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On Auto-Tweets, Facebook Games, and Other Potential Pollution

Oct 26

I love games. While I did wear a letterman jacket through most of high school, I surreptitiously played Dungeons and Dragons every week with my brother’s gaming group. I’ve played a wide variety of games on every computer I’ve ever owned. I like board games like Settlers of Catan, and (god help me) I even futzed around with Magic: The Gathering.

Like a lot of software folks, I have a secret wish to punt everything, run into the hills, and make GAMES.

So it’s exciting to see this gaming renaissance. Casual games, social games– whatever you want to call them– there are new ways to make money making games and it’s no longer the big budget hit-driven madness that we’ve grown accustomed to.

But boom times like this can be messy and noisy, and this one is no exception. One of the key elements of this new gaming revolution is the potential to be VIRAL. As a developer, it’s fairly trivial to have your game automagically announce itself to a player’s Twitter followers, Facebook friends, whatever. “[friendname] just found a +11 Sword of Evisceration, but he needs your help to consecrate it in the blood of the Celestial Dragon – click here to join [gamename]“. Or, on Twitter, “I’m now the Mayor of Baskin Robbins. Bask in my benevolence! [insert bitly link here].”

The cost of shooting out these messages periodically as a user plays is trivial and there’s only upside, right? If 1,000 users play to that point and they each have 100 followers on Twitter, well– you just got 100,000 free ads for you game, packed with the kind of social proof that advertisers can only dream of.

But, at the end of the day, it’s SPAM. As a developer, they shouldn’t be asking themselves whether the cost/benefit analysis works. Heck, it costs me a billionth of a penny to send an unsolicited email and I’m sure I could craft an email that would convert more than a billionth of the time. WIN! Instead, they should be asking themselves the following questions:

Does the player WANT to tweet about this? If they do, encourage them but let them opt-in every time and do it in their own words.
How many of the players followers gives a rat’s ass? If a game auto-tweets on my account, 99.9% of the people are going to get no value. 99.9% aren’t going to find it interesting. I’m looking at you, Foursquare.
What percentage of the players would, once they realized that they just blasted their friends with this promotional tweet would say, “Ooooh, I didn’t know it’d do that! That’s GREAT that I just told all 1500 of my followers that I’m the Mayor of Hooters!”

Yes, social game makers, your spammer math WORKS. 99.9% of my followers will consider it noise– if they read the tweet, they’ll want their 10 seconds back. But you’ll get your 0.1% clicking the link, and those clickers will convert (some of them). And THEY’LL make noise too and you’ll have your virus.

But because this works so well, we’re going to have more and more of it. If you’d told the first guy that sent an email that 95% of the world’s email would be spam in 2007, I think he’d be pretty horrified. While I tend to like federated models like Email more than walled gardens like Facebook and Twitter, in this case I’m glad there are some sensible folks at the helm who can shut this stuff down (or at least give users the tools to turn the noise down).

For what it’s worth, if I wasn’t in the weird and wonderful world of time management software, I’d be doing social games. Hell, maybe I’d suck at it because I took the high road. But I think I’d just focus on making really fun games, making it MORE fun if people invited friends, and giving them the tools to tell the world should they want to.

Software and Making Money (Presentation Slides Included)

Aug 14

(note: this is modified from a talk I gave at Seattle Tech Startups on Wednesday)

The more I think about it, the more I’m impressed with software businesses that are great businesses (not just great software). There’s a class of entrepreneur that is product focused (like the folks at Twitter), there is a class of entrepreneur that is business focused (the white-toothed stereotypical biz guy), and there is a class of entrepreneur who is PR focused (I won’t name names, but we all know of startups that seem to thrive simply because of the attention they draw). I think good things happen when you create an outstanding product that has a clear path to monetization– add on someone who is also an attention magnet (like Steve Jobs, who is all three flavors rolled into one) and amazing stuff happens.

A couple of examples

One you might have heard of– Google. Their outstanding product certainly earned them clear leadership in the world of search engines. But it was Adwords and Adsense that got them to the point where they could feed every employee gourmet meals and do their laundry for them.
One you haven’t heard of– Autotegrity. This tiny company is finding leads for car dealerships via Google Adwords (among other things). They find people who are looking for very specific things (“blue honda accord”) and offer to get them three competing quotes. They take these leads and sell them to car dealerships (3 times, predictably). It’s a win for both sides and they are staggeringly successful.

One thing I increasingly believe is that the idea of just building something great is a game with much higher risks and rewards. Clearly if you build something that captures attention like Twitter and Facebook, you have the luxury of nearly infinite time to figure out how to monetize what you’ve built. But all of the people trying to build the NEXT Twitter end up in much more dire circumstances. A smallish audience of a few million early adopters a month– an audience which is neither big enough nor unique enough to monetize very effectively. This is no joke– I know lots of services out there that are getting tens of millions of page views and millions of uniques per month that can’t manage to get enough ad revenue to pay a single salary.

