Bronte Media

Much news on the downstream creeping of private equity and hedge funds, but the Kayak deal looks evidence of the opposite.

Money is just money, I guess.

I made a theoretical bet with Jason Calacanis that Mahalo really was a well-lit SEO-optimized site, despite his constant denials back in August. The exact quote: “I would bet Jason a lunch at Nobu (I hear he likes it and it’s around the corner from my office) that it is 70% or more. How’s that for lunchbait?”

He even commented on the post, which was kind of cool. He said that 5-20% was a fair enough figure and that “Search traffic will be one of 10 different ways folks get introduced to the service along with our vlog, toolbar, Greenhouse, PR, offline marketing, word of mouth, community-driven efforts, etc.”

Well, I was just browsing some Hitwise data and in November it looks like around 75% of traffic was from search engines. Ahh the sweet arms of Master Google.

Quote of the day comes from Tiger Woods (via Crowdvine founder Tony Stubblebine):

“The greatest thing about tomorrow is, I will be better than I am today. And that’s how I look at my life. I will be better as a golfer, I will be better as a person, I will be better as a father, I will be a better husband, I will be better as a friend. That’s the beauty of tomorrow. There is no such thing as a setback. The lessons I learn today I will apply tomorrow, and I will be better.”

Ad Serving didn’t matter 2.5 years ago when Doubleclick was taken private by Hillman and Friedman for $1.1bn. At that time, everybody under the sun looking at the stock saw pricing of the company’s products decreasing by 10% a year and a huge number of competitors offering Doubleclick’s core ad serving product for much less and some for free. The market was being disrupted.

Surprising was Google’s interest in buying the firm for nearly three times as much a short time later. More surprising is government scrutiny over a deal that is completely inconsequential in the scheme of the online advertising industry. And even more surprising is the stupidity of Microsoft trying to gain scale in the financially worst parts of the online advertising value chain.

Ad serving is going to zero. Maybe even negative (i.e. the vendor pays the client) now that Microsoft is drunk. It is a business that reached the end of its life some time ago.

Instead, ad targeting is still rich with innovation and is not a commodity. It most likely wont be a commodity for some time. That is because the industry will always be trying new strategies to achieve greater efficiency.

Doubleclick achieved a great deal, lead the industry in the early years, sold itself for a steal the first time around but the value of the company lies in the strategic position it holds in the industry and the ability of the company to leverage that position into ad targeting. The ad serving piece is only worth the price of the option to enter new tangential markets. I think a parallel analogy is almost if etrade.com had to become a Merrill Lynch.

So its surprising that the Government cares and that Microsoft cares.

Maybe the most valuable thing to come out of Google’s attempts to acquire Doubleclick is the incredible headfake that has lead Microsoft down a deep and dark rabbit hole of online ad obscurity.

Avvo wins a judgement from a lawsuit brought against them:

“The legal brouhaha erupted earlier this year when high-powered class action lawyer Steve Berman sued [Avvo] the Seattle startup, claiming that the company’s attorney ratings were a “flat-out scam” and could harm consumers.”

New York Times Magazine gives some love to Etsy and the handmade movement they are built around. Etsy are like an eBay for unique products crafted by artsy folks.

The analogy in my own mind is that they are like an online version of the Young Designers Markets nearby where I live in New York.

Initially I dug the products and thought the site was beautifully designed and one of the best examples of usability on the web.

That low bar was the reason I decided to see Rob Kalin, their founder, speak at the Future of Web Apps conference in London a month or two ago.

Wow. I wasn’t expecting what I heard. Rob’s talk was philosophical, passionate and completely bizarre. But unlike 99% of ’smart people’ who espouse on such things, the kid had purpose.

His talk included a Japanese childrens story about little fish aligning to emulate a bigger fish and his aim in being the ‘eye’ of the fish (he told the same story to the NY Times mag reporter). He talked about Walmart, the industrial revolution and seemingly everything other than his given topic (web design).

The funny thing is that I believed in him. As in, even though he had bizarre reasoning around certain things, what he is doing is utterly admirable and fantastic.

Rob is like a smarter, more worldly and likable version of Mark Zuckerberg. That is, he is swinging for the fences and the ball is already high in the air, sailing toward the seats in the upper deck.

