Either Carl Icahn will take down Yahoo! from within, or he was bribed. It’s really that simple.
Could Jerry Yang have gotten away with the white collar crime of the century? Ripping off his investors to the tune of $45B to ensure he remains in charge of the Web’s crown jewel?
All possible. All shameful. Nothing to see here, please move on… you peasants.
The American financial system and the checks and balances supposedly in place = A joke.
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WatchMojo NewsletterOne of the few good things about losing money (humor me) is that the government isn’t on your back to collect taxes, so they don’t give you a deadline to close your books and submit financial statements.
After all, if you make money, you have to pay taxes… but if you lose money - and what self-respecting startup and entrepreneur doesn’t? - you don’t pay income taxes. It’s pretty simple: the government can’t be bothered with losers and doesn’t ask you to issue your financial statement - namely your income statement and balance sheet (the third financial statement being changes in cash flow) - so this gives you ample time to avoid closing your books.
However, if you ever want to set up a credit line or raise debt financing, then you need your financials to be up-to-date. “Who cares what you did in 2006… it’s 2008 already… so where are your 2007 financials?”, I was asked by our bank manager.
When I was studying finance and learning from Warren Buffett’s playbook, I thought debt was murder.
But on the operations front, it’s plain simple: we need more hardware, more software and more mindware (aka people). If I have to choose between staying debt-free and passing up opportunities or chasing opportunities and kicking ass, I’ll choose the latter. It’s really that simple.
Don’t get me wrong: It’s one thing to invest in a company with debt; it’s another for a CEO / CFO to raise debt.
Also, once you understand financial engineering, you can always restructure your capital structure and clean up your balance sheet according to an investor or buyer’s needs and preferences. But until either one of those things happen, you can’t be bothered.
Yes: debt is the devil’s currency, but selling equity is the fool’s currency of choice, if you ask me, especially with content companies, which most investors don’t get and aren’t comfortable with to begin with. If the founder of a tech company goes bonkers, starts doing lines of coke off a hooker’s ass, the investor can bring in a techie to run the ship. But if the founder of a content company goes yaya and starts doing jello shots with a stripper… who comes in to scream “action”? As you can see, it’s a different ball game…
But like anything else, you can turn a negative into a positive: debt helps you avoid the friction you are bound to have with outside investors. Don’t get me wrong, debt is uber dangerous as debtholders stand ahead of stockholders and don’t care about much other than getting repaid, and on time, but because the interest paid on debt is tax-deductible and you don’t dilute your holdings (if structured right), then debt is less painful and less of a waste of time than selling equity.
In some 30 months of managing WatchMojo.com, I will go on record to say that investor roadshows is the #1 biggest waste of time and money. I’ll gladly take half the blame for such waste of time… but trust me, do yourself a favor and don’t bother with would-be investors. When they bend over backwards to meet you, let alone invest in your company, consider returning their call… why?
Truth is few people can raise debt, and VCs play this card quite well to their advantage. More power to them, frankly! A sucker is born every day and usually, in the VC/Entrepreneur/Banker ecosystem, the sucker is the CEO for playing along the sham that is fundraising.
Anyway, with that off my chest, for whatever reason, I’m sharing some stats.
From 2006 to 2007 , as a debt-free company with no outside funding:
- our revenues grew 154%
- our costs grew 78%
While losses accounted for 213% of revenues in 2006, the next year; in 2007, they only accounted for 149% - yes, small consolation, I know.
Thankfully, in Canada, we get back a decent portion of R&D in tax credits… as a content producer, our R&D costs are lower than a pure tech firm… but let’s face it, most tech firms have $0 revenues early on, whereas a smart media firm always has revenues (how come? I’d tell you but I’d have to kill you). Since we still invest a good portion in technology and development, so we will get back some costs…
Which takes us to the moral of the day: it’s not enough to be a good marketer or a good techie, you do need to have a good sense of accounting principles and financial know-how. When I think of all of the money that has gone into WatchMojo.com, for what it’s worth, a part of it has come from re-invested proceeds (tax refunds, credits, etc).
As my father would say: if you’re going to owe the bank money, don’t owe them $1,000… owe the $1,000,000… then and only then will they care about anything else than being repaid, and repaid on time.
But that’s another post for another day.
From TubeMogul:
About a month ago, we launched a “Top 40″ list of the users getting the most views from videos deployed by us (an admittedly biased list, but an interesting one). We will be releasing an updated list shortly, but it’s worth pondering: what is the key to their success? Great content, for one. An additional insight came after we released our recent research on “Online Video’s Short Shelf Life.” A blogger savvily pointed out that most successful content creators already understood that online video fans have a short attention span, and thus put out a high quantity of videos.
Curious if that was actually the case, I tested it using our Top 40 list, and found it to be largely true. In the month of June, Chris Pirillo (#2 on our list), deployed 803 videos. Similarly, WatchMojo.com (#6) put out about 691. Further on down the list, Vlaze media (#35), put out a decidedly humbler 74 videos, and Sony (#40) deployed 32–and so on.
The data shows the brilliance of this. Since average online video viewership tends to peak on day three, putting out videos often allows producers to constantly ride the highest point of the wave. While individual videos rise and fall fast, a given producer can always have a steady audience.
Web video publishers need to balance quantity with quality if they want to be relevant, let alone scale, online. The pro of operating in a hyper-syndication world is that audiences might be splintered and fragmented, but you can reach them on those places if you have an effective distribution strategy. The con of it, frankly, is that it’s nearly impossible to stand out from the clutter.
When people question our strategy of publishing so much content (5,000 videos, 100 new each month), the analogy I use is this:
- Think of the Web as a massive college building… seemingly with no end in sight, as one classroom leads to another, and another, and another.
- Think then of the online video ecosystem as a huge classroom with a number of desks…
- With each online video aggregator (such as YouTube, MySpace TV, Veoh, DailyMotion, Metacafe, etc.) representing a desk. While those desks share some similarities, they are all, in fact, independent and stand alone islands. It’s not, after all, like YouTube links to the same video - or for that matter, related videos - on another site…
- On each desk you find stacks of paper on it, lots of them, with each stack representing:
* categories
* subcategories
* keywords- Each video is represented by a sheet of paper…
What do you represent? You’re a you-know-what disturber shooting spit balls on as many desks and stacks as possible. What services like Tubemogul do is help you get those spit balls on as many targets at once… but that’s just one small part of the equation. Why?
Ironically, while online video content is broadband content and dynamic in nature, currently SEO is utterly ineffective with video (relative to text content), so no one can really see through the sheets of paper, let alone see what’s on each desk.
Individually, no matter how great the content (quality) on each sheet of paper, they get lost in a sea of pulp and paper…
The only way to get your sheet seen by users - who might be landlocked to one desk (by having signed up on that site) - is to ensure that your sheets of paper fall on as many:
a) stacks, and
b) desks,
as frequently as possible… why?
In between the time you upload two videos… there’s a whole lot of papers landing on your sheet after yours has landed… making yours disappear from the top and rendering it nearly invisible to the human eye.
In other words, content companies that can’t scale syndication - and production - will find themselves irrelevant before long.
However, this opens up a new question, which is: is there such a thing as diminishing returns with marginal distribution?
