Instagram’s Facebook filter
The startup had millions of users, but, from the beginning, just one customer.
The predominant way of interpreting Facebook’s billion-dollar purchase of Instagram, in light of the social-networking giant’s forthcoming IPO, is that Mark Zuckerberg had to pick up the photo-sharing app to boost his company’s mobile engagement. That would allow him to guard the mobile flank against incursions from Google, Twitter, and whatever other social-media tools might next arise.
That may be true – and it may even be the way Zuck thought about the deal when he swallowed hard and ponied up the purchase price. But that way of analyzing Facebook’s pickup, and the pickup of dozens of other startups, not just by Facebook but by Google, Twitter, LinkedIn and others, is probably not telling the whole story. Here’s a different theory, one that better describes the tech world that we, the users of the Internet, now inhabit: Instagram may have had millions of us as its users, but it was really built for just one customer: Facebook.
Silicon Valley, for too long, has confused the issue of what it means to be a user of a website, service or app, and what it means to be a customer of the app. Intuitively, you’d think they would be one and the same: The person using the app is the person consuming the app. But increasingly, apps are being made to grab the attention of the hegemonic companies in tech. Whatever it takes to get bought.
Sure, startup CEOs are careful to refer to their user bases as just that – users – but even when money changes hands, those users are cattle to be herded toward a cell on a venture capitalist’s spreadsheet, to help the VC decide whether to fund another pivot, engineering acquisition, rack of servers, whatever. Users are just another dart, basically, that startups have to hurl at the bull’s-eye and ensure success.
A colleague of mine tells a story: You can tell when a tractor was made to be purchased by a farmer, and you can tell when a tractor was made to be purchased by a corporation to be used by its employees. Tractors whose users are also the customers come equipped with every convenience, from a satellite radio to Wi-Fi to all the cupholders a farmer could dream of. They drive well, and their controls are intuitive, because that’s what the average tractor driver wants, and what the tractor competition provides. Tractors bought by companies, for earthmoving, rock breaking and the like, come equipped with nothing but a hard seat and a prayer. Employees – mere users – don’t get any say on the amenities, or lack thereof.
Yahoo CEO Scott Thompson’s forgivable sin
We’ve all had a little time to breathe after the disclosure last week that Yahoo CEO Scott Thompson embellished his resume. Despite saying he received an undergraduate computer science degree, he in fact did not. And while rising through several positions of increasing responsibility for years, he allowed those vetting his suitability to believe otherwise.
So far Yahoo has said Thompson was guilty of an “inadvertent error” and that it was reviewing the matter. Third Point, the activist shareholder who revealed what had apparently been hiding in plain sight and is trying to grab spots on Yahoo’s board, is now demanding that Yahoo fire Thompson.
Is this what’s best for Yahoo? I doubt it. Is Scott Thompson what’s best for Yahoo? I don’t know. It’s too early to say. And that’s the point.
The company is on its third CEO in as many years, and he’s been on the job one day short of four months. You don’t get from here to there overnight, no matter who’s in charge, and you don’t get from here to there at all if you are constantly taking detours.
Yahoo can afford to have a guy at the helm who didn’t get a CS degree but said he did, but it can’t afford to aimlessly cast about, as it has now for nearly a decade. Unlike some CEOs, Thompson isn’t accused of sexual harassment or running a secret hedge fund within the company. There is something to be said for a bit of calm and a period of continuity.
Thompson was hired for whatever talents and abilities he’s displayed since college, not for ostensibly logging computer lab time in his teens. Sure, lying on your resume is not a good thing, and it shouldn’t be rewarded. But in the grand scheme of things it doesn’t rate.
from Paul Smalera:
Facebook.coop
Facebook shouldn't pay its users. Its users should pay to own Facebook.
“Facebook was not originally created to be a company,” founder Mark Zuckerberg wrote in his letter to investors announcing the IPO of his already hugely successful and profitable company. “It was built to accomplish a social mission — to make the world more open and connected.”
Facebook has succeeded wildly, despite internal admonitions that its “journey” is only 1 percent finished. Journalists have latched onto Zuckerberg’s statement that Facebook wants to “rewire” the way the world works. In a world of thousands of self-anointed “social media experts,” only Zuckerberg can claim to have basically invented what the world thinks of as social media. He has etched himself into the timeline of human innovation.
Pity then, that Zuckerberg hasn’t turned his talents or attention toward Facebook’s financial underpinnings. After all, an IPO? How ho-hum can he get? If Mark really wants to accomplish his social mission with Facebook, he should share the company’s ownership with the people who helped him create it. Not just his Harvard contemporaries. Not just the programmers. Not even just the venture capitalists.
I’m talking about us. All of us. The users. Facebook should be a user-owned, user-managed company, run for the benefit of users. For the Facebook, by the Facebook. The company should be a cooperative.
Before I explain further, let me lay out the case in four simple points:
For what it’s worth, the largest co-operative in the world, The Co-operative Group, had £11.9 billion in revenue last year and has 6 million members.
