Bronte Media

If Valleywag insists that no-one uses Mahalo, what does that say about Valleywag itself?

Proving that I am setting the agenda for the wall street journal, an article was published following my first (well, second) take on the Facebook-Microsoft invesment: namely, it would be tougher to hire developers because of the high valuation set of new options.

Two counter-arguments emerged:

Owen Thomas of Valleywag, rambled on in a cheerfully naive post saying “Facebook has a simple answer: restricted stock units. Like stock options, restricted stock vests over time. But unlike options, the employees actually own the shares outright after they’re vested, rather than having the right — the “option” — to buy the shares at a set price.”

Not once did he mention that it’s hard to multiply and grow $15bn valuations. Instead he said that restricted stock is worth ’something’ where options can be worth ‘nothing’ if the valuation doesn’t move. Somehow I don’t think such an argument is so compelling for the rockstar developers.

Ethan Stock, founder of Zvents, presented a much more compelling dressing down as to the severity of the situation. Basically saying that even though Microsoft’s $240m came in at a $15b valuation, the legal work could apportion some to the value of the international ad deal and that the equity valuation (read: valuation that sets the options) could be quite easily $7.5bn and that common stock (the kind employees get, Microsoft would have gotten some sort of preffered stock) can be priced at a 10% discount, and so the valuation for the options to be granted might even be $750m. If that’s the case, then great. They probably don’t have a problem.

Ethan should have stopped his post right there but instead continues that most employees really only want a 10x gain, and they’ll be happy with that. Well, yes but I don’t think Facebook is looking to hire ‘most employees’. And then the big infusion of capital will allow them to hire “people who, say, went from Netscape ‘95 to CommerceOne ‘98 to PayPal ‘01, just to make up one arc.” Again, does the company want the usual valley wagon hoppers?

Still good arguments on both sides of the fence as to whether this is a problem or not.

The Alarm:Clock on CNET buying Webshots for $70m in 04 and subsequently selling it for $45m yesterday:

“CNET is the New York Knicks of online media.”

p.s. I am officially a partial season ticket holder! Sportomachism!

Initial take on the Facebook invesment: At least it’s two New York Hedge Funds and Balmer/Gates and not my parents or other retail investors like ‘The First Time Around’.

Second take: Has the company the company shot itself in the foot? I agree that this deal is only good for Zuckerberg but isn’t the point of the investment to ‘hire developers’ and go from 300 people to 700 people quickly?

Well if any of those new 400 people are in any way equity-motivated, wouldn’t they now re-think their prospects given they are entering in at a $15bn valuation (i.e. their option strike price is at a $15bn valuation).

There has been much talk about Microsoft not being able to get a return by entering in at such a high valuation but that is exactly the same scenario the 400 new developers entering the company over the next year will face as well.

Way late in weighing in on this as well, but maybe I can learn something.

How is MySpace ‘opening up it’s platform’ a big deal? Or, maybe asked another way, isn’t MySpace already open?

Like 8-lane freeway open? Facebook opening their platform is kind of cool but they only did that because they had security in the first place.

Isn’t Adobe Flash the platform of the Internet?

What possibly could MySpace do to ‘open up their platform’? Provide easier methods to get people’s friends so that the applicaiton can mail them an invite? You can already do that via crawling web pages. People already spam MySpace users.

How can one open up chaos a second time? (I am not saying chaos is bad just that by definition, it’s already open).

I just think that social network applications have already thrived on MySpace (Youtube, Photobucket, Slide et al) and in each of those cases they built businesses and direct destinations before selling out even if they made nothing on the widgets themselves.

There is just a huge focal disconnect between Facebook applications and MySpace users using widgets. They are the same thing. Just people like talking about the former more than the later.

I think MySpace is the most important social network. But it’s already open and the only thing MySpace can do is say we wont shut you down if you have ads. Or am I missing something? Please let me know.

I am late with this but last week Platial, a mapping service users can personalize bought Frappr, another mapping service users can personalize.

Platial has raised $2.4m to date and Frappr nothing of significance.

Yet every report (see example) included a version of this quote: “the combined efforts of these two companies just makes one giant mapping service with a reported 15 million unique users every month and 100 million items having been geo-tagged.”

The fact that it was in every puff piece insightful analysis of the transaction makes me think it was included in the release.

Firstly, on those 15m uniques a month, here is what compete says both services have in terms of a US audience to their domains:

Is it because all of their traffic is on other pages? Why isn’t that impacting site traffic to their direct domains (a la youtube, photobucket and anyone else who built a widget business)?

News of the day is that some blog networks, including Engadget, have incurred deep losses in page rank. Sky is falling, world is over, right? Not quite.

The primary reason: PageRank is more a marketing myth than how Google really works these days (read thousands of factors, not just links).

But the news reminded me of another tale of Google-woe: who remembers Squidoo? That whacky world of structured geocities-like pages packed with affiliate spam. The script kiddies poured in, Jason Calacanis waged a war against the site and then ‘Google slapped’ the site with penalties. Well kind of. Here is the usage graph:

Looks like the folks at Squidoo are really reeling from that one.

Long live spam!

From Nick Carlson, a new writer at Valleywag:

“But the clarifications put Web 2.0 pornographers in a tight spot. They had developed platforms for user-contributed videos just like YouTube, except that their girls weren’t so lonely.”

First Twitter, now Tumblr. This from Dan Primack:

“Tumblr Inc., a New York-based Web 2.0 startup, has raised $750,000 in Series A funding from Spark Capital and Union Square Ventures. Bijan Sabet of Spark has joined the company’s board of directors. Tumblr describes its technology as enabling online scrapbooks, as opposed to online journals (i.e., blogs). It says: “Blogs are great, but they can be a lot of work. And they’re really built to handle longer-form text posts. Tumblelogs, on the other hand, let you easily and quickly post and share anything you find or create.” www.tumblr.com”

Card thinks that Yahoo signing more big name publishers in their network is a good thing. I think with the recent news, I’ll call these Madonna deals: that is, a great headline, financially destructive and be able to fool the most gullible of publications into thinking that this is the future of music or in Yahoo’s case, “don’t count it out versus Google”.

Yahoo should let Google and Microsoft slobber all over ad representation deals like MySpace and Facebook. If there is a bubble anywhere in the industry, they are in revenue guarantees to up and coming sites.

Yahoo needs to stick to its knitting. If they concentrate on growing Yahoo properties, they will win. Indeed: “Our page views were up about 20% in the quarter. Those wouldn’t include any page views from off-network companies or anything. That’s the O&O Yahoo! properties.”

That was the most encouraging sentence in the entire earnings call.

Compared to this: “As we’ve indicated for the last couple of quarters, we continue to face headwinds related to rising TAC rates and to our traffic quality efforts in our affiliate search business. ”

Translation: These deals are getting done at higher cost and for shittier quality of traffic.

What rollercoaster does Yahoo want to hop on?