In social networking, Orkut has never been big in the United States? Google was not first to market with social networking. It launched in 2004 well after known sites like Friendster and MySpace were dominating. Google knew it could provide a competitive product because of all the people already using Google Search on a daily basis, and all of the information they had access to. Regardless, Facebook launched after Orkut and clearly blew it away.

Another example is video. Google Video and YouTube launched roughly at the same time (for the sake of argument, YouTube may have launched a bit before Google Video). Video on the web was an instant success. With people beginning to have more access to broadband web speeds, the demand for video was growing. Not only that but the product that YouTube built was functionally better than Google Video. The end result was Google purchasing YouTube for $1.6 Billion.

So when one asks "Well, what if Google decides to do 'X'?", the way to answer that question is to say that Google has grown too big to properly develop and execute the strategy that is necessary in the development of the product. The next step in answering that question is to define why Google's product will never be as good as your product.

Thoughts on a Google/Yahoo Search Deal

TechCrunch posted the following article about Google serving ads against Yahoo search results. Everybody seems to have their own opinion about the pros and cons of such a deal. Microsoft will obviously be pushing the Department of Justice to take a nice and steady look at possible monopolistic overtones to the deal.

Because of Google's mammoth ownership of the search advertising market, it's easy to see why anyone inside of Google or Yahoo would be in favor of it. Google is currently spinning the issue saying that the partnership will lower ad prices Really? How? It will essentially direct advertisers to a network that (after the deal is completed) will own upwards of 90% of the search advertising market, taking away competition, and by definition force the price of keywords and keyword phrases up.

The problem with not just search advertising but online ad networks as a whole is the lack of quality competitors in the space. Granted, there are now over 300 ad networks competing for a piece of the $16billion online ad market. The trouble is not one of them has shown the capability or the determination to produce a product capable of effectively competing with Google.

Unfortunately, a good product is only half the battle. Many companies out there have developed good ad networks, it's just that a) the management is under-prepared for a long fight with Google, b) the product they built can't scale, or c) the company lacks the discipline or the expertise to successfully execute putting another product in play with mainstream advertisers.

The Bloodletting, Part II

I was really hoping that I wouldn't have to post more thoughts on the financial markets recent stumble, but it's too important not to at least post a few random thoughts.

- The Fed decided to bailout troubled insurer AIG last night. While I'm against the government bailing out bad management, this one was needed. AIG wrote credit default swaps and sold them to banks who bought bad mortgages from mortgage companies. Their 'promise' was that in the event of default, AIG (the world's largest insurer, well, it was, anyway) would be good to pay back the bad loan. Lo and behold, bad loans start rolling in, and the piper demands to be paid. AIG sold these derivatives pretty much unregulated, to anyone and everyone that would buy them. Suffice to say, if the Fed didn't step in, the bloodletting would be a lot worse.

- Lots of debate as to whether or not the FOMC should lower short-term rates. Assuming the market opens dramatically lower tomorrow, I don't see this as implausible.

- Word on the street is puts for Goldman Sachs went from around $.15 to over $20 in the space of two hours. No photographic proof of this, but I don't see this as too illogical, given that it's one of two independent banks left standing.

- I overheard something a bit concerning while walking through the Financial district of San Francisco today, two well dressed men standing in front of the Mandarin Oriental whispering into their mobile phones about 'manipulation'. Then, about an hour later, a commentator on CNBC mentions the same word.

- The SEC released an emergency order today preventing naked short selling. Not sure if this isn't too late.

- Both WaMu and Morgan Stanley are seeking their own respective deals to take them out of their bad positions.

The Bloodletting

Today was obviously not a good day for anyone who is apart of this country's financial system in any way. From those employed to oversee it, to those who work for it, and finally (and probably most importantly) those who invest it. With the DJIA dropping more than 500 points, it was the worst day since just after the September 11th attacks.

I actually think that today's bloodletting was a good thing, not only for the stock market, but for the economy as a whole. Over the weekend, a couple of major things happened, first, Bank of America purchased Merrill Lynch, and the Federal Reserve decided they were not going to bailout Lehman Brothers.

Let's be clear, it's never a good thing when banks the size of Lehman and Merrill simply go away. People lose jobs and insane amounts of money. But the decision of the Fed not to bailout Lehman (and inconsequentially, they probably telegraphed the same signal to Merrill) is a sign that they think the economy may be on the mend.

Let's face it, back in March when the government bailed out Bear Stearns, nobody had any sort of accurate clue about how deep or severe the current housing crisis would be. This weekend's decision not to help Lehman, is a clear signal that the government thinks the financial community and the economy as a whole is strong enough to withstand a major investment bank going out of business. 6 months ago, this just wasn't the case.