Union Square Ventures may get a lot of street cred because of investments in Delicious and Twitter but this investment more than any other will deliver a huge return for their first fund.

Aside from the Japanese kids stories, the site itself is beautiful to interact with (I bought a few Christmas presents from it). They have a fantastic approach to storefronts and helping build the brand of the sellers. This may be a ‘niche site’ or in the words of Meg Whitman “a cute little business” but I have no doubt they will rip away a huge part of eBay’s business and be one of the most successful Internet companies to come out of New York.

After being ‘banned’ by Google back in July, Squidoo is doing surprisingly well as a ‘dead company’ (longtime readers know I am a fan of ‘dead companies doing well’ like InsiderPages and Friendster).

So dead in fact that they did 6m uniques and 12m sessions last month. And the non-insitution funded company is now profitable.

Here is the compete graph:

A lesson in outsourcing and specialization:

“Police in Coburg are to investigate whether seven-times world champion Michael Schumacher broke the law after he got behind the wheel of a taxi last week so his family were on time for a flight.”

From the files of Scevak Corporate Advisory Services: What will become of Move.com?

Move.com is a company that has a market cap of $400m. It has $185m+ in cash and short term investments. It operates the leading real estate site, realtor.com that gets about twice the traffic of its nearest competitor.

Revenues for the company are flat but will be around $300m this year. The business will generate over $20m in cash.

Zillow, a startup, was valued at $350m in its most recent $30m round of financing. If we say the company has about $50m of cash left (generous) then it’s operations are worth roughly 1.5 times as much as Move’s ($300m vs $215m).

Global real estate companies like RightMove in the UK, Seloger in France and REA Group in Australia are soaring and are all worth more than Move.

Two years ago Elevation Partners essentially bought $100m worth of options in Move with a strike price of $4.20 but only redeemable in 2010.

The stock price is stupendously low.

The NAR (national association of Realtors) has threatened to start a consumer site in competition with Zillow. But their agreement with Move means that Move would have to approve of the deal. The NAR have publicly expressed their displeasure with Move. If they were to end their agreement Move would be crippled.

This is the genesis of how the NAR could end the agreement:

” Although the REALTOR.com® operating agreement is a perpetual agreement and it does not contain provisions that allow us to terminate, NAR may terminate it for a variety of reasons. These include:

• the acquisition of us or RealSelect by another party without NAR’s consent;

• if traffic on the REALTOR.com® site falls below 500,000 unique users per month;

• a substantial decrease in the number of property listings on our REALTOR.com® site; and

• a breach of any of our other obligations under the agreement that we do not cure within 30 days of being notified by NAR of the breach.

If our operating agreement with NAR were terminated, we would be required to transfer a copy of the software that operates the REALTOR.com® web site and assign our agreements with data content providers, such as real estate brokers or MLSs, to NAR. NAR would then be able to operate the REALTOR.com® web site itself or with another third party. ”

So basically if anyone were to take over the company, they would need the NAR’s consent. All of the other clauses (save for the non-specific last one) would likely never be met.

If Zillow can raise $87m, couldn’t they find a financial partner to help them raise $200m or so more?

I personally think the more likely outcome is that Move continues its transformation with new management and the stock price goes back into the double digits.

Unfortunately I also personally have no money, so I don’t own any stock.

Long time blog readers will remember the domain experiment I started around a month ago.

So a quick update:

I originally had gone with Trafficz.com, which had templates but were hard to configure and came up with strange automatic suggestions (metal working for a real estate domain, and even after choosing the real estate template).

So at the suggestion of John, I changed over to Sedo, for a more simple domain parking page with ads.

In the last 14 days, 503 unique visitors have visited the 101 domains I registered. Or about, 36 people a day. 4 people clicked on an ad and generated a grand total of $0.26 in revenue. I need about $.50 a day to break even (so $7 in 14 days).

With that not working, I am going to create a custom app to manage the domains and lens into content from Homethinking and elsewhere and use the affiliate links and agreements we have there to monetize the domains.

The basic idea is twofold: If I develop meaningful pages for the domains, I should get the Google bump in the exact keyword phrase real estate. And then I can use each domain to link to Homethinking, which helps in our SEO efforts there.

Will let you know once I have the initial templates up and how they do.