Spokeo or Spooky?

Call me old school or a privacy nut!! I did panic when my address and phone number popped up on Spokeo.com. Who wouldn’t? Imagine having a teenage daughter at home as this father complained on the Spokeo facebook fan page:

I am pissed too. I am curious, how did they get my address? I don’t have my address listed in any of the social networking sites. And even if I have it, it is marked “private” and not to be shared with anyone. One of my buddies has his old address listed, which makes me suspicious if they are getting that information from a credit agency.

And the most interesting part, when you read about the company:

“The concept of Spokeo started in 2005. As a Stanford student, Harrison liked to jump around different social networks.  At that time, most of his friends had profiles on MySpace, some blogged on Xanga, and his dormmates were constantly sharing YouTube videos. Harrison was having trouble keeping up, so he rounded his college friends together to build a so-called social network aggregator. Working out of Harrison’s parents’ basement, Harrison and his friends publicly launched this pioneering concept on Techcrunch in late 2006.”

And I was foolish enough to drop a line at techcrunch that they should report about this. Silly me!!

But please, someone please explain to me the business value of this. Why would anyone buy information about a particular person? I can’t imagine anyone other than pedophiles and stalkers.

If you are interested about the founder, here is all the information I have using spokeo.com (ha!! irony?):

Harrison Tang
15119 San Pablo Ave
San Jose, California 95127
(408) 254-9572

He is an asian, an engineer with a college degree. It seems like he still lives with his parents.

P.S. If you are scared about the information listed on this site, click on privacy at the bottom and remove your listing. I feel that this site is a lawsuit waiting to happen.

Filed under: startup, web 2.0, privacy, spooky

Delivering Happiness – by Tony Hsieh

Filed under: entrepreneurship, leadership, startup, customer service, happiness, zappos

Where am I going wrong?

Someone just called me and asked, “Do you know how much VCs have invested in Digg?” I said, “Probably a few million”. “Few million? Look it up”. I said, “How much?”. “$40MM!!” “Holy moly…”

Is it based on revenues? Future revenues? Capital requirement? What?
I think I am pretty bad at Math. I look at the VC investments in web 2.0 startups and try to do the math. Something just doesn’t add up:

Digg – $40M
Yelp – $56M
Slide – $78M
LinkedIn – $103M
Ning – $119M
Twitter – $160M
Zynga – $219M
Facebook – $716M (Big Daddy of all start-ups)

What could justify a $40M investment in Digg (with hardly any revenue stream) versus a $56M investment in Yelp (with good revenue streams)? Are the VCs so desperate to keep the companies alive that they are unwilling to forego sunk costs? Are they funding losses and lengthening the lives of these companies which would have died long before.

Let’s compare these investments to the funds raised by star tech companies in the 1990s (before they went IPO):

Yahoo – $3M
Excite – $3.25M
Ebay – $5M
Google – $25.1M
Juniper – $60.2M (Hardware company and requires capital investment)

Where am I going wrong? Even inflation cannot account for such a disparity. OR is it just the damn recession that has lengthened the IPO cycle?

Food for thought?

Filed under: entrepreneurship, startup, web 2.0, facebook, twitter, valuation, venture capital, web 2.0

2010 Predictions: An Early Report Card

I wrote a post in late 2009 where I highlighted 10 predictions for the year 2010. I thought now would be a good time to check, how are we doing with each of these predictions. Though it’s too early, I think I didn’t give any data to back up my predictions. In this post, I will look at the first 2 months of 2010 and dig up facts which backs my predictions.

1. Mobile Smartphones become ubiquitous

According to a recent study, IDC pegs fourth-quarter smartphone sales at 54.5 million units, up 39% from the same period a year earlier. For the year, smartphones hit 174.2 million units, up 15.1% from 2008, and accounted for 15.4% of all mobile phones shipped in 2009.
Drilling down on Smartphone numbers

2.  Mobile Data Traffic triples or quadruples

According to a latest study by Cisco, mobile data traffic to increase 39 times from 2009 to 2014. If you do the math from the graph, traffic doubles in 2010 and triples in 2011. You can find the study here.

3. More and more content moves online

This is pretty obvious from the tremendous growth of mobile and internet traffic, especially video. According to Mediacom, 2% of TV viewing in UK is online and if you add user generated content, you can triple that figure.

Another interesting development is that Dish Network is moving online with “TV Anywhere”. According to Dish Network, the consumer preference is shifting to online viewing.

Economist recently came out with an article suggesting that newspapers will persuade online readers to pay in 2010. It is a reality that more and more newspapers are moving towards an online subscription model.

4. More experimentation around Social Media Monetization

This is a no-brainer and has to happen with all the pressures around real revenue models in 2010. Twitter recently announced that it is launching a new ad platform. And read this article from Mashable around Facebook Monetization.

My hunch: we will see more experiments this year.