I'm no finance expert, but I think it's safe to assume that there might be more banks that go under in the next 6 to 12 months. The important thing to remember is that the responsibility for these defaults is not the general public's, but that of the banks themselves, who got themselves in this mess to begin with.

Quick Update

So I've been away, obviously, but hope to update this more regularly based on the fact that I finally invested in a personalized domain. I'll be tweaking the colors, layout, and may even change the name of the blog itself in the coming days and weeks. Here's to more content!

Can You Hear Me Know?

Interesting article from TechCrunch today about the future of mobile advertising as discussed by a few business leaders in Davos, Switzerland. The highlights:

- US Mobile Ad Market is projected to be only around $1 Billion by 2012 (seems low to me)

- Mobile phones make it easier for advertisers to target their ads through GPS and other features

- China Mobile estimates its mobile phone market to be half a billion users and they are adding 6 million users a month.

No doubt mobile advertising will have a huge impact in future ad campaigns. The extent of which it happens, especially here in the US, remains to be seen.

Privacy is an Illusion

I found this interesting little piece of information in the New York Times late last week about the fact that Facebook's new ad platform could violate out of date state privacy laws. New York State statute states that "any person whose name, portrait, picture, or voice is used within this state for advertising purposes or for the purposes of trade without the written consent first obtained" can sue for damages.

This is interesting considering Facebook is planning on launching Social Ads by having friends recommend products and services to one another. Of course, they could get around all of this by simply adjusting their terms of service.

Thoughts on SocialAds

Facebook announced yesterday that it will start a new stealthy art of advertising called SocialAds. The point of the platform will allow its 50 million members to become the new advocates for high profile brands such as Verizon, Blockbuster, and other mainstream brands.

The new platform allows these companies to do the following:

- Build profiles around their brand - nothing new here, this has been going on for a few years at MySpace, and was even in beta testing mode at Facebook with its Sponsored groups function.

- Insights will allow advertisers a more in-depth look at how their consumers and target markets behave online. Because Facebook collects such a comprehensive amount of data when a user registers for its site, this information will be extremely valuable to advertisers, more-so than on other social networking sites, where a buying a banner ad would be a shot in the dark. Advertisers will now be able to target not only to traditional demographics, but will be able to go as far as to where a user graduated from, what Facebook applications they are using and who their friends are. All of this, of course, will no doubt raise privacy concerns from industry watchdog groups.

- Beacon is the most interesting part of the platform because it allows users to tell their friends when they visit and purchase on a partners website. Imagine for a moment that you just bought Gucci Sunglasses off of eBay. That transaction will now show up in your news feed on Facebook. Taking this a step further, let's assume that you and your friends are planning a quick trip to Cabo for Spring Break and you want to let them know where you received a great deal. If the airline you purchased your tickets from is a partner of Facebook, that purchase will show up in your news feed.

What Facebook is doing has the potential to revolutionize the industry. If done correctly, they could do for social networking what Google did when they launched AdWords. This new platform is bound to have a dramatic effect not only in online advertising, but advertising across all spectrums.

Facebook Fun

Just in case you've been living in a cave for the past couple of weeks, the big story that everyone is talking about is Microsoft's recent investment into hot social networking start-up, Facebook. First and foremost this has many implications to both Microsoft and Facebook. Microsoft is in essence mortgaging its future placing a big bet on the fact that FB is going to be the next big thing. Facebook, on the other hand, is hoping that Microsoft can show them the ropes on how to become a successful media company (if you think FB is anything but a media company, you're sorely mistaken).

What was interesting over the last couple of weeks is the fact that there were several players who were all trying to buy Microsoft's piece of the pie. Google was perhaps the biggest and most relevant among them and surprisingly lost. Why they lost has yet to unfold. Although in the end it may be pretty smart of FB to have said no to Google, Google sure would have had a lot more to offer them as far as experience and online advertising brainshare.

What's certain now is the gloves are off between the two companies. Today, Google announced that they have established a partnership with several companies to set-up a social networking platform that will be common across the board. While this probably won't make FB co-founder Mark Zuckerberg forget that he's a new billionaire (on paper), it will surely make things more interesting in the weeks and months to come.

Rambling Reading

- The Sox made it into their second World Series in 3 years yesterday by defeating the Cleveland Indians.

- Don't mess with Bill Maher - he'll kick you out, dammit!

- Apple knows how to sell more than a few iPods and computers.

- Good luck getting World Series tickets.

