I was reading SI on the NFL Draft and how random it is: which players become successful vs. which ones flop.
Business is the same, here is a good post on Tech Crunch about Amazon and Jeff Bezos. Mind you, it helps to have a maniacal leader in Jeff Bezos who will win at all costs.
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WatchMojo NewsletterBob Parsons is the CEO of GoDaddy.com. Came across this off his blog:
1. Get and stay out of your comfort zone.
I believe that not much happens of any significance when we’re in our comfort zone. I hear people say, “But I’m concerned about security.” My response to that is simple: “Security is for cadavers.”2. Never give up.
Almost nothing works the first time it’s attempted. Just because what you’re doing does not seem to be working, doesn’t mean it won’t work. It just means that it might not work the way you’re doing it. If it was easy, everyone would be doing it, and you wouldn’t have an opportunity.3. When you’re ready to quit, you’re closer than you think.
There’s an old Chinese saying that I just love, and I believe it is so true. It goes like this: “The temptation to quit will be greatest just before you are about to succeed.”4. With regard to whatever worries you, not only accept the worst thing that could happen, but make it a point to quantify what the worst thing could be.
Very seldom will the worst consequence be anywhere near as bad as a cloud of “undefined consequences.” My father would tell me early on, when I was struggling and losing my shirt trying to get Parsons Technology going, “Well, Robert, if it doesn’t work, they can’t eat you.”5. Focus on what you want to have happen.
Remember that old saying, “As you think, so shall you be.”6. Take things a day at a time.
No matter how difficult your situation is, you can get through it if you don’t look too far into the future, and focus on the present moment. You can get through anything one day at a time.7. Always be moving forward.
Never stop investing. Never stop improving. Never stop doing something new. The moment you stop improving your organization, it starts to die. Make it your goal to be better each and every day, in some small way. Remember the Japanese concept of Kaizen. Small daily improvements eventually result in huge advantages.8. Be quick to decide.
Remember what General George S. Patton said: “A good plan violently executed today is far and away better than a perfect plan tomorrow.”9. Measure everything of significance.
I swear this is true. Anything that is measured and watched, improves.10. Anything that is not managed will deteriorate.
If you want to uncover problems you don’t know about, take a few moments and look closely at the areas you haven’t examined for a while. I guarantee you problems will be there.11. Pay attention to your competitors, but pay more attention to what you’re doing.
When you look at your competitors, remember that everything looks perfect at a distance. Even the planet Earth, if you get far enough into space, looks like a peaceful place.12. Never let anybody push you around.
In our society, with our laws and even playing field, you have just as much right to what you’re doing as anyone else, provided that what you’re doing is legal.13. Never expect life to be fair.
Life isn’t fair. You make your own breaks. You’ll be doing good if the only meaning fair has to you, is something that you pay when you get on a bus (i.e., fare).14. Solve your own problems.
You’ll find that by coming up with your own solutions, you’ll develop a competitive edge. Masura Ibuka, the co-founder of SONY, said it best: “You never succeed in technology, business, or anything by following the others.” There’s also an old Asian saying that I remind myself of frequently. It goes like this: “A wise man keeps his own counsel.”15. Don’t take yourself too seriously.
Lighten up. Often, at least half of what we accomplish is due to luck. None of us are in control as much as we like to think we are.16. There’s always a reason to smile.
Find it. After all, you’re really lucky just to be alive. Life is short. More and more, I agree with my little brother. He always reminds me: “We’re not here for a long time, we’re here for a good time!”
Read more.
I don’t understand why Warner Bros. is looking to develop its own destination. Forget the fact that there are other destinations doing that pretty well already… why doesn’t WB use Time Warner’s online assets, like SI, Time, and… AOL, or Bebo!
TWX is one odd company: last night I mentioned how AOL and CNN don’t seem to talk, add this to one more unit living in a silo.
I never understood why some companies like Handheld Entertainment and Go Fish were publicly traded. With easier access to capital comes the fact that your premature business gets nailed by shareholders, especially if your underlying premise - that distribution trumps content - is faulty.
[Disclaimer: both companies were or are distribution partners of WatchMojo.com]
GoFish is now worth $10.61M, ZVUE (formerly known as Handheld Entertainment) is worth $10.16M. Revver, never publicly traded but armed with $13M in VC money sold for less than $5M to Live Universe, Brad Greenspan’s company.
