Last year our April Fool’s Joke was that FOX was buying Tech Crunch… but before long Tech Crunch pulled its own prank.
This year Michael Arrington seems to have tried to pull off a trifecta of gags:
- TheUnfunded counter punches TheFunded.com (TC gets accused of covering some dumb startups, but this one would have taken the prize for dumbest)
- Tech Crunch sues Facebook
and last but not least, he now pulls CNET into the mix by getting them to run this article.
Oh, what’s CSD? Chief Shit Disturber.
See our April Fool’s Day joke here.
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WatchMojo NewsletterFor the past 2 years, the WatchMojo.com family has tried hard to get leading thinkers, technorati and pillars of the financial community to respect content creators.
But now, after a lot of effort, time and money, I realize that this isn’t simply trying to change an engine at 30,000 feet, in fact, it’s more like trying to make the world stop and spin in the opposite direction.
It’s just not worth it, nor is it possible. Why continue to go against the grain? “We should not be in the content creation business, we should be in the platform business,” voices echo in my head.
This past weekend I spent a lot of time finalizing terms of a soon-to-be-announced financing round, and as part of the deal, we have to purge the site of all of the original content we’ve produced.
This, I’m told, is the path to riches, the road to attain the brass ring.
That amounts to:
- 3,500 videos published (4,000 in all including pipeline, which also has to go, sadly)
- With each clip being an average length: 1 to 3 minutes.
- 99% of which is in English, with 1% being in French and Spanish, with plans for content in German, Mandarin, etc.
- Across 12 categories: Automotive, Education, Fashion, Film, Food, Health, Music, Politics & Economy, Space & Science, Sports, Technology, Travel, Video Games
- Over 30 or so subcategories: Cooking, Instruments, How To, Workouts, Languages, Tips, etc..
- 100 to 200 hours of programming
- 500 hours of filmed material (I failed to read the fine print of the Term Sheet, I must burn those tapes, too… nothing to prove that once-upon-a-time a content empire stood here)
I’d be lying if I said I agreed with this 100% initially, but after endless hours of discussions, prolonged negotiations and considerable regression analysis in a Google Spreadsheet, I was effectively check mated and came to the conclusion that we should Control + All + Delete everything we’ve done and everything I’ve invested in the company and become a hybrid of:
- a next generation YouTube
- a Digg for non-clickable media files
- a MySpace for broadband files
- a Google of motion picture
- a Facebook of related moving slides
and get the most passionate and volunteer-minded 6 billion people of the world find out about our tools and platform and empower them to use our platform so that we can take on Digg, YouTube, MySpace and Facebook head on. Oh, also Google. Yeah, let’s add Google, they’re rich!
Initially I had my doubts about yet one more platform… but with Bebo being a part of AOL, my newfound backers smelled an opening…
You know what, they’re right: I don’t think it’s too late to create a profile on a 14th website, I really don’t… at least that’s what the investors convinced me of… why own content when you can own an email address? Content is so easy to get your hands on, but an email address? That’s scarce!
Hmm… Obviously if you’ve been reading me for the past two years and wonder why I have made a total 180-degree and capitulating on my content is king mantra… it’s not become I’ve lost my marbles, it’s because it’s April Fool’s Day folks.
More so with every passing day of the calendar… Content is King!
For more April Fool’s Day fun, check out our friends at RWW.
Jason Calacanis goes crazy this morning… but I wonder if he realizes the irony of his attack on YHOO.
First, his beef:
Yahoo made a huge critical blunder today: they decided to compete with their customers. Today they launched a content site called Shine dedicated to women. It looks really slick, and they make a point of talking about all the great editors they have working on it from Jane and the Wall Street Journal.
Anyway, back to Shine: wow, really dumb idea on Yahoo part. I would kill myself if I was running the publisher network right now. Can you imagine what it would be like to go to WSJ, Jane, iVillage, Glam, or Sugar publishing and try and get them to support Yahoo services?
- Yahoo sale person: “Hello, I from Yahoo. We would like you to use Yahoo Publisher Network and share ad revenue with you”
- Glam/Sugar/Jane/publisher “oh, really? That’s great! I hope you take the profits and put them into your competing content site that will drink our milkshake!”
- Yahoo sale person: ” You bet! We will drink it up…. we will drink your milkshake.”
