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There is an article in the FT today that asks whether Facebook is a “web phenomenon on the cusp of greatness or just a social craze?”, and as we’ve discussed here before the last thing any of us needs is for it to turn out to be a fad. I think it is just about fair to say that the debate is still open, but what is definitively the case is that Facebook’s momentum is on the increase. First take a look at these charts (courtesy of the FT)
The graph on the left shows the traffic momentum is strong, and the pie chart on the right shows that Facebook is pretty much an all age site now (or at least all age up to retirment). Secondly, these highlights from recently released engagement stats on FB (courtesy of Inside Facebook) tell a story of a community that is on the rise in terms of depth and richness as well as size:
Given all this, and that with a population of 240 million Facebook would be the fourth largest country in the world I’d say that Facebook should be able to lay the ‘social fad’ accusations to rest pretty soon. Then if they could just start making money they could answer the business sustainability question…. ![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=e9ea4027-984a-4387-a493-601fe550bbd1) Brad Feld posted a couple of days ago about Saying No In Less Than 60 Seconds in which he talks about the 10-50 times a day he has to say no to deals and meeting requests, and that as a result he has to do so quickly. As Brad describes it there are a couple of things wrapped up in here, firstly his goal of being accessible to everyone that reaches out to him, which means both making himself contactable and responding to contacts, and the second is a time management point. The goal is laudable and the time management is a practical necessity. Turning to myself, I have a similar goal of having contact with as many interesting people as possible. This is inevitably a time consuming process and as such competes for my time with my portfolio, the internal operations of our partnership, deals I am pursuing, and last, but by no means least, my family. Unsurprisingly there is never enough time to go around and at any given point I am most likely feeling guilty about neglecting one of these constituencies, right now it is my portfolio where in the last week I have had two senior execs remark that they haven’t seen much of me lately. My point in all of this is that for VCs optimising the use of their time is a big deal, as any extra that can be squeezed out can be profitably put to use. Brad’s focus in the post above is minimising the time to say ‘no’, while still doing it well, and in this previous post he talked about how he likes to keep meetings short (often less than 30mins). That resonated with me, as when I look at my working life and try to figure out where I can find time to meet with more entrepreneurs and spend more time thinking about our investments the obvious place to go is reducing the time I spend with companies once it becomes clear that we aren’t going to come to a deal. US VCs have always been better at this than we are in Europe. The culture of the 45 minute meeting is well established over there, but over here the custom is for meetings to last an hour or more. Moreover, it is sometimes the case that people perceive it as rude, or some kind of sleight, or comment on their business if a meeting is shorter rather than longer. I have had cases of more arrogant entrepreneurs wanting to schedule 90mins or 120mins for the first meeting. In order to create time to see more companies I have been thinking about reducing the length of first meetings to 45 minutes. I think that is enough for both sides to figure out whether we want to move forward together, but I’d be interested to know what you think. From the entrepreneur side is 45 mins enough?, is it rude to schedule meetings this short?, and any other thoughts. Om Malik has a great post up today on GigaOM reporting on Joost’s announcement that it will now offer a white-label video hosting platform whilst at the same time letting some people go and closing its Netherlands office. The reason for this shift in strategy is clear in the chart below – they haven’t got enough traction.
As well as covering the change in strategy (which he describes as a strategy of last resort) OM does a bit of post mortem analysis on the the consumer play. He lists the many things they had going for them at the start (many of us were very excited by their prospects at the time) and then the reasons they went awry. According to OM these are the top three reasons things went wrong at Joost:
The reason I am bringing these out is that I think they apply to just about all startups anywhere. I actually think they all boil down to the same thing, which is focus. In my experience companies which think of themselves as big companies from day one rarely succeed because they start doing too much. Instead the great ones focus obsessively on doing one thing brilliantly. That can be a single product that works globally (Skype, Google) or it can be a service that you perfect in a single country before going international – and most media and advertising businesses fall into this second category. Just look at Hulu, which has made itself successful by focusing on the US (much to my irritation as I’d love to be able to use it here..). Once you have success in one area it becomes much easier to grow either geographically (which is where Hulu is going) or by adding new products. The other great virtue of this approach of course is capital efficiency. I think these arguments have much more weight than the opposing one of wanting to get everything done super-quickly for fear of ‘missing the window’. ![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=cd307e42-e69f-4545-9789-269ce6a5d3e2) 
Image via Wikipedia Yahoo! is apparently closing down Maven Networks, a company it acquired in May last year for $160m. If you read the Techcrunch report Yahoo! is claiming that the technology lives on in some of their other products, but tellingly they are not migrating customers on the Maven platform to another service. New Yahoo! CEO Carol Bartz says they are still interested in making acquisitions, but as I wrote yesterday unless they improve their track record I can’t imagine this enthusiasm will last for long. Up until now wealthy players of virtual worlds and MMOGs like World of Warcraft have been able to expedite their progress through the game by spending real money to acquire levelled up players and other in-game virtual goods in a grey market largely supplied by Chinese labour. According to Information Week China has now banned the trade of virtual goods and services for real money, so this practice will largely come to an end – or maybe move to Africa…. This little talked about aspect of the MMOG ecosystem is actually quite important because it makes the games much more attractive to time poor but cash rich players, which are exactly the type of punter that everyone wants in their worlds. I have been writing much less about this sector recently because it has become clear that virtual worlds are very difficult businesses to make a success of, much more difficult than I had thought. On top of the difficulty and expense of building a good virtual world it has transpired that cost effective customer acquisition has been beyond most startups in this category – largely because of poor conversion from visitor to active player and monetisation. This development will make monetisation more difficult still.
