Moses Kagan's Aurora Borealis

Gmail appears to be having one of its periodic fainting spells, so I can't get on my account. This is at 1:03pm PST. Brutal.

Labels: gmail, Google, outage

Just like everyone else, I love (and use) the site. However...

Facebook is only ever going to be Yahoo 2.0.

Like Yahoo, Facebook:

1. Has an enormous audience with diverse interests
2. Has an audience composed of people who do not come to the site in search of specific goods / services / information

Therefore, Facebook is only ever going to be a display advertising business, one which generates such a high volume of impressions that supply will always outstrip demand. Sure, on the margins, Facebook will come up with innovative campaigns, improved targeting, etc. But fundamentally, its audience is not sitting there with mouse in one hand and credit card in the other. Therefore, it ain't Google.

How about comparing Yahoo and Facebook in terms of revenue:

In 2007, Yahoo is going to do between $6.5b and $7b in revenue, leading the market to value it at $35b and change.

In 2007, Facebook is going to do $150-200 MILLION in revenue off of 45m users. Incidentally, 50% of this is coming from one (probably money-losing) deal with Microsoft.

To reach Yahoo's revenue figures, Facebook is going to have to increase its top line by 30-35x.

And, if it reaches that magical milestone with margins similar to Yahoo's, Facebook will be making $1.5-2b in cash from operations per year. Which is considerably less than half of what Google made last year.

In short, we're watching the rise of Yahoo 2.0, not some paradigm shifting behemoth. So everyone should calm down.

Labels: facebook, Google, Yahoo

Somewhat embarrassingly, I read Grisham's King of Torts over the past few days and I've got a new business idea.

First, some background. The class-action lawsuit game works like this: Someone figures out that a company has done something wrong that effects a large number of people. A lawyer gets involved. He files a suit and begins trying to sign up as clients people who have been effected by the company's misbehaviour. When a settlement is eventually negotiated, the lawyer takes 30% of the settlement due to each of the clients he has signed-up. So, a mistake by a company which results in a settlement of $1,000 per effected customer would result in fees for the lawyer of $1,000 x 30% x number of clients effected. This is a big money game!

As you can see, being a good class-action lawyer is about signing up clients - which is really a marketing problem.

I therefore propose the following business model:
1. Buy a domain like "classactionclaims.com"
2. Hire one or more bloggers to write blogs about 10-20 of the most promising class action cases - these should be set up as sub-domains
3. Promote the network by sourcing links from prominent class-action firms in exchange for write-ups
4. Insert Google adsense
5. Profit as free traffic starts rolling in and clicking on (very high CPC) ads

Labels: adsense, advertising, blog, Google

Six months after Google's acquisition of Youtube, Mark Simon at SearchInsider decries Google's Shaky Investments, arguing that Google overpaid for Youtube and still lacks a revenue model to support the $1.65b valuation.

Two thoughts:
1. Paying $1.65b for the market leader in a rapidly growing segment of the internet when you're worth $175b is no big deal. In fact, I'd argue it was probably cheap when viewed in the slightly longer term.

2. Google itself did not initially have a revenue model. Rejecting VC pressure to run banner ads, Google waited until the advent of the PPC auction model (by GoTo / Overture) several years later to begin monetizing the enormous traffic volumes it was generating. The Google team are wisely repeating the same strategy: focus on the user experience while waiting for an ad model to emerge that doesn't screw up that experience.

Labels: advertising, Google, Youtube

David Carpe, of passingnotes.com, has an awful post on what he thinks Google is going to do in 2008:What Google is Really Doing for 2008.

Carpe's big idea is that Google is going to flip a switch on what will be the biggest social network in the world by knitting together each of its different social apps (Google Pages, Calendar, Gmail, etc.). He thinks this is going to blow MySpace / Facebook / etc. off the map.

What Carpe doesn't realize is that Google's not cool. It's slick, it works really well, it 'organizes the world's information'. But it's not cool. And social networking sites, at least the ones that target teenagers (the heaviest users), need to be cool. They need to stand for something, whether it's music (like MySpace or Last.fm) or college gossip and hookups (Facebook) or whatever. By standing for something, and basing their design decisions around that one thing, the best networks create communities with distinct feelings.

So, David: Who, exactly, identifies with 'organizing the world's information'?

Labels: facebook, Google, MySpace, social-networking

Just read this article about Yahoo launching a mobile advertising network: http://www.nytimes.com/2007/03/27/technology/27mobile.html

Call me skeptical, but I’m not a buyer of Yahoo traffic for the direct-to-consumer mobile video service we've set up for a client.

The quality of the traffic we’ve seen from every mobile advertising platform we’ve trialled in the UK, with the exception of Google search, has been awful. Over the last three months, we’ve run banner ad campaigns across several of the more established mobile advertising networks. The conversion rate on the traffic has been around 0%, with the basket size coming in at around 0 items.

For now, the strategy is: bid up those Google keywords.

Labels: advertising, Google, mobile, Yahoo