When Microsoft takes over Yahoo this will create even more problems. MSN/Live is trying to compete with Google AdSense and Yahoo’s blunder is going to feed right into Google’s “we won’t compete with publishers” position.
If I was running a women’s site today I would make a point of puling everything I have off of Yahoo and building a voting block of women’s sites to do the same. If Yahoo wants to go “winner take all” that’s their right, but the niche content sites should stand up for themselves and vote with their partnership dollars for a true partner who doesn’t run off with your business in the night.
Someone please explain to me why they would do something so dumb right now. Rafat Ali? Kara Swisher? Mike Arrington? Om Malik? Henry Blodget? Someone please clue me in… because this seems so dumb I can’t understand it.
Second, this is hypocritical.
Let me explain. Yahoo! did this for the same reason Mahalo.com started off creating pages linking out to 7 websites per a given topic… and then after a while decided to create full articles on said topics.
Pretty much like this vs. this.
Content is king. Having a page with links out (gee, sort of like YHOO and Mahalo 1.0) is somewhat limiting… but having a page with actual content is slightly more valuable. Jason, you of all people should know this.
I appreciate the nuance that Yahoo! has an ad network for publishers, but that is no Google network. In fact, this is no different Google.com competing with Google’s network for ad revenue (if a client’s ad budget is tapped, it’s tapped, after all).
To boot: Yahoo can leverage Shine to get more ad dollars for themselves and for their publisher partners.
I do agree that Yahoo!’s excessive hail marries are starting to seem desperate, but this move in of itself is not all that dumb.
Disclosure: long YHOO stock… but trust me, no one enjoys criticizing YHOO more than I do.
ZenithOptimedia expects online ad spending in the U.S. to grow 23.4 percent this year, an upgrade from the 19 percent it forecast in December. Overall, global ad spend for online will rise 26.5 percent this year to $47.7 billion.
And something we’ve long argued (see our old post here), now being accepted as “fact”:
– Soft economy means more for online: With the economy limping along, more marketers will be encouraged to rely more on digital media the detriment of traditional media. Internet advertising is a low price buy, with large amounts of inventory, targeting capabilities and ads that can be quickly changed. The consolidation that began last year promises greater efficiencies for advertisers as well. Zenith believes still more merger activity to take place and expects that to play a role in propelling online ad growth. Zenith also cites the emergence of mass-appeal, high-profile video sites like Hulu. Search engine marketing is also expected to experience continued growth as more small businesses embrace online as part of their overall local marketing strategies.
Read more.
This isn’t your father’s Microsoft, let me tell you.
Since Ray Ozzie has come on board: MSFT has changed its tune.
I understand Google is powered by Linux, but times have changed.
Microsoft is so big in software that it is now looking at gaining market share in media and advertising, to do that, it understands that it must lose some battles to non-Windows platform (or non-Office environments, for that matter), to win the long term war: to be as dominant in advertising as it has been in software.
As technology migrates to the clouds and the lines between software and media blur, business models become increasingly advertising-supported.
As such, the long term war is over advertising revenue and not licenses and subscriptions. The 1990s were the age of the PC and MSFT understood that hardware was a commodity but software provided infinite profits. It won that battle.
The 21st century’s first half will be about users migrating to the Web, advertisers following it, and the inefficiency between attention and spending will create abnormal profits.
For MSFT to remain MSFT, it needs to win in advertising. Over the last 10 years, its sought to do that alone, occasionally via partnerships (with NBC on MSNBC, for example). More recently, its tried to do it via acquisitions:
- Last year it plunked down an 85% premium to acquire aQuantive for $6B (we owned the stock, thanks MSFT).
- This year, it launched an unsolicited 60% premium for Yahoo! (we owned the stock, as well, thanks MSFT, again).
Yet, Yahoo! has worked very hard to fend MSFT back. In fact, if only Jerry Yang and Sue Decker worked half as hard for shareholders as they are doing for themselves to retain control, this would all be moot. I’ve since sold a good chunk of my shares but always maintained that the deal would get done, and at $50B. But as economic conditions change and Yahoo! risks bombing 2008 Q1, some wonder if $31/share is all it will take to acquire Yahoo!
We shall see. Yahoo! has been so ungrateful and childish that maybe MSFT should send it a message.