Chipmakers most creative, drugmakers least?
Chipmakers including Intel and Qualcomm make up the world’s most innovative industry, according to a new analysis of patents by Thomson Reuters that is equally notable for some of the companies it does not include.
Thomson Reuters has just released its “Top 100 Global Innovators” list, which it compiled by scrutinizing patent data around the world using a peer-review methodology it developed.
“We tried to take an objective look at technology innovation and apply a composite measure not just of volumes, but also of influence in terms of citations of later published patents, in terms of globalization of patenting,” says Bob Stembridge, the lead analyst behind the study.
Other companies related to semiconductors on the list include Samsung, Analog Devices, SanDisk and Applied Materials, which invents and builds the equipment used to manufacture chips.
But a handful of companies currently seen as leading players in the chip industry are missing from the list.
Britain’s ARM Holdings, whose intellectual property has taken the tablet and smartphone industry by storm in the past few years, was absent from the compilation.
Also missing was Texas Instruments, the world’s No. 3 chipmaker and leader in analog semiconductors.
The dreary details of Groupon’s future
By Kevin Kelleher The views expressed are his own.
Underwriting is usually a cheerless business. Taking a company public involves long regulatory filings, endless hours of due diligence and PowerPoint-driven roadshows. Investors need details, even if the details are dreary.
And then there’s the Groupon IPO. The daily deal company went public at $20 a share Friday and surged as high as 40%, briefly valuing the company at $20 billion. It may not be the hottest tech IPO so far this year — that distinction belongs to LinkedIn, which doubled its value on its first day — but it is the most discussed and divisive deal. Bulls and bears argue over the company and its future with a kind of passion that belongs to the culture wars.
On its face, the IPO is just about a company raising money, but it’s also so much more: It’s a spectacle — a dramatic tale of the fastest growing company in history brushing off a $6 billion bid by Google to go public and quickly become worth three times as much. It’s a scrappy outsider vindicating critics who attacked it mercilessly during an enforced quiet period. It’s a gaudy billboard luring other tech startups to come into the public markets.
What the Groupon story is missing, though, is all those dreary details. For all the metric-filled spreadsheets and PDF files of analysis, Wall Street is still a place driven by emotion. And the debate over Groupon is really about the difference between the emotional appeal of Groupon’s IPO and the less appealing story that lies in the minutiae.
A look at some of the details of the IPO itself suggest that this offering was carefully engineered to create a big splash. The prospectus lists 14 Wall Street firms, including Goldman Sachs and Morgan Stanley, the two biggest underwriters. These firms know that with a sluggish IPO market — only 18 companies went public in the third quarter, compared with 33 in the third quarter of 2010 — a big name IPO like Google or Amazon can whet the market’s appetite for more IPOs.
Groupon had been the biggest tech name in the IPO pipeline, but there were concerns this summer that investors’ interest might not be strong enough. So underwriters responded by ensuring that the supply of shares would be less than the demand. The result, according to Bloomberg, was the smallest float of any Internet IPO in the past decade: only 4.7% of its total shares. That raised $700 million for Groupon, less than the $900 million that Groupon insiders made from selling private shares in January.
Inkling launches digital textbooks 2.0 for iPads
Apple dominates the tablet market — its iOS tablet software accounted for more than 60 percent of the tablet market in the second quarter, while Google’s Android made up about 30 percent, according to Strategy Analytics. So it’s no surprise that more than 40 educational institutions in the United States either require or recommend in-coming freshman or first-years come equipped with an iPad.
For example, that list includes the medical schools at Brown, UC Irvine, Cornell and UCF; undergrads at Boston University, Abilene Christian University and Georgia Perimeter College; business students at Hult Business School, Lamar Business School and Seton Hill. Even prep schools are in on the act including South Kent, Princeton Day School and Madison Academy.
Certainly it’s appealing to slip an iPad into a backpack rather than massive tomes that students need to lug around campus.
One e-book company based in San Francisco is betting that more educational institutions adopt this line of thinking. Launched a year ago and backed by venture capital such as Sequoia Partners and text book publishers like McGraw-Hill and Pearson, the e-text book company Inkling recently released its 2.0 version of textbooks for iPad. Some key features let co-eds make notes, ask questions and add comments anywhere in the book to be shared among classmates or the wider community using the same material across other campuses.
The e-books can save a student as much as 40 percent off the dead tree version and Inkling allows students to purchase the book by the chapter for a few bucks each should they choose to do so.
“I think this fall is a turning point,” said Matt MacInnis, Inkling founder and CEO, about iPad adoption. ”Enough people are going to know someone else using an iPad (for content) that it will reach a tipping point.”
Inkling really is leading the way in digital textbook platforms. I can’t wait to see what they come out with next. I don’t have an iPad yet but I do plan to purchase online textbooks this next semester, so I need to get one.
Life after Google: Schmidt eyes talk show shtick
What do you do after ten years running one of the world’s most successful and feared companies?
