Moses Kagan's Aurora Borealis

Michael Arrington has a piece on Techcrunch today ripping into Microsoft for offering to consider re-entering merger talks if Yahoo replaces its board. He argues that: "...Microsoft, led by CEO Steve Ballmer, have taken Yahoo’s rebuffs entirely too personally. It’s no longer just about business, it’s about destroying and humiliating the people who embarrassed Microsoft."

False. The reason that Microsoft is insisting that Yahoo replace its board before re-entering talks is that Jerry Yang and his allies previously gave Microsoft the distinct impression that, rather than submit to a merger, they would "burn the furniture [and] destroy the place".

We can all understand why Yang would have gone to extreme lengths to try to keep the company he founded from being subsumed into Microsoft. However, we can also all understand why Microsoft, having had its fingers burned once, would prefer never to deal with him again.

My unsolicited advice to Yahoo shareholders: Fire the board, do a deal, and get on with life.

Labels: merger, Microsoft, Yahoo

Michael Arrington is bitter regarding Yahoo's recent announcement of "Inbox 2.0", their attempt to wrap social features around the Yahoo email platform.

Arrington writes: "It makes me sad because it is absurd for Yahoo to keep launching new social networking products, almost monthly, without what appears to be any sort of high level strategic vision.

A few months ago it was Mash, followed by a quiet closure of Yahoo 360. Earlier this month they let loose a new college/alumni network experiment called Kickstart.

And now Inbox 2.0, but without any statement about integration with Mash or any other Yahoo properties. And, how does their recent acquisition of Zimbra fit into Inbox 2.0?"

To me it's pretty obvious: The social-networking phenomenon is, to some extent, about luck. Sure, functionality plays a role. And the tone matters. But ultimately, some social-networks get big quickly because they hit the right early users, the ones with large enough personal networks to push the service out quickly. Then the magic of viral marketing takes over and growth accelerates.

The cost of building new social networks is low. Ning and other basically let you do it for free. If you want to own your platform, you can build one for less than $100k.

If you're Yahoo, and you keep seeing social platforms launch and grow large quickly (at your expense), you have to start to wonder if you ought to just get a bunch of small teams working on launching home-grown networks. Sure, many will fail, but if even one succeeds, you're guaranteed to make all of the money you invest back.

Labels: social-networking, Techcrunch, Yahoo

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

The New York Times has a superficial review of Yahoo's new Mash social network here.

I feel like I've had this conversation before. Oh, wait, I did - with David Carpe when he suggested Google was trying to do the same thing.

The point remains the same: big companies don't make cool social networks. Viacom's MTV has failed at it at least once (Flux). Google's Orkut failed (except among Brazilian cocaine dealers). Yahoo 360 failed. MSN Spaces failed.

Social networks need to be tied very closely to a community, so much so that they appear to be an organic extension of that community. No one is going to use a network imposed from above and [in horrible little nerd voice, while rubbing hands together] linking all of Yahoo's internet properties together into one world domination machine to finally destroy those lucky, pre-IPO jerks over at Facebook!

Honestly, just because it sounds good in a meeting doesn't mean people will use it. It would have a better chance of survival if they stripped the Yahoo brand off it entirely.

Labels: Mash, social-networking, Yahoo

Orange released its new Digital Media Index recently. Approximately 2m of Orange's 15m UK subscribers have visited the Orange WAP portal in the past month. If we assume that another 1-2m have used off portal services but not visited the portal, 20-27% of Orange customers are using the mobile internet.

The question is: How does this compare to the internet to internet penetration? According to Harris Interactive (http://blogs.zdnet.com/ITFacts/?p=10998), the US had internet usage rates of crossed the 30% threshold during 1996-7. Those years also marked the emergence of the first wave of successful non-porn internet companies.

Are we approaching lift-off for successful, non porn mobile internet companies?

Labels: mobile, Orange, wap, Yahoo

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