So I wonder: with the conditions on the ground changing, should Microsoft make a competing, parallel offer for Google to give 0.5 share of MSFT for every 1 share of Google?
THE TALE OF THE TAPE
Google commands a market capitalization of $137B. Google has over $15B of cash and no debt on its balance sheet, so it has an enterprise value of $122B.
Bear in mind, its market cap was well over $225B in November 2007. Yes, Google’s growth has slowed down, but its core business and long term prospects have not really changed. I’d say investors have simply become more realistic and less risk averse. In fact, a lot of the early buyers of Google stock have long cashed out, I believe. A lot of the holders right now have bought in over the past couple of years, meaning that their holdings remain under-water. Reading some comments on message boards, I suspect many wonder if we’ll ever see those pre-2008 levels again.
Microsoft, meanwhile has a market cap of $260B and with $20B in cash it has an enterprise value of $240B. So basically, MSFT is worth twice as much as Google.
Toss in a premium and you’ve got a deal whereby every 3 shares of Google fetch 2 shares of MSFT. Last year, such talk was lunacy… what with Google doubling every month and MSFT remaining in neutral. But last year was last year and this year is this year. Mind you, two years ago I asked “by 2010, will Googe be worth more than MSFT?”
Google did $17B in sales in 2007; MSFT did $60B. MSFT generates over $17B of free cash flow per year.
Back in Q4 2007, Google was worth $200B, but MSFT too was higher; at that time, MSFT was worth 1.5x higher than GOOG.
But once Google announced its 2007 Q4 results and growth had fallen precipitously, the pace of insider selling accelerated. More importantly, with comScore showing that Google’s paid clicks are stalling in January and February 2008, many fear that Google’s stock might see the $300s before seeing the $500, $600 and $700 barriers any time soon.
In this context, if MSFT offered to merge/acquire with Google, how would Google investors really feel?
Some things to consider:
- Massive Insider Sales Suggest Bearish Outlook by Googlers
Diversification is one thing, but how come no Googlers are holding onto shares for any long period of time?
- Yahoo! and Microsoft have more overlaps than Google and Microsoft.
Yahoo! Mail is tops, Hotmail is rarely used. Gmail gets a lot of glowing reviews but market share wise it’s not exactly a category killer.
MSN Messenger and Yahoo! Messenger? Ditto. Gmail Talk. I use it, but most people don’t. AOL’s AIM is the leader.
In display/ad sales, Yahoo! is the leader, MSN does well but lacks real reach, Google is nowhere to be found.
There are some overlaps in ad serving, granted, Microsoft owns aQuantive’s Atlas DMT and Google just bought Doubleclick, whose DFP platform is widely used. But who cares: both will eventually see margins and market share erode.
Ad serving has nothing to do with media per se, it’s all about software.
- Microsoft and Google’s Culture is More Similar than Microsoft and Yahoo!
Yahoo! has lost the fire in its belly. For years, I held the stock, not because I thought Yahoo! had the stamina and drive to compete in the marketplace, but because as the world’s biggest new media company, it was a prime acquisition target.
Yahoo! does not strive for world domination: instead of building its own search, it showcased Google’s search. Yahoo! paid Right Media $45M for 20%… built it up, then bought the remaining 80% for $680M (what were they thinking…)
Microsoft is all about dominating, as is Google. Google and MSFT’s means to their end is very different, but their belief that they should own everything they touch is actually very common and similar.
Google wants to own the advertising process even though it only owns the Web portion (and even there, it only owns the search component, it has yet to prove itself in display, video, classifieds, etc.)
Microsoft owns the PC and wants to own the Web.
That trait is nowhere to be found at Yahoo.org, I mean Yahoo.com.
- Outlook for Business vs. Outlook for Stock
But here’s the clincher: no one doubts that Google as a business will be bigger in 3 to 10 years, but as a stock, will it really be at $200B anytime soon, let alone ever cross $300B? $400B? $500B?
Microsoft, after all, has generated more and more revenues and profits but its market cap is nowhere near its peak. Why would Google be immune to the laws of gravity and the laws of big numbers?
- Little to Lose
Nothing will make YHOO change its tune faster than seeing its stock fall back to $20/share after MSFT pulls its offer. However, MSFT need not pull its offer for Yahoo! to shake Yahoo! up; it can submit a competing bid for Google knowing - even if it can afford to (it can’t) - it will never, ever be green lighted for both.