If you’re Eric Schmidt, CEO of Google, it seems the role of television talk-show host holds some appeal. The 55-year-old Schmidt, who in April will hand over day-to-day control of Google to co-founder Larry Page, has been working on developing a show that would feature him as the host, according to the New York Post’s Page Six.
The article does not say exactly what type of talk-show Schmidt wants to emcee.
Will Schmidt, who has toiled in the tech industry for decades, cast himself as a feel-good self-help guru a la Dr Phil, or might he see a model of inspiration in Jerry Springer’s tireless work chronicling the everyday dramas and disputes of regular Joes?
If the morning crowd is Schmidt’s cup of tea, his timing may be perfect, following the recent news that Regis Philbin plans to retire.
But Schmidt may have something with a bit more gravitas in mind, given that he’s been working with Liza McGuirk, the executive producer of CNN’s “Parker Spitzer” program, according to the Post.
In fact, Schmidt has appeared as a guest on “Parker Spitzer” in the past, as well as on programs like “Fareed Zakaria GPS”, which McGuirk also served as executive producer, according to the Post.
Today In Music: Q&A with Tim Westergren founder of Pandora
Q&A: Tim Westergren, Founder Pandora
Pandora is the leading Internet radio service in the United States with more than 75 million registered listeners claiming more than 50 percent of that market using its free service. It is one of the top five most download apps across smartphones and mobile platforms like iPhone, Android and BlackBerry according to Nielsen research with more than 50 million total mobile downloads.
It was launched on the Web in 2005 by Westergren and to date has raised more than $56.3 million through five rounds of funding according to TechCrunchwith backing from names like Greylock Partners, Hearst Interactive Media and Allen & Co.
Earlier this month sources told Reuters that Pandora has opened early conversations with bankers about a possible $100 million IPO . The company has declined to comment on any details of the potential offering.
Q: How is the business going right now?
Tim Westergren: Things are going great. We’re definitely at something of an inflection point, principally driven by the evolution of the connected system around us like cars and various consumer electronic devices. While they don’t individually represent big numbers relatives to computers and smartphones, just the fact those are becoming markets we can go after now is a very substantial change for us. It’s a big thing on our radar right now jumping on anytime anywhere distribution.
How does Pandora work in a car?
Today In Music: Sony Music boss invests in start-up, fuels exit speculation
Sony Music Entertainment Rolf Schmidt-Holtz’s personal investment in Hamburg-based entertainment technology company TeVeo has sparked off speculation that his departure is imminent — which it almost certainly is, but not necessarily because of his investment.
As is well known by now, Schmidt-Holtz is very likely to leave Sony Music on March 31st when his contract expires after five years on the hotseat. He will be a partner in TeVeo following an investment, which was cleared by Sony, and is believed to be around 10 percent. We’ve been told by a source that the investment and his likely departure in March are not linked.
So if he does leave what will that mean for Sony Music, still struggling to present a completely united front to the world since the 2004 merger between Sony Music and BMG Entertainment?
The name on everyone’s lips is Doug Morris (pictured, left) , the veteran chairman of Universal Music Group who has held early talks with Sony Corp chief executive Sir Howard Stringer. Other names we’ve heard include Rob Stringer, Sir Howard’s younger brother — which would be an awkward appointment to make for obvious reasons. Other names in the mix include Sony/ATV Music Publishing chief Marty Bandier and Sony USA CFO Rob Wiesenthal. See all the details here in our story from December.
(Photo: Reuters)
Today in Music: BMG keeps rebuilding publishing empire with Fuji deal
Bertelsmann’s BMG Music Rights has continued to expand by agreeing to a deal to manage the song catalogs of Fuji Entertainment America’s ARC Music, Six Palms Music and Third Story catalogs in a worldwide deal everywhere outside of Japan and South East Asia.
While this isn’t quite as committed a deal as buying a company’s catalog, it’s still an important way to continue to gain influence and power in the music publishing business. The German media company returned to music publishing in 2007 after a brief absence following the sale of its song publishing company to Universal Music Group in 2006.
Since being founded, BMG Music Rights has built up its catalog to more than 200,000 songs and recordings following acquisitions of catalogs like Crosstown Songs, Cherry Lane Music Publishing and Stage Three Music.
The joint venture company (between Bertelsmann and private equity firm KKR) is now seen as the likely buyer of EMI’s rich catalog of songs whenever, if ever, its owner Terra Firma finally puts EMI’s assets on the block.
ARC Music’s catalog includes works by blues and rock ‘n’ roll legends like Chuck Berry (“Johnny B. Goode”), Bo Diddley “Who Do You Love”, Howlin’ Wolf (“Smokestack Lightning”) and John Lee Hooker (“Boom Boom”), pictured left.
Six Palms’ catalog includes Tom Waits’ I Hope that I Don’t Fall In Love With You” and “Hey Joe” made popular by Jimi Hendrix.
(Photo: Reuters)