WatchMojo.com is worth more than those three companies combined, not because any stock ticker or term sheet says so, but because if value is ultimately derived by demand and supply, there’s no competition. It’s not even close. With every passing day, the value of content soars whereas distribution fizzles unless you are # 1 or # 2.
GoFish has changed models and is no longer a UGC platform, but rather, a kids’ ad network. Two years ago, UGC was in; last year, it was ad networks. Something tells me GoFish might very well prevail, but it’s hard to focus and execute when your stock price is out there for public consumption and rejection.
ZVUE went on a shopping spree and financed itself via private investments in public equities (PIPEs), which is always a dangerous tool. Maybe that is why the company’s stock is languishing. I thought of buying some shares but there remains downside risk, even though the stock has fallen from $7 to $0.40.
Not a day goes by where you don’t hear about a new roll up fund. Today Austin Ventures launched one, backing former Razorfish CEO Jeffrey Dachis.
For the past few months, I’ve talked to two investment groups about doing a video rollup and the names of such companies always come up as would-be targets. I’m not sure the upside is there, even at distressed prices.
Last year Ross Levinsohn and Jon Miller contemplated doing the roll-up, but the numbers did not add up, partially because online video is very nascent. So Messers Levinsohn and Miller instead merged with ComVentures and began to invest in online video startups.
This year, when Revver was on the auction block, I considered making a run for it, but I could see that there were and would be dozens more of such companies for sale as the market weeded out the second tier aggregation/distribution sites.
The temptation was there, but ultimately I stuck to my guns: I much rather own content instead of distribution. This is counter-intuitive to the Valley mindset but not to big media. Distribution is great, but it’s not exclusive or defensible per se in online media.
Even in traditional media, look at what is happening to ABC, CBS or NBC (even FOX). They lost market share to HBO, MTV, ESPN etc.
Then enter new media where everything is a click away.
Especially online, distribution is a commodity, and ZVUE and GoFish were commodities to shareholders. The public market is more correct in recognizing that than private investors, many of whom who suffer from herd mentality and are a bit, shall we say, behind the times.
Consider recent history:
Lycos, Excite et al. all had massive distribution at one point, now they’re distant runner-ups. Even Yahoo! is seeing erosion in market share to the new wave of distribution outlets, namely vertical publishers and massive social networking sites.
So instead of owning distribution, we at WatchMojo.com instead partner with them: YouTube, Hulu, MySpace TV, Veoh, etc., why compete with these massively funded strong brands when we can tap into their networks and build our business on their platforms?
I think with time and experience, even private investors get this: this morning Web 2.0 uber investor Fred Wilson conceded content might be a better bet than aggregation. That sure sounds like something I’ve been saying for some time. I doubt Fred is giving content businesses a consideration, I surmise nothing will change that… however, online, where everything is a click away, you cannot build defensible positions in distribution or aggregation, but you can with content.
Twitter apparently raises $20M, proving that indeed, greed is a stronger force than fear. Going into the week, rumor had it the company was looking to do a $60M pre-money valuation… others said it might go as high as $150M… since we’re playing with monopoly money, let’s just cut down the middle and suppose it was a $100M deal (pre-money, post-money, who cares about now, right?)
Anyway, let’s say this not being a first financing round, VC will want a more modest 5-10x (instead of the 100x dream or 1x salvage), that’s a $500M to $1B exit.
My only major concern, apart from all of the ones listed here, is, with Facebook’s Status Tool, does Twitter really have a chance to go super mainstream? I mean… are those two features not one and the same?
I wonder what portion of that $20M will go to anti-spam tools.
I am watching a video on CNN… yet I can’t embed it anywhere. Why not? Given that CNN is part of Time Warner, and Time Warner has spend billions on AOL, Quigo, Advertising.com, LightningCast, etc., I cannot understand why Time Warner would not open up their massive content archive and let their extensive ad platforms - hum, remember Platform A? - cross-polinate with one another to generate more revenues?
LightningCast of note is supposedly some big ad video network, which AOL bought and bundled into Advertising.com, which is now central to Platform A… llegedly.
Just wondering.
Sometimes, I think that being part of a big media would be great because you can do all of these things to unleash value, but then I realize that being independent allows us to do so much, and not have these silos divide a company’s growth and execution.
