Since being pushed out of MySpace, Chris DeWolfe has tried to raise money to roll-up social games and compete against Zynga:
DeWolfe is likely looking at very small gaming companies run by a handful of stellar developers but that lack the legal, business development, and dealmaking resources to make any kind of a dent in the current social-gaming market.
Social games are a red hot space, with Zynga allegedly generating $100-250M in annual revenues.
If this all sounds familiar, it’s because DeWolfe’s former boss Ross Levinsohn was also planning on raising money and rolling up assets when he left Fox Interactive Media. Levinsohn, of course, joined forces with former AOL boss Jon Miller and instead merged their venture capital operations with ComVentures to become Velocity. Today Miller has left for News Corp’s Digital Chief and Levinsohn has renamed Velocity Fuse. One thing he learned wasn’t obvious was the whole roll-up strategy.
Roll-ups sound great in theory and every time I mention rolling up video assets (the industry I operate in via WatchMojo) investors get hot and heavy, but the truth is, just because sometimes creative/technical types lack the “legal, business development, and dealmaking resources to make a dent in their market” doesn’t mean roll-ups make sense from a strategic, operational, financial or tactical perspective.
You have to be able to manage a lot of personalities and egos, above all, and then once that is done (if that can be done), then you have to make the numbers add up.
Then again, don’t be surprised if Levinsohn invests in DeWolfe’s venture, who knows.
DeWolfe still has a better valuation landscape today than the one facing Levinsohn when he left FIM, but either way, DeWolfe should avoid suffering from hubris and biting off something that is easier to chew if he plans to catch lightning in a bottle twice.
Facebook has added a new feature to encourage users to reconnect with friends that they haven’t written to in a while…the back thing is that for some users those people had actually passed away. As one user put it - “#MassiveFacebookFail.”
“In an Oct. 26 blog post, Max Kelly, Facebook’s head of security, announced the company’s policy of “memorializing” profiles of users who have died, taking them out of the public search results, sealing them from any future log-in attempts and leaving the wall open for family and friends to pay their respects”
The authors of “Curse of the Mogul”, namely Jonathan Knee, Bruce Greenwald, and Ava Seave, allege that media moguls are a bunch of idiots, basically (note to their lawyers: yes, I am paraphrasing).
Via Business Insider:
For instance, News Corp acquisitions in the past decade, from the Journal to MySpace, have not gone over well. News Corp wrote down $3 billion on the Journal, and MySpace is pretty much worth zero at this point.
I understand MySpace [2009] < MySpace [2005] - granted, but still, am I crazy or was that not a great deal: Google paid Fox Interactive Media $900M to serve text ads on the digital properties of News Corp. because it wanted to block Microsoft and Yahoo! from landing the MySpace inventory.
News Corp. paid $580M for Intermix, which owned MySpace.
Today MySpace is no longer the largest social network out there, but it remains a very fierce player in music and entertainment.
I fail to see how it was a bad deal, even if its value keeps falling over time.
From the department of “no shit”:
A number of the large ad networks have been reaching out to developers to let them know that they essentially have no idea what’s going on. Facebook has taken the latest actions without giving developers any form of early notification and many ad networks feel left in the dark. Those developers that have ad supported business models (the majority of Facebook developers) feel as though their businesses are in jeopardy. The rationale is that if they can’t trust what were previously reliable ad networks, who can they trust?
The developers all share a legitimate concern. One developer I spoke with postulated that if you can’t rely on the ad networks, is Facebook a good platform for running a business?
I don’t mean to sound holier than thou here, after all, we derive 49.5% of our total streams from YouTube, but YouTube owns 75% of the video content space (ie. so we don’t have a choice). However, to hedge against this, we generate less than 5% of our revenues from YouTube and maybe 10% from Google/YouTube combined.
“The social networks have really never made us money,” said Wells, the paper’s ad, marketing, circ and operations VP. He added that, at times, Bakotopia appears close to profitability, “but never quite makes it.”
Oddly enough, the very same boosters who last year “swore” that Facebook was worth $5-10B (but is now so uncool, or less cool) are saying Twitter is worth $5-10B.
Once every while, the greater fool theory is proven to be true when someone comes along and pushes up the paper value ever so higher than the previous fool (I mean fool here in that cool way, you know: “man, that Michael Jordan is such a fool”). But jokes aside, Twitter and Facebook are actually worth a bundle, but the arguments being used are in fact not in of themselves supporting the multi-billion dollar rationale:
- Celebs use Twitter. Yes, they also used MySpace and today everyone thinks MySpace is dead and worthless.
- Businesses can use Twitter to communicate directly with customers. Yes, same thing could be achieved with a newsletter.
Yes, I am over-simplifying it, and sure, “I don’t get it”. What I do get is “liquidity”, or lack thereof:
No one will come and sign a check for anything remotely near those figures, and the public markets remain untested for products such as Twitter and Facebook.
The point is, unless some kind of liquidity transaction, it’s all moot. So we can all speculate all we want, like the fools we all are.
More on the matter:
From CNN, pretty darn accurate:
Here are 12 of the most annoying types of Facebook users:
The Let-Me-Tell-You-Every-Detail-of-My-Day Bore. “I’m waking up.” “I had Wheaties for breakfast.” “I’m bored at work.” “I’m stuck in traffic.” You’re kidding! How fascinating! No moment is too mundane for some people to broadcast unsolicited to the world. Just because you have 432 Facebook friends doesn’t mean we all want to know when you’re waiting for the bus.