Google and Yahoo! cannot merge because their share in search would come to 60% + 30% = 90%.
Even if the antitrust bosses object to MSFT’s 10% market share being added to Google’s 60% share, there are ways around it for MSFT to sell MSN.com to Time Warner or News Corp. as a form of sacrificial lamb… It surely would be simpler than how Google could buy Yahoo!, something we covered here.
If for the next 3 months Yahoo! thinks that the specter of a MSFT/Google is even remotely possible, its investors would literally line up to torch the purple campus because Google + MSFT (with aQuantive) would annihilate Yahoo!’s lead in display in one quarter. Even if Yahoo! would make an overture to News Corp., Time Warner, or private equity, no one would be able to match MSFT’s outstanding $31/share offer.
I know, this is getting a bit crazy, but it could be done. It would be ballsy, but hey, with a name like Ballmer, why not at least consider it?
BOTTOM LINE:
I personally doubt this will happen, but for two years I said MSFT will make a run for Yahoo! and many of the thinkers that now say what’s taking so long thought I was crazy then.
What do you think?
Let’s get some cliches out of the way:
1. Don’t believe your own PR.
2. Listen when people give you feedback, more importantly, act on some of it.
3. Always find ways to improve yourself and your company.
These are all very nice cliches that we should all adhere to, for sure, but let’s stop the violin music for a second.
If you listened to everything your critics say, you would be a major doormat. Why?
1. Study the Source of Criticism.
Most of your critics don’t like you or have opposite objectives to yours. There’s nothing wrong with having opponents and disagreeing with people, but you should not always listen to everything your critics say, either.
2. Some Critics are Actually Wrong and Misinformed.
In fact, some times, critics are wrong and uninformed. A board member who shows up once every quarter with boatloads of feedback is usually wrong. An employee who sees 1/10th of the whole picture but has 10 things to complain about might be wrong. A client who is told “the client is always right” and complains about not getting a free this or an extra is definitely wrong. The point is: criticism is a part of life, it’s not right or wrong per se, it just is.
3. Trust Your Gut.
As a business person, you deal with whatever it is that you deal with 24/7, sometimes you suffer from tunnel vision, for sure, but more likely than not, you know the in’s and out’s of your business better than a passer-by who wants you to believe he or she has all of the answers.
4. It’s Good to be Hated.
If people have nothing but good things to say about you: then they do not fear you, you don’t pose a threat, you don’t scare anyone and frankly you are a joke in their eyes. People compete for a limited amount of resources and rewards; don’t be a fool, if you pose any threat to other people’s likelihood of winning those resources and rewards, they will bash you.
5. Charity is a Myth.
People who say they are showing tough love and care about you are usually lying. They are looking out for themselves. Charity is usually a self-serving thing. I say usually, but I mean frequently.
When a coach recruit a teenage athlete to become a member of his team, he does so because the player can help the coach win. That’s why the coach will learn to love the player; it’s not the other way around.
The key is, the coach needs the player to win and remain relevant.
6. Winners Build Up, They Don’t Bring Down.
Don’t get me wrong, I am not saying don’t listen to the naysayers and critics, that’s crazy. I am just saying study the source, analyze why they are saying that. Some people can elevate themselves to your level based on what they contribute and say. Other times, people try to be on the same level as you by bringing you down. Don’t fall for that.
In other words, true, you’re really not as good as your biggest fan pretends that you are (sorry mom), but you’re never as bad as your biggest critic says that you are, either.
In 2006, I got sued by a big, big company that shall remain nameless. It was a fairly traumatic experience: I had not done anything wrong yet they came at me with so much firepower that I thought the world would cave in on me.
Against all odds, I managed to win. The best thing about the process was understanding how the legal system works. One of the main things about the legal system is lawyers, obviously. Lawyers get a bad rep, sometimes unfairly. At heart: their clients are at fault for being, well, stupid. Alas, one reason lawyers get knocked is due to their fees. Sometimes fees are high for a reason, but sometimes, you get billed for nothing. This case deals with the latter.
During my ordeal, the entire thing was broken up into numerous parts.
- The first part was the legal intimidation: lawyer letters drafted on thick, expensive paper, in legalese, threatening countless actions for things you may or may not have done, thinking of doing, or being watched as you do it.