Just saying.
So this weekend a lot of otherwise smart people are asking: “is MSFT going to walk away from YHOO” presumably because Jerry Yang does not want to lose control of YHOO to the point of torpedoing everything in sight. Nice. Score on for fiduciary duty.
Are you people for real. Or just crazy?
Let’s look at some of the facts:
- MSFT’s quarter was not a grand slam, further explaining why MSFT needs to make a big, needle-moving move in online ads.
- YHOO’s quarter was all right, meaning it’s not as crappy of a company as the biggest critics would want you to believe.
- MSFT’s offer of $31 for YHOO remains the best bet for shareholders and MSFT will go direct to shareholders.
- Yes, some YHOO staffers might not like working for MSFT… but MSFT can pull a Neutron Jack kind of move and take over the property and not lose much sleep about YHOOers not showing up. That line about the engineers? A lie. MSFT just wants the eyeballs, traffic, client deals, revenues, and audience. The people are not that important in the mix here.
People, start planning for YHOO + AQNT + MSFT world wide web.
Long YHOO and frankly very tired of all of this about now.
You know what would be really cool? A service that allows users to name so-called anonymous sources to determine what is valid and what is hogwash.
Between Tech Crunch, Alley Insider and All Things D, I think we have enough anonymous sources for a beta version.
Yesterday Henry Blodget reported that Twitter is looking to raise a Series C financing round of up to $15M on a $60M pre-money. If investors bite, that would give the short-form publishing platform a $75M post money valuation and effectively dilute the company by 20%.
Previous, Twitter had raised $5M on a $20M valuation, whereby they had sold off 20% of the company.
- Listen to your Money-man
Fred Wilson published a piece on how raising too much money before you have defined a successful business model. I covered this here and heaped a lot of praise on Wilson for admitting that too much VC money is what oftentimes kills businesses. He said:
Most venture backed investments fail because the venture capital is used to scale the business before the correct business plan is discovered. That scale/burn rate becomes the cancer that kills the business.
When recently asked by a user to describe what that is business model actually was, Fred replied:
build a service that tens of millions of people love using every day, then build a revenue model that is native and appropriate
That sounds really great in abstract terms, but it fails to define what model that will actually be… My guess, frankly, is that no one really knows but they all have plenty of ideas and opinions. You know what they say about opinions…
This funding then must be for IT and infrastructure which users say is unreliable. It’s not a coincident that changes at Twitter’s IR brain trust have been numerous of late: first Blaine Cook, then Lee Mighdoll.
You can call it a coincidence, but in a culture where money and success outweigh personal lifestyle, I don’t buy it. This is what I think happened:
- The company’s management team has to change some things and people before raising more money, investors probably told them, and this was the purge, veiled under these seemingly independent and unrelated moves. People don’t leave “hot” startups in the Valley.
OR
- The CEO had to get senior management members to sign off individually to certain things, and the IT guys did not agree to those metrics, objectives and steps in getting there. So, they left and in order not to freak out would-be investors, they concocted a personal reason to leave. It happens all the time.
Notice the VP of Sales did not have to sign off on anything, presumably because sales are not a top priority right now… and this might become problematic, more on this below. Better question: is there a senior level executive in charge of sales planning and strategizing? I doubt it. What many companies do is build all of these assumptions and promise numerous things to investors then hire a sales guy to make it happen. Sales guy knows this is all rubbish, but to get the job, stock options, etc., agrees to it all during interviews, because sales guys are like that… then afterwards they realize “what did I get myself into?”
So seeing that Twitter fails to have any semblance of a business model, then I assume they are not going to go against Fred’s advice and this additional funding is probably indeed for IT purposes first.
- When in doubt, Blame Ruby [on Rails]
When I thought of writing this post, I knew I had to address the IT matter but I am not a techie so I figured I should asked one, ideally someone knows about Ruby on Rails, the platform that Twitter is built on.
I asked Heri Rakotomalala who is a Ruby expert, runs a Ruby consulting shop and writes the authoritative blog on Montreal startups (he’s always been extremely supportive of our company). Anyway, not being an expert on Ruby on Rails, I thought it would be prudent to ask him why Ruby gets some flack before pontificating on the matter.
I asked him: “why do I keep hearing Rails does not scale?”
