Bronte Media

It’s been a little while since I have arrived in Paris, so I thought a random thoughts update was in order:

- My french has improved greatly but still not enough. I was bummed to see that all the TV is dubbed, rather than English with French sub-titles which was a great help in learning spanish when I traveled to South America. I saw Wanted in English and with French sub-titles at the Cinema and my vocabulary did improve even with that.

- The everyday simple foods, like bread and coffee leave New York for dead. But the restaurant scene so far has been a little disappointing and over-priced (in USD). Oh how I yearn for Bar-Bo-Ne. But it’s still early.

- The French have mastered the side by side seating in cafes (vs the sitting opposite each other), and I am now convinced it is a better setup.

- Workwise I feel like productivity has soared. In the morning I feel uninterupted and try to get all I need to get done and then leave the early evening for email, phone and other crap. Early evening overlaps with the late morning New York time and early morning West Coast time.

- I feel like I am shadowing Fred Wilson and his wife. For those who don’t read his blog, he is spending a month in Paris and his wife also maintains a superb blog. She has been writing about their time here, including restaurant recommendations. I have only met Fred once and never his wife but I feel weirdly like I am following them.

Friday: Run an ad on your homepage calling Carl Icahn an idiot.

Monday: Offer him a board seat.

I am finishing up on the excellent Reminiscences of a Stock Operator, a book by a trader at the turn of the 20th century. The book highlights just how little has changed in a hundred years and one of the axioms that is relevant today is: In a bull market, good news is amplified and bad news ignored. And conversely, in a bear market, good news is ignored and bad news amplified.

With Google ‘blowing’ their second quarter results, clearly we are in a bear market.

This is a company whose owned and operated properties are growing 42% year over year, which is quite stunning when compared to the likes of Yahoo and MSN, who have both been posting pathetic performance.

The second quarter is always the weakest in terms of sequential growth (and the fourth quarter always the best) and it is funny to see the constant goldfish-like surprise each year when investors react to the results.

Another interesting point is the use of the words “challenging macro-economic conditions”, which I expect every management-speak corporate officer to quickly append to their vocabulary in the coming year. After which, they can be “cautiously optimistic” about the recovery.

Net-net, Google is still banging out home runs in a crumby economy and the news is about to get worse for a whole host of other online ad firms.

Max Levchin, a man after my own heart: “The more your business looks like that of an ad network (augmented or not by the current sex appeal of being “social”), the less ultimately valuable you are.”

PEHub has another great article on the disconnect between public and private valuations.

Nowhere is this more evident than in my corner of the world: Online real estate.

You have Housevalues trading at practically its cash value even though its roughly a break even business and has some interesting acquisitions and investments.

There is MOVE. Long time readers will know of my love of the stock at this valuation and in general with the company’s direction now that it has new management some idea of what to do. Here’s another recent post by me on the company.

Basically, public investors are saying to shit with online real estate.

But then in the private sector you have Zillow and Trulia. Trulia recently announced a $15m series C investment to bring its total capital raised to $33m. Zillow has raised roughly $87m.

So you have a very optimistic private capital market and a very pessimistic public one.

I would obviously side with the optimists, as I am really voting with my feet.

But that to me solves a big problem in the venture capital industry: how to invest the large amounts of capital they have raised. A $500m-$700m early stage venture fund doesn’t really make sense but a $500-700m crossover fund clearly does.

I wouldn’t be surprised to see if some of the larger firms started taking large stakes in the small public Internet companies, as their valuations relative to private financings are just a screaming buy (of course if you believe it’s all going to shit then nothing is a good buy).

I just have a hunch that something major will happen in the coming year, and maybe online real estate will be a good example of that trend.

On Monday my bags are packed and I am moving to the city of light, Paris!

One of the reasons I started Homethinking and my own company was to have the flexibility to do something like this. It may be a complete abject failure but I am going to give it a shot at least until the end of the year, and then re-evaluate at that point.