5. Consumer Privacy becomes a key concern

We have all heard the privacy buzz around Google Buzz and the media frenzy around PleaseRobMe. Most importantly, even the Congress is thinking about passing a bill on Online Privacy: Protecting Consumer Privacy Online.

6. More Startups Challenge Facebook

I don’t know about this one. The only product I can think of, which has come close to challenging Facebook, is Google Buzz. Too early to say, but I bet more competition in the coming months, mostly from Asia.

7. Real time Search starts revenue generation

“Real-time search has been the “Holy Grail” of search providers like Microsoft and Google, and the resulting growth of Twitter traffic demonstrates that there is a lucrative opportunity there for those who learn to effectively harness social networking.” – PCWorld

And most importantly, the Twitter pact with Google, Bing and most recently Yahoo all points towards the importance of real-time search.

8. Commoditization of Hardware Equipment & Primary Differentiation through Applications

This is not a new phenomenon and has been happening for the last 2 decades. Recently, the mobile hardware industry is a victim: Apple Gross Margins shrink from 42% to 36% in the last 2 years. Also the PC and Server Industry is getting affected: In FY Q4 2009, Dell reported shrinking Gross Margins.

And read this very interesting article on Software Innovation: The new frontier of competitive differentiation.

9. Web Startups built around businesses and real revenue models

You don’t have to listen to me, listen to Dave Mcclure. He recently wrote about this transition in his blog:
“We have largely WASTED an entire web decade of time, energy & venture capital on extremely inefficient revenue models.  There have been a few interesting examples of startups acquired in the 00′s for large amounts due to amazing growth (eGroups, MySpace, Skype, YouTube) or advertising potential (aQuantive, DoubleClick, AdMob, RightMedia).  However, mostly the decade has been an uninterrupted string of uninspiring business models and small-time acquisitions of Web 2.0 startups filled with rainbows & unicorns, rather than those based on simple, transactional revenue models.”

10. Industry consolidation among iPhone/Android application builders

I don’t have much data point on this prediction other than the FreeVerse Acquisition by Ngmoco which has stirred fears among iPhone fans. I see this as the beginning of the iPhone developer consolidation in 2010: keep your eyes open.

Though I wrote the 2010 prediction post at that time qualitatively, I think I have provided enough data points on this post to prove that some of my predictions might come true this year.

Filed under: startup, technology, web 2.0, 2010 prediction

Next big thing for Yelp

Yelp has millions of consumers and hundreds of local businesses coming to its site everyday. It has become the de-facto location for connecting businesses with consumers and vice versa. It has done such an incredible job building credibility with the consumer base. But, it has still so much opportunity to exploit.

It has a huge database of local businesses, which wants to connect with customers online. That is the next big big opportunity. Majority of small business surveys show that small businesses are struggling to attract customers using the online medium. Majority has websites but have hardly any traffic. Most of them are struggling with their online strategy. Most importantly, many are not Internet savvy and have predominantly outsourced their techie stuff.

Then, what can Yelp do?

Firstly, Provide an opportunity for local businesses to build websites easily
When I say building a website, I don’t mean it from scratch. You can argue that a Facebook page can be a small business website. Yelp just needs to provide an easily modifiable template such that a non tech-savvy business owner can easily build a site in minutes. It can reside on the current local business page on Yelp as a separate tab. The advantage of building a website on Yelp for a small business owner is that it doesn’t have to invest on Google search or other customer acquisition activities – there are already millions coming to Yelp everyday.

Secondly, Build applications connecting consumers with businesses
Just imagine if I can schedule an appointment with my doctor or book a table at my favorite restaurant on Yelp. You then make Yelp the de-facto location for consumers to interact with small business services online. It’s a win-win for both consumers and businesses. So many times I had to find the telephone number on Yelp and then call that business – it would be so much easier if I can just send them an email or chat with a rep online.

Thirdly, Build your credibility with local businesses
This cannot be done easily. This might take years to build a brand around small businesses. Small businesses need to understand that Yelp cares. Look at Zappos, their business model was primarily around customer service. I cannot think of one single company who can boast a brand around small business or can say they excel in customer service with small businesses. It will require a lot of investment, but it is worth every penny.

And lastly, Cash on it
Yelp can make millions (or even billions) out of this. If Yelp doesn’t do it, Facebook will. If Facebook doesn’t, some other company will. (Some who are already on that track right now is Google, CitySearch, Bing just to name a few). It is as simple as charging a monthly subscription fee for the services you provide. Consumers will never pay, but businesses will. Then why focus so much on making consumers happy but not any on businesses? I am not saying that you lose credibility of your existing review system. You can still keep that as it is, but just invest a little more to make local businesses happy.

And once you make the millions, don’t forget to send me the check.

Filed under: startup, technology, small business, website, yelp

Social Media – Choice and Competition?

One of my friends on facebook posted this in May: “Just look at the possible “sharing” options for a new article!”