He answered:
Because you read too much techmeme and stories about twitter.
more seriously, rails is a relatively young framework. very powerful but also very easy to use. developers who don’t have experience in architecturing big systems can use it to develop a web2.0 website with full features etc. then they are surprised it can’t handle the load. the equivalent of giving kids a battlecruiser.
also, at its beginning, some developers saw their server stopped working unexpectedly, but there are solid tools now to prevent this (monit, nagios, god etc to monitor the server)
fiy, here is a list of big companies using rails
for me, we are going through the same things that Java went through, at its beginnings, it was very slow, too complex, irrelevant to IT etc. And now 10 years later, it’s king in banks systems, insurance firms, healthcare etc. Rails is going the same way.
- Lesson from Facebook I: Cool is a passing state of mind
When Twitter launched at SXSW last year, it blew up and all of the early adopters jumped on the bandwagon. This is generally a smart and clever way to go about. However, early adopters tend to move on quickly, too.
Just this past winter, Facebook was the hottest thing in the world, fetching a valuation of $15B and raising an additional $240M (and then much more by way of Li Ka-Shing). Today, there’s talk of Facebook hate and API frustration.
Facebook’s time has passed in a way, because it is still searching for a business model and every avenue it goes down in hurts the user experience or frustrates the same lot that hyped it last year.
I see Twitter facing the very same challenge, already!
- Social Media: Cool until you wanna make a buck
Let’s face it: we’re seeing a purge in Web 2.0 Bullshit. The social media hype train just past the 6th inning. Right about now, in case of rain, the game is over. This year, investors are growing spines as advertisers are searching for quality.
But even if you boast quality in social media, it does not translate to advertising success and financial payoff.
As an advertising-centric executive and business guy, I personally don’t see anything exciting and revolutionary (heck, even evolutionary) that would really help advertising come to the Web at a faster clip, in bigger portions…Digg, Slide, Twitter, Facebook, etc. - all of these companies deservedly get props and rave reviews from developers and fanboys but none of them, frankly, are what advertisers are looking for or what will make online advertising surge.
Social media is one dangerous, double-edged sword: it attracts and sucks out a lot of attention but it fails to live up to any conventional advertising metric. I wrote about this some more here and here.
Yet to then tell marketers “tough, pound sand and adapt” is foolish. We want online media to remain a free ad-supported environment, so we have to play along with advertisers (not kowtow to them, but listen and understand to them).
Spewing nonsense about how the web changes all of the rules is mumbu-jumbo. Even if there will be many revolutionary shifts in the paradigm (insert many more buzzwords) it won’t mean that overnight things shall change all that much.
- Marketing: Promotional vs. Commercial
Most of the new platforms, services and sites we see these days are both promotional and commercial. Commercial in this context does not imply e-commerce, it includes advertising revenue. In other words, as I’ve outlined here, YouTube is a perfect example of a service that gives tremendous promotional value but does not clearly allow all content owners to monetize it via advertising. We’ve started to do that successfully, but we also have a big presence on YouTube. MySpace is also very similar. Facebook too, but in different ways.
Twitter, I suppose offers some promotional utility but as a commercial/advertising service, I doubt it has much promise now. However, as a commercial e-commerce/shopping platform… that I see. In fact, I’ve been testing it because writing about something without ever trying it is pretty incredible (as is, would lack credibility) and I see some ways that Twitter could make money.
The problem here is that thanks to Google envy, everyone wants to be in the advertising game. eBay? Amazon? So passe…
But what if Twitter overlooks the e-commerce angle because of Google envy? The more funding it gets, the more it has to adopt an advertising strategy, and as we have seen, social media and advertising don’t go hand in hand.
- Advertising: Push vs. Pull
If Twitter were to want to pursue an [eventual] advertising sales strategy. Then it needs to understand and accept how their one major variable plays into advertising: Twitter is a push mechanism, not a pull one. As with email, this creates an instant spam issue. But even devoid of spam, it creates a barrier to its growth.
When you go to Google and search something, you are pulling data: be it organic or paid results.
When you use Twitter you push out data; Twitter cannot push out ads and expect a) as little resistance or b) as much success as Google due to that variable.
This nuance deserves a considerably longer discussion and this post is getting long enough… so we’ll come back to it at a later date.
