It depends. The Economist has an interesting story on vertical search (disclaimer: our company Mojo Supreme developed the MetaMojo.com vertical search engine and the video meta search engine).
It quotes Charlene Li of Forrester saying that
“Some are already prospering: GlobalSpec.com, for example, a profitable search-engine for engineers, has 3.5m registered users and signs up another 20,000 each week. ‘They own that market’”.
Indeed, but GW has been around forever. Today, there are vertical search engines popping up but it’s very hard to gain any traction. Sure, open source and API have reduced the cost of launching search engines (though using an API is not wise), but in search, distribution is everything.
Only 27% went on to a medical site of any kind, let alone a health-search site. “The path to general search engines is well-worn and familiar,” says Susannah Fox of Pew. “Dr Google is the de facto second opinion in this country.”
Our strategy has always been to create contextual media properties around each vertical category… see for example how we drive targeted travel search volume by having these city directories:
“Find out what the best publishers have to say about Amsterdam, click here.”
I really like seeing other vertical search engines grow and do well but for those that have raised some VC where investors expect a 10x return on their investment and investing in both IT and distribution is expensive, it might be hard to gain much traction.
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WatchMojo NewsletterI always like to remind my brethren online that everything web professionals say should be taken with a grain of salt (yes, myself included).
Here’s one more example:
Every time I notice someone send me a screen grab, I see they are on Mozilla. You would think 80% of the world’s users were on Mozilla, though in actuality, Mozilla’s numbers are 100M users worldwide, and given a global web user audience of 772M (comScore), that means that 1/7.72 or 13% of the world’s web users are in fact on Mozilla. Considering how badly MSFT pulverzied Netscape’s Navigator to grow to a 95%+ reach at its zenith, that’s not bad at all. I’d say today IE gets 80%, Mozilla gets 13% or so and Safari, Opera, etc., get 7%.
In fact, I think I am one of the few people in our world who still has a tendency to first open IE. I do that, of course, mainly because I want to see what the bulk of WatchMojo.com’s visitors see when they come to the site. Make no mistake about it, while Mozilla’s growth as an alternative browser has been nothing but admirable, it’s reach has yet to crack 20%.
But, my screen grab analogy should serve as a lesson to all: if you pool the web professional user segment, you’d think only 20% were on IE… in other words, whatever nuggets of wisdom and advice bloggers, tech types and web pros pimp out, bear in mind it’s probably not applicable or relevant to the real world out there, that to this day have very different tendencies that the “early adopter” crowd.
Today marks the end of my love affair with aQuantive, a company I got to know working in ad sales over the years and a stock I learned to love over the years…
aQuantive got acquired recently by Microsoft in a $6B deal, making it one of the better performing stocks in my portfolio. Please note, for every hit like this, there are misses. In fact, I’ve been working on a post on my biggest trading/investing mistakes and there’s so much there that it’s taking a while.
I was not going to post the lot size, then decided to do so anyway as I want to share a few lessons (under the graph):
The lessons are:
- you need money to make money: 100 lots won’t cut it, and even 1000 don’t really make a dent. I sometimes contemplated putting $100K or more into the stock, but aQuantive was a company that was always priced at a high P/E and expectations were high… so it was arguably priced to perfection and I did not want to lose my shirt. I don’t regret not buying more, cause your thankful on the downside when losses are limited, but the bottom line: you need money to make money.
- stick to what you know: at the risk of coming across as too confident here, few people have as much knowledge in both finance and advertising online. That’s an area I should stick to (with proper diversification to limit exposure, of course).
- stick to quality companies: aQuantive was a best of breed firm in advertising services. I also owned Doubleclick, Valueclick etc. at various points, but aQuantive was the only one I would get back in… with more and more ferociousness.
- look for diversified plays within strong industries: aQuantive was a diversified online player, this made a lot of difference over the years, and of note, when MSFT bought it.