The Self-Promoter. OK, so we’ve probably all posted at least once about some achievement. And sure, maybe your friends really do want to read the fascinating article you wrote about beet farming. But when almost EVERY update is a link to your blog, your poetry reading, your 10k results or your art show, you sound like a bragger or a self-centered careerist.
The Friend-Padder. The average Facebook user has 120 friends on the site. Schmoozers and social butterflies — you know, the ones who make lifelong pals on the subway — might reasonably have 300 or 400. But 1,000 “friends?” Unless you’re George Clooney or just won the lottery, no one has that many. That’s just showing off.
The Town Crier. “Michael Jackson is dead!!!” You heard it from me first! Me, and the 213,000 other people who all saw it on TMZ. These Matt Drudge wannabes are the reason many of us learn of breaking news not from TV or news sites but from online social networks. In their rush to trumpet the news, these people also spread rumors, half-truths and innuendo. No, Jeff Goldblum did not plunge to his death from a New Zealand cliff.
The TMIer. “Brad is heading to Walgreens to buy something for these pesky hemorrhoids.” Boundaries of privacy and decorum don’t seem to exist for these too-much-information updaters, who unabashedly offer up details about their sex lives, marital troubles and bodily functions. Thanks for sharing.
The Bad Grammarian. “So sad about Fara Fauset but Im so gladd its friday yippe”. Yes, I know the punctuation rules are different in the digital world. And, no, no one likes a spelling-Nazi schoolmarm. But you sound like a moron.
The Sympathy-Baiter. “Barbara is feeling sad today.” “Man, am I glad that’s over.” “Jim could really use some good news about now.” Like anglers hunting for fish, these sad sacks cast out their hooks — baited with vague tales of woe — in the hopes of landing concerned responses. Genuine bad news is one thing, but these manipulative posts are just pleas for attention.
The Lurker. The Peeping Toms of Facebook, these voyeurs are too cautious, or maybe too lazy, to update their status or write on your wall. But once in a while, you’ll be talking to them and they’ll mention something you posted, so you know they’re on your page, hiding in the shadows. It’s just a little creepy.
The Crank. These curmudgeons, like the trolls who spew hate in blog comments, never met something they couldn’t complain about. “Carl isn’t really that impressed with idiots who don’t realize how idiotic they are.” [Actual status update.] Keep spreading the love.
The Paparazzo. Ever visit your Facebook page and discover that someone’s posted a photo of you from last weekend’s party — a photo you didn’t authorize and haven’t even seen? You’d really rather not have to explain to your mom why you were leering like a drunken hyena and French-kissing a bottle of Jagermeister.
The Maddening Obscurist. “If not now then when?” “You’ll see…” “Grist for the mill.” “John is, small world.” “Dave thought he was immune, but no. No, he is not.” [Actual status updates, all.] Sorry, but you’re not being mysterious — just nonsensical.
The Chronic Inviter. “Support my cause. Sign my petition. Play Mafia Wars with me. Which ‘Star Trek’ character are you? Here are the ‘Top 5 cars I have personally owned.’ Here are ‘25 Things About Me.’ Here’s a drink. What drink are you? We’re related! I took the ‘What President Are You?’ quiz and found out I’m Millard Fillmore! What president are you?”
Too bad no one listens to me, what I wrote about Facebook-oriented funds when they launched, I believe the title was “Why not flush money down the toilet, pal?“. Was I being too nice?
Today:
Some in Silicon Valley have speculated that MySpace isn’t willing to pay more for iLike because it fears Facebook will boot iLike once its main rival takes control of the service. But that doesn’t go far enough in describing the situation, said one of the sources. What has pushed iLike’s valuation down is a problem with control. The company’s managers have no way to prove to potential acquirers that their business model has a bright future because they can’t predict from one day to the next which direction Facebook’s Platform will go. The source said that leaders at iLike, or any other company on the platform, are not truly in control of their fate–Facebook’s Mark Zuckerberg is.
“The cash flow of any company doing business on Facebook’s API, or Facebook Connect, or Facebook platform is inherently at risk,” said the source. “The multiple that an investor can place on that cash flow is not that much greater than 1, because you never know at which point Facebook could change the terms of the relationship or change the technology and cut off that cash flow.”
But seriously, don’t listen to me…
Apparently, 83% of Top 100 Marketers advertise on Facebook, is this a result of social media being effective or does it have to do with Facebook being so huge that marketers have to be on it, the way they had to be on portals in the early 2000s and had to be on ABC/NBC/CBS previously, etc?
I think Facebook’s success with advertisers mimics MySpace’s success in that the biggest social media company will do well due to reach and size, but all others will suffer. Just look at the number of casualties in the ad-supported social media spae and you can come to your own conclusions.
Only 1 out of 20 people interact with ads on social networking sites, according to the latest study.
Social media as an advertising medium is dead. I’ve written about this before:
Social media totally obliterates the rules of publishing and media in general, but it does little to change advertising. In fact, the only real impact on advertising is an influx of cheap inventory and a harder job of cutting through the noise. But the notion that marketers will embrace social media is plain misguided, because the problem with UGC’s “value proposition” is that
- direct marketers (who might not mind UGC’s low quality and raciness) don’t like the low performance
whereas
- branded advertisers (who care less about the ROI in the short term) cannot take the risk to market alongside it.
PLAY