So step out of the gates with a strong idea of who’s going to be paying your paycheck and how many of those people you’re going to need to pull it off. If “targeted advertising” is your answer, find an audience that PAYS– that means creating a content site for an audience than some subset of marketeers would chew off their own arm to get in front of. That may mean creating software for weird-but-profitable niches like home remodeling (which commands $20 CPMs last I heard). And it certainly means serving audiences who actually SEE and CLICK on ads (which means that your blog about startups is not going to make you any money, natch).

The key here is that owning a business isn’t about building a product any more than owning a car repair shop is about fixing cars. You’ve got to broaden your vision and bring your passion to bear on stuff like marketing, business models, customer service, guerrilla PR, SEO, and more. It’s hard to name any companies that are admirable who don’t excel at things well beyond product development.

So if you’re supposed to work on everything, what do you work on FIRST?

You should look at your business as a funnel (which, incidentally, is how every salesguy on the planet looks at their sales pipeline). Here’s one that’s in my head all the time:

funnel

What’s at the top of this funnel varies on what type of business you have. Maybe it’s page views from organic SEO and SEM. Maybe it’s warm leads from a bank of cold-calling lead-gen folks. And maybe your conversion event is a software purchase (like ours is). Maybe it’s an ad-click. Maybe it’s an account signup. But trust me, you have a funnel.

So when trying to figure out what the hell to work on as an entrepreneur, go worship at the alter of the funnel. That means:

Measure the hell out of everything. If you don’t know many many new visitors are coming to your site, what percentage of them do something, what percentage of THOSE people, click signup, what subset of THOSE people actually successfully signup, and what percentage of THOSE people are paying you a month later, the first thing you should do is work on metrics. Don’t go overboard, but know your funnel.
Work your way UP the funnel, not down (if you have the financial luxury to do so). Most entrepreneurs ask “how do I get people to come to my site so it can grow?” The answer most often is down the funnel: the product isn’t providing enough value, communicating clearly enough, engendering enough passion, or causing people to want to tell their friends.
Seek the low hanging fruit in the funnel. That means that you should seek out where people are escaping your funnel. If you get tons of visitors but no one clicks on anything (high bounce rate, low time on site), chances are your value prop is confusing or isn’t very compelling. You might need to improve the product, but chances are you just have to improve how you talk about it.
Seek leverage. The lower you attack the funnel, the more it helps. If you do something to improve your retention that will help you forever. If you do something that gives you a boost in acquisition (like a SuperBowl ad), the value will be short-lived (unless you have a true viral loop). Two great retention stats (via Andrew Chen):
“If each month you lose 8% of your existing users (92% retention) from the previous month, the average use will stay for 12 months. If you can hold just 4% more of your users (96% retention), then they will stick around for 2 years. If you can hold only 1.3% more than that (97.3% retention), they will be in for 3 years.”

And, if you take a cohort of 1000 users from a month an 80% retention rate means that you’ll have 68 of them after 12 months. If you can get that to 90%, you’ll have 282 left. A 300% revenue boost for that single cohort (and every subsequent monthly cohort!).
Don’t give up on making your product great. It’s easy to get sucked into data, A/B testing, form fields, etc. But at the end of the day, people don’t just abandon signup forms because they are hard and confusing, the abandon them because they don’t care enough about signing up.

Resources Referenced in the Presentation

Bokardo’s “Designing for Social Traction” Presentation
Josh Kopelman’s Cohort Analysis Spreadsheet

Hat Tip to:
Gladwell’s Blink (has the story about likable doctors getting sued less regardless of how good they are at healing)
The Heath Brother’s Made to Stick (best marketing book on the planet, they talk about the “Curse of Knowledge” and the “Tappers and Listeners” study)

Here’s the full presentation:

Startup Monetization in the Trenches

View more presentations from Me.

Should you move your startup to the Valley? Depends on where you are (Data included!)

Jun 12

I admit that I am a bit of a contrarian. For a long time, the contention that “if you’re doing a startup, you HAVE to be in Silicon Valley” didn’t sit well with me. Sure, talent is important– but for many startups you need only a few talented folks to prove that you’ve got something and companies like WordPress have proven that you can build a great team (literally) anywhere and everywhere (they are virtual and across the world). Sure, energy is important– but the biggest source of energy isn’t your peers– it’s the people who are finding value in your product (users and customers). And sure, you need money… Well, the Valley wins hands down here. If you need to raise money, that’s where you need to be. But more and more early stage investors seem willing to invest outside of their little patch of Californian dirt. After our stint at Y Combinator and a bit of fundraising, the decision about our startup (an employee time tracking tool) was pretty clear to us. We headed back to Seattle, where we had a rich network of geeks to work with and talk with and (more importantly) we could live cheaply and not die.