- allocate capital efficiently: I am selling my shares because MSFT is paying $66.50 and there’s no need to be greedy… at $66/share, it’s time to allocate capital to higher growth areas…
Also, while Mojo Supreme is picking up nicely on all fronts, the fact that I’m self financing Mojo Supreme means that every once in a while I have to unload some shares when they really spike… of course, that also supports the “allocating capital to higher growth areas” because I’ve long ago realized that as good of an investor as I strive to be, I am arguably a far better manager and entrepreneur. Don’t worry, a mistakes I’ve made as a manager is also on the way…
Of course, I think I’m ending my affair with AQNT as an investor, something tells me that as WatchMojo.com continues to grow, we’ll be working together for some time to come.
On the stock market front, there are certainly a few great opportunities I’ve had my eyes on. As always, I’ll add disclaimers when making posts on a given company I own or even think of owning.
:: “Why AQNT is worth 2x DCLK“ - 2007
:: “AQNT: I told you so. Maybe You Should Listen to Me?” - Feb. 2007
:: “AQNT: I am telling you, Listen To Me! - Nov. 2006
I recall Fred Wilson talking about how his then partner Jerry Colonna always tried to peruade him that Web business were different when it came to valuations… I think that is quite representative of all new media types: be it bloggers, executives etc., that we sometimes forget that sure, you can extend the rules and fundamentals of finance and valuation considerably when you shift the focus online, but ultimately, it needs to make sense.
What on earth am I talking about? Today I read CNN Money’s Paul LaMonica’s talk about Facebook’s rapidly rising valuation.
To that end, Richard Barton, the CEO of real estate information site Zillow, said during the same panel discussion that he’s been getting many more friend invites from Facebook than LinkedIn as of late.
So could Facebook parlay this buzz into a huge sale of the company? After all, there was speculation earlier this year that Yahoo! (YHOO) was considering a $2 billion purchase of the company after Facebook allegedly turned down a $1 billion offer from Yahoo last year. But Levchin, speaking with me at lunch after his panel discussion, said he now thinks the company would fetch much much more.
He said that Microsoft (MSFT) probably could get a better bargain for Facebook if it wanted to buy it since the company has a close online ad selling relationship with Facebook. Levchin said Microsoft might be able to work out a $5 billion purchase of Facebook. But he said that if Google (GOOG) or Yahoo wanted to buy the company, they might have to pony up $10 billion.
$10 billion! Are the bubble days back? Well, venture capitalist and Facebook board member Peter Thiel said late last year that he felt the company may be worth more than $8 billion. Given the source though, this estimate obviously has to be taken with well, 8 billion grains of salt.
Then again, for every 5 Facebook boosters, you get two denigrators. I’m personally in both camps: in some ways, I clearly see Facebook as where many an impressive firms before their massive tipping point; but I also see a case of the Friendsters, a potential missed opportunity. Can Facebook find that billion dollar idea and scale it? I don’t know, cause I don’t actually know anyone within the walls to make an educated guess. It’s one thing to tickle the fancy of the social networking crowd, it’s another to make a $10B business out of it.
Of course, as a publicly traded company, this is all moot. Its valuation is not even what VCs have pegged it at each round, it’s simply what someone will ultimately pay for it to bring liquidity to its shareholders: that could be in an IPO, or in an M&A.
Let’s just take a peak at how fast things have moved in the Facebook mania:
And who is responsible for this alledged bidding?
And we’re not including Barry Diller’s ill-fated attempted, either.
Note, I was almost going to include Peter Thiel’s $8B volley, but that was a call for the company to be worth $8B by 2015… so while Thiel was then sounding loopy, suddenly, the man with the Midas touched might have hurt Facebook’s prospects? Yeah, don’t count on it.
Related:
- Why Facebook’s VCs will Fund Facebook App Developers
- Facebook OS: Be careful what you ask for
- Facebook 100M users, a matter of when, not if
- Facebook: IPO vs. M&A.
- Facebook’s 2008 to do list: File for an IPO.
- Should MSFT Turn its Attention to Facebook?
- Peter Thiel: Facebook is Worth $8B.
- Murdoch: “MySpace worth $6B”, if so, then break up FIM!
- Facebook to be worth $2.35B by 2010.