My plan is to not a change a thing work wise but simply do that work from a different city in the world, and one I have always wanted to live in (not to mention be able to sample the delights of RyanAir and EasyJet flights throughout Europe).

Homethinking has 8 people and me, and five of those people are in Eastern Europe, so if anything that is a plus with the timezone.

Then through the wonders of the Internet I can have a US number ring my Skype Phone and a US postal address that scans, stores, shreds Mail on my remote demand. No one will even know I am not in the US.

Why Paris? It is one of the world’s great cities and I will finally force myself to learn French. It will also allow me to continue to follow my gastronomic calling and indulge in more food-related hedonism.

The downside? Well the US dollar is dropping like a rock and if it moved to 2 to 1 or 2.5 to 1 then the economics would be harder. But that’s all the reason to start now.

As for this blog and it’s topics? Nothing will change there either (my thinking will still all be around the same things) but there may be the odd photo of a baguette.

I would love to get more involved in the entrepreneurial or Internet community in Paris. So if you know anyone be sure to introduce me (niki dot scevak at gmail).

Thank you New York City. Five great years on, I’ll always have a special place in my heart and may return in the future!

Color me skeptical. Jingle, the free 411 provider, is saying that they are profitable on a per call basis. And at the same time they are announcing the CEO is leaving, they are closing down their California office and they are re-organizing.

My original analysis of the industry from way back in 2006 is here, here, here and finally here.

The Techcrunch post says the company has their per call cost down to $0.10, which is signficantly down from the $0.25 the company reported in October 2006.

I should also say that the original post relating to the economics received a fantastic reply from Lyn Chitow Oakes, SVP of Marketing, which I was very grateful for. The current management team page on their site, which she was listed on at the time, shows no mention of her now but her LinkedIn profile does say she still works for the company in that capacity.

Warren Buffett on Berkshire Hathaway versus Private Equity:

“You can sell it to Berkshire, and we’ll put it in the Metropolitan Museum; it’ll have a wing all by itself; it’ll be there forever,” he says at the February meeting. “Or you can sell it to some porn shop operator, and he’ll take the painting and he’ll make the boobs a little bigger and he’ll stick it up in the window, and some other guy will come along in a raincoat, and he’ll buy it.”

From an interview with Ken Miller, founder of Anchor Intelligence, a click fraud company:

“[Question]: And you charge these clients on a monthly subscription basis?

[Answer]: Processing is a per-click subscription.”

A click fraud company that is paid on a per click basis. Now that wouldn’t create the wrong incentives would it?

C’mon, who are we deluding? Yahoo is the loser in all of this takeover battle and Microsoft has tipped it in a death-spiral? No fucking way.

Yahoo induced itself into its own death spiral. More specifically, Yahoo’s management.

Microsoft’s offer for the company temporarily juiced the share price but it is now right back where it started. In fact, it wont be long until other private equity or competitors launch competing bids (and they wont be at $30+ a share).

And so when people write of the ‘exodus’ at the company and how they are losing rockstars like the Flickr and Delicious founders, I scoff. Why? Those are entrepreneurs waiting to vest. Watching Flickr’s growth explode was probably really exciting but watching the paint dry on new releases (Flickr video anyone?) was painful. As a Flickr pro user I don’t really care about how many people use the site, but I do care about a kick ass photo site. On the ownership side of the table the founders are probably in a similar situation.

Yahoo needs new leadership. Yahoo needs a mass exodus of all the people who can’t get passionate about building Yahoo. All of this is necessary for it to regain its footing. As bad as it sounds, nearly every one of those senior management people should have left because they presided over the failure in the past few years.

Is it going to be easy to turn around? Is it going to be easy to find the right people to turn it around? No and no, but nothing is easy and I have 100% confidence they will turn it around. But they need new blood.

When all is said and done and the music has stopped the one without a chair isn’t Yahoo but Microsoft. We are nearly there. It is jaw dropping to see the media swarm around Yahoo and proclaim death and yet the limp Microsoft on life support is portrayed as a savvy market player.

This wont last for long. A few quarters of financials and the truth will no doubt bubble to the top.