So it was with great glee that Jim Karsten took the gauntlet I threw down in my last post and mined the vaunted CrunchBase for some real live data. Now, CrunchBase is obviously NOT scientific… But it’s the biggest and most consumable dataset that I know of. Without further ado, here is a table showing startups by location and the percentage of startups in that location that have been acquired. Note: Jim has kindly put up the full scrape of data here – there are other interesting bits worth looking at.

Startup Count & Acquisition Rate, by State
	Startups	% of Total	Acquisitions	% of Total	Acquisition Rate
CA	2739	41.2%	188	53.3%	6.9%
NY	692	10.4%	34	9.6%	4.9%
MA	386	5.8%	20	5.7%	5.2%
TX	323	4.9%	19	5.4%	5.9%
WA	317	4.8%	26	7.4%	8.2%
FL	254	3.8%	3	0.8%	1.2%
NJ	227	1.8%	8	2.3%	6.6%
IL	180	2.7%	9	2.5%	5.0%
VA	164	2.5%	7	2.0%	4.3%
CO	133	2.0%	7	2.0%	5.3%
PA	131	2.0%	2	0.6%	1.5%
GA	117	1.8%	2	0.6%	1.7%
MD	94	1.4%	4	1.1%	4.3%
NC	80	1.2%	1	0.3%	1.2%
AZ	77	1.2%	1	.3%	1.3%

Disclaimer: Yes, CrunchBase is flawed for this. No, ~5% isn’t REALLY your chance at getting bought if you start a company tomorrow, etc., etc. Please don’t troll about the quality of this data. It’s still thousands of records, which is better than the alternative.

At first glance, the key number (acquisition RATE) doesn’t seem markedly different. Heck, if you live in Virginia, CrunchBase tells you that you have a 4.3% shot at an exit… Why move to California for a measely 6.9%? But I think it’s better to focus on the fact that you’d be increasing your exit shot by *over 50%* with such a move. With acquisition rate being as vanishingly small as it is, nudging up a few percentage points is a huge deal.

But overall, as a contarian (AND as a resident of Washington State– the big winner by a nice margin), I was pleased by the results. The bottom line? It’s hard to quantify the COST of moving to a startup (months of distraction, expense, stress, loss of social network, etc), but my gut says (as it always has) that if you live in a technology hub like Seattle, NYC, Boston or Austin– hunker down and start building value- your success is based on how much value you can give versus how much you take.

Edit: some interesting insight from John Cook over here.

Just How Important is the Valley? Let’s Look at some Data.

Apr 17

[Edit: Added the raw data in a table at the end]

Some of the smartest startup brains I’ve ever met have said that if you want to be in the startup game, you MUST be in the Valley. There are plenty of justifications out there for it, and many/most of them make a fair bit of sense. Recently, Paul Graham posted another great essay on the topic, and said:

The second idea is that startups are a type of business that flourishes in certain places that specialize in it—that Silicon Valley specializes in startups in the same way Los Angeles specializes in movies, or New York in finance. [1]

What if both are true? What if startups are both a new economic phase and also a type of business that only flourishes in certain centers?

I don’t know the truth of Silicon Valley’s gravity (or more importantly, how that gravity is trending) but the idea of it doesn’t sit right with me. Emotionally, I found myself wanting to agree with Aaron Swartz and Glenn Kelmann rather than Ron Conway, Mike Arrington, and PG (which is pretty much the only time that’s ever happened).

So as an exercise in digital outsourcing, I took some public lists of technology acquisitions in 2007 and 2008 and paid some nameless person in some nameless town a few dollars to research the locations of those companies when they were acquired. The results surprised me. Here’s the spreadsheet, if anyone wants to fiddle with it (in hindsight, I should’ve used the CrunchBase API– if someone wants to dive in and do this, I’d love to see it).

Highlights, Acquisitions in 2007 / 2008
225 total acquisitions on the list (110 in ’07 and 115 in ’08)
175 (77%) were in the USA
63 (28%) were in the Valley
Top states beyond CA were NY (19), WA (14), MA (11), TX (6), IL (5), NJ (5).
Israel and the UK were dominant internationally

Removing Acquisitions with Prices under $20mm or Undisclosed
(This was in response to the thought that the non-valley acquisitions were the small one)
110 total
91 USA (82%)
28 in the Valley (25%)

The Really Frakkin’ Interesting Bit
In 2007, 45 of 110 (41%) acquired companies were in the Valley. In 2008, only 18 of 115 (16%) were.

Now, 1 year does not a trend make. And, this is some pretty amateurish research and number crunching. The numbers that I really want (which is really hard to find) are the denominators. In other words, how many valley startups spun up in these years versus the rest of the world? Does the Valley meaningfully change the chances of startup founders making it? And how have these numbers changed over the past 5-10 years?

My theory?