- Bad Culture: Business Model Bad; Financing Good
But the key theme I am hinting at is Twitter: as one entrepreneur to another [admittedly more successful] bunch: don’t fall in the trap of raising too much money, too soon. Most companies fail because of that.
Build a company and a business first, then start to worry about investors’ lack of understanding of advertising models. Don’t start to put up with investors’ lack of advertising models while you are trying to define one. It will never end.
VCs know a lot about many things, but ad sales ain’t one of them.
Two years ago, I could not raise a dime because I was being unfairly sued in a meritless and frivolous lawsuit which created a liability around my neck that made an albatross look like a nice pet to own. I won that case and it’s behind me.
Last year, I could not raise a dime on my terms because video content was not in vogue as investors were investing in more platforms and video tools.
Today, content is the new “it” in thing in video all of a sudden and we can raise money pretty easily, especially as overall video funding does not cease to grow and you see more and more digital media content funds.
However, I am still biding my time because I want the model to be very clear so I don’t have to waste 4 hours a day talking to know-it-all VCs. Yes, I said that.
For the record, I am not saying we’ll never raise money, I resign to the fact that entrepreneurs like to build HUGE companies and inevitably you need outside financing to scale (assuming we don’t finally accept a buyout offer), but once you define a business model and successfully start to build on that, you have leverage to do way with draconian terms and unrealistic growth plans, which, I suspect explains why Twitter’s IT guys are out.
Raising too much money is an instant fail because some companies cannot even spend that much money within a year and end up wasting it. When you waste, you destroy value.
Once you have a culture and mindset of waste, it’s over. You will never be able to right the ship.
Twitter is probably raising more money because it sees other raising money. That almost becomes the entrepreneur’s greater fool theory…
- Lesson from Facebook II: Don’t Overfund Yourself
At Tech Crunch 40, Evan Williams (co-founder of Twitter and founder of Blogger - which was acquired by Google) said something that stuck with me as an entrepreneur. He said (I am paraphrasing):
When someone comes to you and wants to buy the company you started, if it’s relatively young, then it’s about what amount it will take for you to sell. It’s less about revenues, profits, multiples, etc., and more about that question.
Connecting the dots, once you start to raise more and more money and your “startup” becomes a well of VC’s money, then your head becomes a moving target and your company becomes unsellable. I fear that this Twitter round is going to do just that: could you imagine Twitter having $25M in funding? There was even talk of a $150M round.
Beware: a VC who would want 5x, 10x, 100x or 1000x return on their investment won’t be happy with a small exit. MySpace fetched $580M not because the Silicon Valley early adopting digerati and technorati loved it, au contraire, everyone else did…
Facebook tweaked their Status bar and became an overnight competitor. Pownce launched something and copied it in a week. Twitter’s team should focus on a more modest approach to build something. This is one case where too much money will ruin a, well, a thing. Whether or not Twitter proves to become a good thing remains to be seen.
However, the fact that Alley Insider just-so-happened to get its hands on this leak suggests that this is Twitter’s founders and investors to let would-be buyers one last chance to pay what Evan (and I presume, Biz Stone) are asking for before the clearing price goes up…
Time will tell.
You know what I find really, really, really frustrating?
When VCs pitch to you, they talk a lot about how much they provide more than money… it’s sometimes true, oftentimes it’s not. But what is really damning is when I am trying to contact a given company for a business development deal and contact a VC to have them make an introduction and nothing, nada, zilch.
Funny thing is VCs brag about 9 out of 10 of my investment fail, and 1 is a grand slam. Well, well… maybe if you tried to provide more than money, then the others would not fail…
Any self-respecting VC should at least:
- respond to confirm that they got the email, and say that they have sent it in to someone at the company you are trying to reach.
Any proactive VC should:
- reply to you, thank you for reaching out, then add a contact at their portfolio company and have you follow up with one another.
I won’t call anyone out… but when you get an email from someone saying they are looking for a contact at a given company, for the love of all things holy act man, act!
You only ensure that we don’t take you seriously when you tell us a few months later that you bring more than money to the table.
In fact, you as a VC look foolish because it’s not like I won’t find a way to reach the company down the road anyway? And when I do, I’ll mention: “did so and so at VC X tell you I was trying to reach you guys? No… I am sure they meant to…”
All right, I feel better… back to work…