...And We're Back!

After a longer than anticipated hiatus, we'll be blogging on a more regular basis again (though the exact timeframe is TBD). In any case, it's been a great 6+ months off. Looking forward to bringing you even more fun from around the Web.

Rambling Reading

Before we get into this edition of Rambling Reading, you may have noticed that this blog has been somewhat dormant this month. Well, the reasons are many, but the goal for the next little while will be to post 3 or 4 times a week, as circumstances allow. On to this week's great Web reads:

-I think Shakespeare said it best when he said "Parting is such sweet sorrow." Little did he know that that quote would be applicable to a once hot entertainer and her now shit-holed career.

-The headline that Newsweek uses "Raiders of the Lost Tomb" definitely applies in this case.

-We can't defeat terror, but we know how to disable your garage door opener.

-Bobby, this is what Humpin' Around will get you (That is, humpin' and not paying your child support).

-Manny's still being Manny, kind of.

MyBay

It was announced last week that eBay was trying to hook-up with MySpace on MySpace. eBay is hoping to tap the 50 Million plus MySpace users by allowing them to transact on MySpace via eBay.

This is an interesting move for eBay, primarily because most of MySpace's customer base contains people in the 18-24 demographic (which, btw, is great idea to gain buyers, not so great to gain sellers).

What's in it for MySpace? Good question. Sure, eBay has 180 Million customers that it can introduce social networking too, but let's face it, MySpace is just a big 'hook-up' platform and how many 40 year old soccer moms want to use a site that's geared towards kids in their 20's.

This is just a preliminary deal, and it's unclear if it will actually be consummated, however, if it does go through, I don't see it being a boon for either company. eBay will surely use MySpace as an advertising mechanism, but once they saturate it, what's left?

WikiLobbying

I thought that this recent clip from Stephen Colbert was quite amusing - especially given the wonderful world of Web 2.0:

Valleywag: Money Buys Happier Sex

From the 'Wag:

Men with a net worth of more than $30m, tech entrepreneurs among them, claiming that their wealth had brought "better sex" -- defined as more frequent sex with more partners. The survey, by Prince & Associates and reported by Robert Frank, showed wealthy women were even more libidinous.

Auctionbytes: eBay to Introduce Feedback 2.0

In my opinion, I'm not sure eBay's going to be able to pull this one off - just relieving the headache that the current eBay feedback system causes all involved (including the eBay employees who have to put up with the bitching from various people wanting feedback removed) is a project in and of itself. Allowing buyers to rate sellers in everything from communication to shipping is a nightmare waiting to happen.

From Auctionbytes:

eBay users can now view sample screenshots of eBay's recently announced "Feedback 2.0" system on the eBay UK website. The new system will allow buyers to rate transactions on item description, communication, shipping time, and shipping & handling charges. In late February, eBay will pilot Feedback 2.0 on eBay.co.uk, eBay.ie and in Australia, Belgium, France, India, Italy and Poland. If all goes well, eBay will launch the new system globally in late spring or early summer.

eBay UK announced the forthcoming system to users on Monday on its Announcement Board, with links to screenshots and details. Once buyers leave a rating of positive, negative or neutral along with a comment, they will have the chance to rate sellers on the following four questions:

• How accurate was the item description?
• How satisfied were you with the seller's communication?
• How quickly did the seller deliver the item?
• How reasonable were the postage and packaging charges?

Buyers can give sellers up to five stars on each of the rating criteria. For instance, five stars on the first question indicates the seller's item description was "very accurate," while two stars on the last question indicates the postage and packaging charges were "unreasonable." eBay will include a thumbnail image of the item underneath the auction title to make it easier for the buyer to remember the item.

On the Feedback Profile page, called Member Profile page under the original feedback rating system, eBay has added a new module that provides the average of each Detailed Sellers Rating left by buyers for the seller in the past 12 months. A seller must have at least 10 Detailed Seller Ratings to have an average displayed. In addition to the average, eBay displays the total number of ratings left for each Detailed Seller Rating in the past 12 months.

Rambling Reading

As usual, the following are some random articles of stuff that I've found interesting on the series of tubes known as the internets:

- Now you don't have an excuse for drinking alone.

- "I promise judge, I was alert the whole time."

- Paris Hilton admits she did it, kind of (no, not that).

- Cutting up your mom only gets you six months in New York. I understand he was under undue influence, but still, this is your mother.

- Don't leave home without your passport. Pretty soon, it will be required to go anywhere (I'm sure it's buried in the Patriot Act somewhere).

- $335,000 for 77 square feet, sign me up!