The core things that REALLY matters to build a v1 software startup are (in order of important):

having the will to build one
Silicon Valley used to have a pretty serious monopoly on people who wanted to be technology entrepreneurs. I think that’s changing– the number of people who are getting their feet wet with entrepreneurship outside of the Valley seems to be skyrocketing. People don’t want to be doctors and lawyers any more– they want to own their own companies. And as entrepreneurs in non-Valley locations see exits, it inspires a new crop in their home town.
building something that people really freakin’ want to have
The Valley offers no edge here– in fact, some people wonder if the “echo chamber” doesn’t actually get in the way of understanding the rest of the world.
having the team/resources/cash to get your product to market
THIS is where the Valley has always dominated. But I think that’s changing. We’ve all seen how cheap it is to start a software company nowadays (though you might still need VCs to GROW it).

In terms of teams– clearly if you’re going to be recruiting lots of geeks, you want to be in the Valley. Or do you? I’ve heard that WordPress has a virtual team all over the world and they seem to be doing okay. With all of the great information on software development and startups and with the fabulous open-source projects out there, maybe it’s getting easier to get to be a great hacker outside of the Valley. And, just as the cost of building a startup has gone down, the manpower necessary to build a v1 product has gone down as well. So MAYBE you need to move your startup to the Valley when it’s time to ramp up, but I’m not convinced you need the Valley to collect two or three motivated hackers.
Note: I think distribution magic and TAM (total addressable market) are hugely important for magnitude of startup success… But that’s a different post.

There is no doubt that Silicon Valley wins. Even a paltry 16% of 2008′s acquisitions is a staggering number for a little cluster of cities in northern California. But it’s not as big a monopoly as I might have guessed. Maybe that 1 year trend is starting to show that the institutional dollars in the Valley aren’t as important as they were in years past (or heck, maybe those funds are looking beyond their traditional borders). And maybe all of those great technologies that allow us to connect with people around the world are helping entrepreneurs connect with the energy and relationships that the valley brings the the table.

Again, Big Dislaimer: This is quickly googled data, outsourced research, and quick-n-dirty spreadsheeting. And, of course, acquisitions are an imperfect measure of success. AND, each startup/market/region is different. Bad science all around. Just a conversation starter, really.

Raw Data:

Acquired	Acquirer	Acquisition cost	Year	City	State	Country
Moniker	Oversee.net	$65 Million	2008	Pompano Beach	FL	USA
Bodybuilding.com	Liberty Media	$100 Million	2008	Meridian	ID	USA
CleverSet	Art Technology Group (ATG)	$10 Million	2008	Seattle	WA	USA
Anywhere.FM	Imeem	Undisclosed	2008	San Francisco	CA	USA
Audible	Amazon	$300 Million	2008	Newark	NJ	USA
Maven Networks	Yahoo	$160 Million	2008	Boston	MA	USA
FoxyTunes	Yahoo	Undisclosed	2008			Israel
Vehix	Comcast	Undisclosed	2008	Salt Lake City	UT	USA
HotOrNot	Avid Life Media	$20 Million	2008	San Francisco	CA	USA
Compete	Taylor Nelson Sofres	$75-150 Million	2008	London		UK
BlogDigger	Odeo	Undisclosed	2008	Washington, D.C	DC	USA
Auctomatic	Communicate	$5 Million	2008	San Francisco	CA	USA
BeInSync	Phoenix Technologies	$25 Million	2008	Tel Aviv		Israel
Prospero	Mzinga	Undisclosed	2008	Burlington	MA	USA
Social Platform	Onesite	Undisclosed	2008	Los Angeles	CA	USA
Pluck	Demand Media	$75 Million	2008	Austin	TX	USA
Bebo	AOL	$850 Million	2008	San Francisco	CA	USA
Sway	Cornerworld	$30 Million	2008	Middleton	WI	USA
buy.at	AOL	$150 Million	2008	London		UK
YaData	Microsoft	Undisclosed	2008	Tel Aviv, Israel		Israel
Weblistic	Spot Runner	Undisclosed	2008	Fremont, CA	CA	USA
XIV	IBM	$350 Million	2008	Tel Aviv, Israel		Israel
Apertio	Nokia Siemens	$206 Million	2008	Bristol, UK		UK
Onaro	Network Appliance	$120 Million	2008	Boston, MA	MA	USA
MySQL	Sun Microsystems	$1 Billion	2008	Uppsala, Sweden		Sweden
Trolltech	Nokia	$153 Million	2008	Oslo, Norway		Norway
Fraud Sciences	eBay (Paypal)	$169 Million	2008	Tel Aviv, Israel		Israel
E-Dialog	GSI Commerce	$157 Million	2008	Lexington, MA	MA	USA
MessageOne	Dell	$155 Million	2008	Austin, Texas	TX	USA
G-Technology	Fabrik	Undisclosed	2008	Santa Ana, CA	CA	USA
Danger	Microsoft	$500 Million	2008	Palo Alto, CA	CA	USA
Caligari	Microsoft	Undisclosed	2008	Mountain View, CA	CA	USA
Twhirl	Seesmic	Undisclosed	2008			Germany
Pageflakes	Live Universe	Undisclosed	2008	San Francisco, CA	CA	USA
Sphere	AOL	$25 Million	2008	San Francisco, CA	CA	USA
Farecast	Microsoft	$115 Million	2008	Seattle, WA	WA	USA
Activeweave	Buzzlogic	Undisclosed	2008	San Francisco, CA	CA	USA
Fleaflicker	AOL	Undisclosed	2008	Tenafly, NJ	NJ	USA
Expensr	Strands	Undisclosed	2008	San Francisco, CA	CA	USA
gBox	eFORCE	Undisclosed	2008	Cupertino, CA	CA	USA
MeeVee	Live Universe	Undisclosed	2008	Burlingame, CA	CA	USA
Inquisitor	Yahoo	Undisclosed	2008	Sunnyvale, CA	CA	USA
Cnet	CBS	$1.8 Billion	2008	San Francisco, CA	CA	USA
Ars Technica	Conde Nast	$25 Million	2008	Chicago, Illinois	IL	USA
StarBrand Media	Sugar Inc.	Undisclosed	2008	Los Angeles, Ca	CA	USA
M:Metrics	ComScore	$44 Million	2008	Seattle, WA	WA	USA
Celebrity Baby Blog	People.com	Undisclosed	2008	New York, NY	NY	USA
Snapvine	WhitePages.com	$20 Million	2008	Seattle, WA	WA	USA
SwapDrive	Symantec	$123 Million	2008	Washington, D.C	DC	USA
Hostopia.com	Deluxe	$122 Million	2008	Mississauga, ON, Canada		CA
Imity	Zyb	Undisclosed	2008	Copenhagen, Denmark		Denmark
Rupture	Electronic Arts	$30 Million	2008	San Francisco, CA	CA	USA
ZYB	Vodafone	$50 Million	2008	Copenhagen, Denmark		Denmark
StarNet Interactive	IAC	Undisclosed	2008	Tel Aviv, Israel		Israel
Plazes	Nokia	Undisclosed	2008	Berlin, Germany		Germany
Adify	Cox Enterprises	$300 Million	2008	San Bruno, CA	CA	USA