In the software, semiconductor and networking spaces there are a number of large companies that have made acquiring startups a core part of their business strategy. These companies have developed well honed M&A processes – from evaluation through acquisition to post merger integration. As a result they understand what they are getting and what they can do with it and therefore what they should pay – three important features of any well functioning market. Cisco, IBM, Oracle and HP are perhaps the most active exponents of this strategy. In the new media space things are not yet that mature. Google, Yahoo!, Microsoft and AOL have all made a decent number of acquisitions and in the evaluation and acquisition phases they do things in largely the same way as the pre-web tech giants, but in the post merger integration phase their track record is much more spotty. I’m not going to name names here other than to point to a previous post about the number of failed acquisitions that Google has made and to say that the others are no better, and often a lot worse. And, at the risk of stating the obvious, it would be great for everyone in this space if the acquirers of our businesses were more successful with the businesses they acquired. That way they will make more acquisitions in the future, and at higher prices. My fear at the moment is that the poor success rate will lead to a decline in transaction volumes. These thoughts have been at the back of my mind for some time, and I have long thought that one of the big challenges is the difficulty of ringing out back end synergies when you acquire a new web service. This post was stimulated by an article on The Register this morning which described a spat between two senior techies from Microsoft and Google. The Microsoft guy was describing the multiple projects they have going to improve the performance of their various web properties and how they were doing different things in different places for different apps – in other words he was describing the patchwork approach they are forced to adopt because they are not running everything on a single platform. The Google guy (Vijay Gill) responded by pouring scorn on Microsoft, saying they have taken entirely the wrong approach. At Google they force everyone to develop to the same platform (which includes Google’s distributed file system GFS, BigTable its distributed database, and MapReduce its distributed number-crunching platform). Then when they get an improvement in any of the underlying infrastructure all the apps benefit. In other words they get back end synergies across all their apps. The challenge with this approach is on the people side. Vijay put it like this:
The Google approach makes much more sense to me. The people challenges might be difficult but once you are over them you are sorted. If you take the other approach, and Yahoo! are also in this camp, then you might have an easier time up front with your developers, but you sign yourself up to a lifetime of difficulty as your apps scale. Moreover, the Google approach reminds me very much of the approach which served Cisco so well during their ascendancy. Like Google Cisco had it’s own proprietary software stack, they called it IOS, short for Internet Operating System, and everything had to be written to it. Bringing this back to M&A – going back a little way, every acquisition Cisco made was ported to IOS and the cost and expense of doing this was understood prior to a deal getting done, and hence they knew with reasonable certainty that the extent of the synergies they would get (this process was in fact so visible that startups targeting an exit to Cisco would start thinking about how to reduce this cost long before they came to sell themselves). As I have written before it looks like Google is adopting a similar approach. For me this is great, and the more vocal Google is about it the better. That would help them overcome the people challenges at the point of acquisition. The big picture here is that if Google can get half as good at acquiring businesses as Cisco, and other leading businesses in this space can then copy their best practice, it will be fantastic news for all of us.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=23a490e4-def2-4eb4-913c-ab09501c8cae)
In another example of Twitter being used to increase efficiency there is a story on USA Today about Comcast using Twitter to communicate with customers after lightning caused a blackout during a hockey playoff game. This is efficient for both Comcast and the customer. First the consumer perspective:
and from the service provider perspective:
Finally, three other social media success stories:
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=d7124426-b7d8-472e-bedc-a5cfb4ce89fc) 
Image by Frank Hamm via Flickr A month or so ago I wrote about Twitter as a productivity tool for participants in the Hacking Education conference in New York – that was quite a loose example of how Twitter extended people’s reach into new conversations and extended the range of existing conversations, thereby making the communication process more efficient for all. There is a report in the Telegraph today about hedge fund traders using technology from US company StreamBase to mine the Twitter stream for information that they can plug into their automated trading platforms. For me this is a pretty clear example of Twitter being used as a tool to increase the productivity (or more accurately effectiveness) of trading systems. Fresh news out today from search marketing technology company Efficient Frontier shows the Microsoft search engine is making good progress with it’s share of paid clicks. If this trend continues the advertising budgets will follow.
This comes on top of good news about their share of searches, so I’m guessing folks at Redmond are pleased. It is still very early days though, as the folks at Efficient Frontier point out, two weeks data doesn’t constitute a trend.
![Reblog this post [with Zemanta]](http://img.zemanta.com/reblog_e.png?x-id=3e91b17f-43ea-4648-86e4-108622dc6ea0) In an ironic twist Chris Anderson is guilty of taking content for his latest book from Wikipedia for free and without citation:
And his excuse, poor:
Please! Full story on Bookseller.com. |
Nic Brisbourne - DFJ Esprit LinkedIn Profile |
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