- The second part was the legal tussle, from being served with papers, to the preparation as well as the protracted showdown in the courts. Bear in mind, I actually represented myself in my battle. Frankly, that was insane when I look back at it all now.
- The third part was the settlement, for which I finally got a lawyer. Hey, it was crazy to rep myself, but to think I could settle the victory without a lawyer would have been foolish. Mind you, I don’t think you should rep yourself. I personally actually knew I would win and told my counterpart - the President of the Bar Association - that I would win no matter how much he tried to phase me out and intimidate me… which was really crazy in hindsight. I respect lawyers considerably but I think that unlike, say for example doctors, anyone can “play” lawyer for a day (by studying the procedural stuff) and beat a lawyer in the substantive details.
Anyway, the point is, at all phases, I interacted with lawyers. Some lawyers were neutral, a handful were against me, and a few were my allies.
When it came to preparing, I spoke to various lawyers and paid a couple for counsel (which amounted to a tiny, tiny sum compared to the $100,000 to $250,000 everyone told me I’d need to mount a formal defense if I hired one to actually rep me).
One thing I had to master was walking the fine line between talking to a lawyer pro bono and them billing you.
To this day, I’ve realized that some lawyers randomly send you bills even when you are trying to assess their acumen in a field in order to give them your business. For example, one of the two lawyers I spoke to during the preparation stage has absolutely no knowledge of what I needed help with.
Lawyers think that they can get away with a lot because they know their clients are usually in a corner with their backs to the wall.
Over time, I’ve become rather impatient when a lawyer tries to bill me unfairly.
There’s a very good chance you will one day go through your mail and get a bill for something that you did not actually expect or ask for. Use your judgment as to whether you should pay it or not, but it you sincerely think the invoice is uncalled for, you can use the following response, pro bono.
Just bear in mind:
- If you actually agreed to pay a lawyer for something and then decide to back out of it, that is something else. a lawyer can and will pursue you if you decide to not pay legitimate bills. The following really applies to random legal bills for initial talks or meetings to gauge their area of expertise.
- You should also not take advantage of this, after all, the last thing you want is to have no lawyers wanting to represent you (oh wait, that won’t happen with lawyers).
=
Dear [],
As a matter of business policy, the company does not make payments for professional services unless we have given an actual mandate to a legal or accounting law firm.
As a professional, I meet countless would-be clients to earn the privilege of winning their business, I don’t invoice them for that meeting, even if they ask to meet me.
We work with a handful of lawyers and law firms, when I meet new lawyers, it is to ascertain whether we will be enlisting their services in the future. I do not expect to be billed for that discussion.
As such, we won’t be paying the invoice ref. # [].
Thanks for understanding.
I’ll follow up if and when the time comes to doing the [whatever service you were inquiring about], at which time we can discuss a formal mandate.
=
Don’t be a doormat. Just because people ask for things and push you around doesn’t mean that you should let them get away with it.
Between Yahoo! and CNET, I wonder if 2008’s storyline is: stay private, maintain control?
CNET will reduce costs, sure, but turns out the layoffs will also hurt revenues. Now is the time to be investing in digital, not scaling back. The companies that invested throughout 2001-04 ended up strengthening their hands… those who scaled back paid big time.
Ultimately, I think one undeniable lesson is be careful how much control you lose for the sake of growth. CNET and Yahoo! are Web 1.0 pioneers who obviously would not have had their histories without raising capital, going public etc., but if they are now in the position they are in, it’s because they lost control and became vulnerable.
It’s great to grow like crazy overnight, but is it really worthwhile if it means you are suddenly on the outside looking in? I don’t know the answer to that question, but it’s worth asking.
A few years ago (Bubble 1.0), GE’s Jack Welch set up a tracking stock for his “web ventures”. Suffice to say, it didn’t work. I’m not even sure if ever took off.
But reading about Google’s brain drain, I wonder, why doesn’t Google simply let those eager to leave a stable environment for startups with a new media fund?
Yes, the devil’s in the details (read: call me if you want me to help you set it up without the obvious pitfalls, conflicts etc.), but if I were the trifecta-of-paid-click-love, that’s what I would do.
I’m not saying all of those who leave Google for new ventures of competitors (read Facebook) would stay on, but trust me, a lot of people would…