Personifi	Collective Media	Undisclosed	2008	Fort Worth, TX	TX	USA
Navic Networks	Microsoft	Undisclosed	2008	Waltham, MA	MA	USA
Gracenote	Sony	$260 Million	2008	Emeryville, CA	CA	USA
Simple Star	Sonic Solutions	Undisclosed	2008	San Francisco, CA	CA	USA
Diligent	IBM	Undisclosed	2008	Framingham, MA	MA	USA
EDS	HP	$13.9 Billion	2008	Plano, TX	TX	USA
Hands-On Mobile Korea	Electronic Arts	Undisclosed	2008	San Francisco, CA	CA	USA
B-hive Networks	Vmware	Undisclosed	2008	Herzliya, Israel		Israel
OpenAir	NetSuite	$26 Million	2008	Boston, MA	MA	USA
Let It Wave	Zoran Corporation	$27.6 Million	2008	Paris, France		France
Practique Associates	Merced Systems	Undisclosed	2008	Bracknell, UK		UK
MusicGremlin	SanDisk	Undisclosed	2008	New York, NY	NY	USA
Skywire	Oracle	Undisclosed	2008	Las Vegas, NV	NV	USA
Symbian	Nokia	Undisclosed	2008
Alltel	Verizon	$28.1 Billion	2008	Little Rock, AR	AR	USA
Helio	Virgin Mobile	$39 Million	2008	Los Angeles, CA	CA	USA
Iomega	EMC	$213 Million	2008	San Diego, CA	CA	USA
Powerset	Microsoft	$100 Million	2008	San Francisco, CA	CA	USA
Weather Channel	NBC Universal	$3.5 Billion	2008	Atlanta, GA	GA	USA
HaloScan	JS-Kit	Undisclosed	2008
Imagekind	CaféPress	$20 Million	2008	Seattle, WA	WA	USA
Truemors	NowPublic	undisclosed	2008	Palo Alto, CA	CA	USA
ContentNextMedia	Guardian Media Group	$30 Million	2008	Santa Monica, CA	CA	USA
PodTech	ViewPartner	$500 K	2008	Palo Alto, CA	CA	USA
jkOnTheRun	GigaOm	undisclosed	2008	Houston, TX	TX	USA
Omnisio	Google	unidsclosed	2008	Atherton, CA	CA	USA
AbeBooks	Amazon	undisclosed	2008	Victoria, Canada		CA
DailyCandy	Comcast	$125 Million	2008	New York, NY	NY	USA
Blogcritics	Technorati	undisclosed	2008	San Francisco, CA	CA	USA
Ciao (Greenfield Online)	Microsoft	$486 Million	2008	Connecticutm, MA	MA	USA
social.im	iSkoot	undisclosed	2008	San Francisco, CA	CA	USA
Peerflix	LiveUniverse	undisclosed	2008	Palo Alto, CA,	CA	USA
Napster	BestBuy	$121 Million	2008	Los Angeles, CA	CA	USA
YoVille	Zynga	undisclosed	2008
PartnerUp	Deluxe	undisclosed	2008	Shoreview, MN	MN	USA
Socialthing!	AOL	undisclosed	2008	Boulder, CA	CA	USA
ZAO Begun	Google	$140 Million	2008	Moscow, Russia		Russia
Jabber	Cisco	undisclosed	2008	Seattle, WA	WA	USA
Pure Networks	Cisco	$120 Million	2008	Denver, CO	CO	USA
Ribbit	British Telecom	$105 Million	2008	Mountain View, CA	CA	USA
PostPath	Cisco	$215 Million	2008	Mountain View, CA	CA	USA
Lefthand Networks	HP	$360 Million	2008	Boulder, CO	CO	USA
Bitwine	Monster Venture Partners	Undisclosed	2008	Tenafly, NJ	NJ	USA
DBA	Ebay	$383 Million	2008	Denmark		Denmark
Bill Me Later	Ebay	$820 Million	2008	Omaha, NE	NE	USA
Polldaddy	Automattic	Undisclosed	2008	Sligo, Ireland		Ireland
JungleDisk	Rackspace	$11.5 Million	2008	Atlanta, GA	GA	USA
Wayport	AT&T	$275 Million	2008	Austin, TX	TX	USA
RuTube	GazProm Media	$15 Million	2008	Moscow, Russia		Russia
Clickpass	Synthasite	Undisclosed	2008	San Francisco, CA	CA	USA
Revolution Health	Waterfront Media	$100 Million	2008	Brooklyn, NY	NY	USA
socialmedian	XING	$15 Million	2008	New York, NY	NY	USA
AdEngage	Technorati	Undisclosed	2008	Los Angeles, CA	CA	USA
acerno	Akamai	$95 Million	2008	New York, NY	NY	USA
Lookery	Adknowledge	Undisclosed	2008	San Francisco, CA	CA	USA
Centennial	AT&T	$944 Million	2008	Wall, NJ	NJ	USA