Now look at the same option in October:

Wow!! This is a real social media explosion in 6 months. The paradox of choice? Why would you need 50 sharing platforms? Is this adding clutter or removing clutter?

There is clutter from a choice perspective. But choice is good. “Choice and Competition” – the famous phrase from the healthcare debate. Choice is always good for the consumer but bad news for VCs and entrepreneurs. This space is really getting crowded – too many players, too less innovation.

It is time to think about a new business opportunity? The long tail – Well! I will keep harping on it till I see entrepreneurs try to create businesses for businesses. Consumers won’t pay; businesses will.

Long Live the Fortune 5 million!!

Filed under: entrepreneurship, startup, technology, web 2.0, sharing, social media, web 2.0

Define your own “Success” – Must See

Filed under: entrepreneurship, Personal, startup, success, TED

TechCrunch50 – A summary #tc50

While I was watching the demos at TechCrunch50, these questions kept popping:

Where is the business model? What is the pressing need? What’s the purpose – are you raising money? Looking for customers? Advisors?

Maybe I am not an expert or maybe I am old school. I still fail to understand how all these companies will make money. I don’t think I should make a blanket statement but honestly it applies to most of the companies on stage.

And then I see a twitter valuation of a $1B – no, you are not dreaming. You heard it right. A billion dollars valuation before you are cash flow positive or make a single dime.

Seriously? I am just curious what VCs look for, before they invest. How can you do a positive valuation for companies without a business model? Is this similar to the bubble of the dot-com eras? OR am I hallucinating?

Don’t get me wrong. Some of the companies had some real cool products. There were some, which I think would really go far like RedBeacon, DataXu, AnyClip, CitySourced or Udorse. But none created the excitement, which I expected to get at least once. Like the Aha moment when I first used Hulu or Youtube or Yahoo.

I am sure the company is out there – I am wondering which one?

Filed under: entrepreneurship, startup, technology, web 2.0, valuation

TechCrunch50 Day01 #tc50

Are you watching TechCrunch50? There is a live stream on their homepage at http://www.techcrunch50.com.If you are not, then you are really missing out on the future of web. Google launched Fast Flip and Bing launched visual search all on the same day.

There are also some interesting start-ups launching their products on stage. I was pretty stoked to see the IIT KGP self proclaimed geek giving a demo of the imo controller – one of the most gutsiest presentations I have ever seen. Very excited by the fact that real innovation is happening in India and especially, talented engineers starting companies of their own at such an early age.

There were some other companies that need mention. I really liked udorse and healthygame. Both companies are founded on great ideas and are doing something really different. Udorse being backed by Peter Theil and Founders Fund have already scored some points with the critics.

Though I was initially confused with Rackup; I was impressed by their business model which provides a win-win for consumers. DataXu had some very interesting “rocket science” technology that can be of very high value to enterprise CEOs.

I am really looking forward to Day 02.

Here is the entire list of companies:

Penn & Teller Story Something Clasemovil ToonsTunes.com Sealtale iTwin iMo FluidHTML Toybots Woozees Spawn Labs Clicker 5to1.com DataXu SeatGeek HealthyWage RackUp Udorse Redbeacon Yext localbacon RefMob TheSwop.com MOTA Motors DemoPit of the Day: ODesk DemoPit of the Day: Yourversion

Filed under: entrepreneurship, startup, technology, techcrunch50, web

How the technology curve has changed!

I wrote in a previous post, how comparing the adoption time line of radio and TV to facebook is like comparing apples to oranges. Today I will look at it more from a theoretical angle.

Let’s look at the s-curve of a normal product like an iPod or a Motorola Razr. Both products were initially released in the market at higher prices. Mostly early adopters bought the products. With time, social value of the products increased as we saw more and more friends raving about it. As soon as the prices were cut (mostly due to cost curve going down) – the products crossed the chasm as there were widespread adoption of the products. It has happened over time and time again. Remember, the width of the chasm i.e. adoption time line is a function of the cost curve. i.e. the chasm for TV is 34 years whereas the chasm for IPod is 3 years

S-Curve for Normal Products

The dynamics have changed with the advent of facebook, twitter, friendfeed and various other web 2.0 products. There is no concept of price anymore because you provide the products for free. Price is now an imaginary axis and the technology adoption curve is primarily determined by the social value. More friends -> more adoption -> which brings more users.

S-Curve for Web 2.0 Products

Width of the chasm is primarily determined by social value and usability. The product crosses the chasm without any economic value associated with it; it doesn’t stand the test of time. So, the product enters into a late stage of the technology cycle (Digg?) without actually making any money. Now the key question is – how long the product will survive post chasm? Will you invest in a product which has already crossed the chasm?

The best bet is to exit before it crosses the chasm completely. OR the easy way out – make money while it crosses the chasm

Filed under: startup, technology, web 2.0