Feedburner	Google	$100 Million	2007	Chicago, IL	IL	USA
Treehugger	Discovery	$10 Million	2007	Brooklyn, NY	NY	USA
UGo	Hearst	$100 Million	2007	New York, NY	NY	USA
Fireant	Odeo	$400000	2007
Insider Pages	CitySearch/IAC	$13 Million	2007	Redwood Shores, CA	CA	USA
RedSwoosh	Akamai	$15 Million	2007	San Francisco, CA	CA	USA
Webdialogs	IBM	$161 Million	2007	Billerica, MA	MA	USA
Flektor	Fox Interactive	$20 Million	2007	Culver City, CA	CA	USA
Sidestep	Kayak	$200 Million	2007	Santa Clara, CA	CA	USA
Mediabistro	Jupiter Media	$23 Million	2007	New York, NY	NY	USA
Hitwise	Experian	$240 Million	2007	Melbourne, NY	NY	USA
HowStuffWorks	Discovery	$250 Million	2007	Atlanta, GA	GA	USA
PhotoBucket	Fox Interactive	$250 Million	2007	San Francisco, CA	CA	USA
PRWeb	Vocus	$28 Million	2007	Ferndale, WA	WA	USA
BuzzTracker	Yahoo	$2-$5 Million	2007	Chicago, IL	IL	USA
WebEx	Cisco	$3.2 Billion	2007	Santa Clara, CA	CA	USA
StubHub	eBay	$310 Million	2007	San Francisco, CA	CA	USA
Business.com	R.H. Donnelley	$345 Million	2007	Santa Monica, CA	CA	USA
MeziMedia	ValueClick	$352 Million	2007	Los Angeles, CA	CA	USA
StumbleUpon	eBay	$45 Million	2007	San Francisco, CA	CA	USA
Wallstrip	CBS	$5 Million	2007	New York, NY	NY	USA
Optimost	Interwoven	$52 Million	2007	New York, NY	NY	USA
Mozy	EMC	$76 Million	2007	Pleasant Grove, UT	UT	USA
SmartShopper	Zango	$9 Million	2007	Tel Aviv, Israel		USA
Ingenio	AT&T	Not Disclosed	2007	San Francisco, CA	CA	USA
Yedda	AOL	Not Disclosed	2007	Tel Aviv, Israel		Israel
dpreview.com	Amazon	Not Disclosed	2007	London, UK		UK
Virtual Ubiquity	Adobe	Not Disclosed	2007	Waltham, MA	MA	USA
Jumpcut	Yahoo	Not Disclosed	2007	San Francisco, CA	CA	USA
WhereOnEarth	Yahoo	Not Disclosed	2007	London, UK		UK
Grub	Wikia	Not Disclosed	2007	San Francisco, CA	CA	USA
Blogniscient	TopTenSources	Not Disclosed	2007	Newton, MA	MA	USA
InviteShare	TechCrunch	Not Disclosed	2007	Atherton, CA	CA	USA
Odeo	SonicMountain	Not Disclosed	2007	San Francisco, CA	CA	USA
Cuts	RiffTrax	Not Disclosed	2007
JobLoft.com	onTargetjobs	Not Disclosed	2007	Toronto, Canada		CA
Billmonk	Obopay	Not Disclosed	2007	Seattle, WA	WA	USA
BarelyPolitical.com	NextNewNetworks	Not Disclosed	2007	Ambler, PA	PA	USA
MedStory	Microsoft	Not Disclosed	2007	Foster City, CA	CA	USA
Feed Crier	IMified	Not Disclosed	2007	Sacramento, CA	CA	USA
Tabblo	HP	Not Disclosed	2007	Cambridge, MA	MA	USA
Logoworks	HP	Not Disclosed	2007	Lindon, Utah	UT	USA
Trendalyzer	Google	Not Disclosed	2007	Stockholm, Sweden		Sweden
Tonic Systems	Google	Not Disclosed	2007	San Francisco, CA	CA	USA
Panoramio	Google	Not Disclosed	2007	Spain		Spain
Strategic Data Corp	Fox Interactive	Not Disclosed	2007	Santa Monica, CA	CA	USA
Parakey	Facebook	Not Disclosed	2007	Mountain View, CA	CA	USA
Cricinfo	ESPN	Not Disclosed	2007	London, UK		UK
Afterbuy.com	eBay	Not Disclosed	2007	Krefeld, Germany		Germany
metaStories	Brightcove	Not disclosed	2007	Seattle, WA	WA	USA
Movielink	Blockbuster	$50 Million	2007	Santa Monica, CA	CA	USA
Gravatar	Automattic	Not disclosed	2007
FotoLog	Hi-Media	$90 Million	2007	New York, NY	NY	USA
Max Preps	CBS	$43 Million	2007	Sacramento, CA	CA	USA
Club Penguin	Disney	$700 Million	2007	Brighton, GBR		UK
AdultFriendFinder	Penthouse Media Group	$500M	2007	Palo Alto, CA	CA	USA
Jellyfish	Microsoft	$50 Million	2007	Madison, WI	WI	USA
WebShots	American Greetings	$45 Million	2007	Redwood City, CA	CA	USA
Kaboodle	Hearst	$30 Million	2007	Newbury, Berkshire, UK		UK
Last.fm	CBS	$280 Million	2007	London, UK		UK
Fandango	Comcast	$200 Million	2007	Los Angeles, CA	CA	USA
MyBlogLog	Yahoo	$10 Million	2007	Orlando, FL	FL	USA
Rivals.com	Yahoo	$100 Million	2007	Brentwood, TN	TN	USA
BOOMj.com	Time Lending California	Not Disclosed	2007	New York, NY	NY	USA
Glimpse	TheFind.com	Not Disclosed	2007
TripUp	SideStep	Not Disclosed	2007	Los Angeles, CA	CA	USA
mbuzzy.com	SendMe Mobile	Not Disclosed	2007	San Mateo, CA	CA	USA
Pickle.com	Scripps Networks	$4.1 Million	2007	Arlington, VA	VA	USA
Zingfu.com	Profile Builder	Not Disclosed	2007	Milwaukee, WI	WI	USA
Newsvine	MSNBC	Not Disclosed	2007	Seattle, WA	WA	USA
WebFives	Microsoft	Not Disclosed	2007	Seattle, WA	WA	USA
Jaiku	Google	Not Disclosed	2007	Helsinki, Finland		Finland
Clipmarks	Forbes Media	$30 Million	2007	New York, NY	NY	USA
SingShot	EA	Not Disclosed	2007	San Francisco, CA	CA	USA
BuddyTV	Comcast	Not disclosed	2007	Seattle, WA	WA	USA
Five Across Inc.	Cisco	Not disclosed	2007	San Francisco, CA	CA	USA
Tribe	Cisco	Not disclosed	2007	Los Gatos, CA	CA	USA
Twango	Nokia	$96.8 Million	2007	Seattle, WA	WA	USA
Doubleclick	Google	$3.1 Billion	2007	New York, NY	NY	USA
aQuantive	Microsoft	$6 Billion	2007	Seattle, WA	WA	USA
BlueLithium	Yahoo	$300 Million	2007	San Jose, CA	CA	USA
Quigo	AOL	$340 Million	2007	New York, NY	NY	USA
24/7 Real Media	WPP	$649 Million	2007	New York, NY	NY	USA
Tacoda	AOL	$275 Million	2007	New York, NY	NY	USA
RightMedia	Yahoo	$680 Million	2007	New York, NY	NY	USA
AdTech	AOL	Not Disclosed	2007	Frankfurt, Germany		Germany
Enpocket	Nokia	Not Disclosed	2007	Boston, MA	MA	USA
ScreenTonic	Microsoft	Not Disclosed	2007	Paris, France		France
Cognos	IBM	$4.9 Billion	2007	Ottawa, Canada		CA
Zimbra	Yahoo	$350M	2007	San Francisco, CA	CA	USA
Opsware	HP	$1.6 Billion	2007	Sunnyvale, CA	CA	USA
EqualLogic	Dell	$1.4 Billion	2007	Nashua, NH	NH	USA
Koral	SalesForce.com	Not Disclosed	2007	California	CA	USA
devBiz	Microsoft	Not Disclosed	2007	NJ	NJ	USA
Global Care Solutions	Microsoft	Not Disclosed	2007	Bangkok, Thailand		Thailand
GreenBorder Technologies	Google	Not Disclosed	2007	Mountain View, CA	CA	USA
PeakStream	Google	Not Disclosed	2007	Redwood City , CA	CA	USA
Latigent	Cisco	Not disclosed	2007	Chicago, IL	IL	USA
TellMe Networks	Microsoft	$800 Million	2007	Mountain View, CA	CA	USA
Postini	Google	$625 Million	2007	San Carlos, CA	CA	USA
GrandCentral	Google	$45 Million	2007	Fremont, CA	CA	USA
VoiceStar	Marchex	$28 Million	2007	Philadelphia, PA	PA	USA
Avaya	Silver Lake & TPG	$8.2 Billion	2007	London, UK		UK
3Com	Bain Capital Partners	$2.2B	2007	Santa Clara, CA	CA	USA
Gaming Everywhere	Ujogo	Not Disclosed	2007	San Diego, CA	CA	USA
Adscape	Google	$23 Million	2007	San Francisco, CA	CA	USA
Havok	Intel	$110 Million	2007	Dublin, Ireland		Ireland
Vexcel	Microsoft	Not Disclosed	2007	Boulder, CO	CO	USA
ImageAmerica	Google	Not Disclosed	2007	Clayton, MO	MO	USA
Keyhole	Google	Not Disclosed	2007	California	CA	USA
NavTeq	Nokia	$8.1 Billion	2007	Chicago, Illinois	IL	USA

Google is a friend to the news business (but it’s got to evolve)

Apr 12

People are upset about the news industry dying/changing, and with good reason. There’s a lot of great history and romance in journalism, and it’ll be a shame to see them go. There’s a great summary of the issue by Nick Carr and some good thoughts (with a linkbait title) by Scott Karp. Karp says:

Those who argue that Google is a friend to content owners because it sends them traffic overlook the basic law of supply and demand. The value of “traffic” is entirely relative. The more content there is on the web, the less value that content has — because of the surfeit of ad inventory and abundance of free alternatives to paid content — and thus the less value “traffic” has.

He’s right that it’s a supply and demand issue, but he’s wrong that Google isn’t a friend. Newspapers got to be a VERY fat business with a huge expense line because there was a limit of supply. You want written news in your hometown? You’ve got one choice, maybe two if you’re lucky. You want to advertise to people who care about the news? Same choices.

Over the past 50 years, reporting the news SHOULD have gotten cheaper. A flood of journalism grads, word processing and desktop publishing tools, increasingly sophisticated global communication, and cheap syndicate-able news stories when it’s not practical to report it. Over the past 20 years, you’d think it’d have gotten cheaper yet. Why have a press at all? When a story is breaking in Istanbul, why not just find a freelance reporter there rather than fly one of yours over and put ‘em up in a hotel? Need to do some fact checking? Try the internet. Don”t have time to write a deeper article? Link to some content partners in a “learn more” section at the end of your article. Looking around at content startups (like TechCrunch), it’s easy to see imagine cheaply you could run a newspaper. But modern newspapers don’t have that imagination, and if they did they don’t have the agility to get there with huge debt service, huge staffs, and big infrastructure to support distributing dead trees and ink.

The problem with the industry isn’t that Google owns the middleman slot. The problem is that the news industry as we know it is fundamentally inefficient. There were local walls around the supply, and little fiefdoms of news grew fat and happy (and horribly inefficient) inside these walls. Now that innovation has removed those walls, an oversupply of news has spilled into the world and the girth of these news organizations just can’t be supported. This doesn’t mean we should pour the hate on innovation.

Technology innovation is often about making markets smaller/more efficient. It’s taking something that used to cost $50 and making it available for $5, which tends to make innovators rich and incumbents flounder and die. It’s about making music sharing cheap and easy so record-labels can’t get drunk off of the insane profits they’ve been enjoying. It’s about sites like Kayak and Faracast making the market for airline tickets more efficient and less inscrutable.

Google *IS* a friend to the news business. They are giving them a free/huge distribution channel that they don’t have to pay for. There are plenty of small/nimble news startups from the Huffington Post to the West Seattle Blog (my neighborhood rag) that are happily growing and collecting advertising revenue.

There’s clearly a need/demand for news and a clear path to making money with content on the Internet. There’s not much we can do but sit back and watch most of the dinosaurs die, rot or evolve, and watch the nimble little mammals grow up to fill the niches they leave behind.