With hiring already tough in Silicon Valley, Facebook has just made its HR head's life much more difficult. Here's an excerpt from an article in today's Wall Street Journal about the company's options dilemma [subscription required].
There is a little-noticed downside to Microsoft Corp.'s investment in Facebook Inc.: The deal will likely raise the price of stock options issued by the social-networking company and could make it more difficult to hire talented employees.
Last week, Facebook appeared to score a major victory when Microsoft said it would invest $240 million in the Palo Alto, Calif., start-up, in exchange for a 1.6% stake. The investment values Facebook at $15 billion, up significantly from last year when a financing round valued the company at $525 million, according to a person familiar with the matter. Microsoft's investment cemented Facebook's reputation as one of the hottest Web start-ups in Silicon Valley.
With the rise in valuation comes a rise in the value of employee stock options. And in Silicon Valley, where stock options can be a major component of employee pay packages, more expensive stock options mean less potential upside for the option holders once start-ups go public or are sold.
Pandora Gets Some Ink in Inc.
Inc. magazine has a cover story on Pandora in its latest issue. Here's a link to the story, and here's an excerpt:
Westergren realized he had a huge weapon in his arsenal: his customers. Westergren sends a welcome e-mail to everyone that signs up. It's an automated e-mail from an alias address, but whenever anyone replies, he replies back. Last year, when he was touring the country looking for new music, Westergren decided to begin holding meetings with listeners. He'd choose a locale, post it on the Pandora blog, and invite anyone in the area to attend. Four people attended the first meetup in Austin, but as he traveled to a senior center in Phoenix, a taco joint in San Antonio, and a lecture hall at MIT, the groups grew, and soon dozens, even hundreds, of listeners were attending. All the effort spent courting nonpaying customers might seem excessive, but it lets Pandora spend next to nothing on marketing. In any case, the listeners responded. Some have become so fanatic that they've written songs about the site, sent boxes of fudge, and even made donations.
That work turning customers into fans, Westergren realized, meant he could rally them behind the royalty rate issue. So he sent an e-mail to all the Pandora listeners that identified their representative and senator and asked them to write in. Pandorans responded. Westergren estimates that about one million e-mails, phone calls, or faxes were made or sent by Pandora listeners. California Democratic Senator Dianne Feinstein received 25,000 e-mails; in the office of Jay Inslee, a Seattle-area representative, correspondence about Internet radio equaled that concerning the Iraq war. Inslee and Illinois Representative Don Manzullo drafted a bill that brought Internet radio rates in line with those of satellite stations; in the Senate, Sam Brownback and Ron Wyden sponsored a companion bill. "I said, 'Oh, my gosh, this is a bombshell ready to explode with the small radio stations,'" says Manzullo.
Evidence Machine
H5 receives prominent coverage in this week's Forbes. Here's a link to the article [membership required] and an excerpt:
Corporations are evidence machines, generating terabytes of electronic documents, e-mails and digitally recorded phone calls each year. Lawyers try to sift through all this dross in search of the smoking gun that can determine the outcome of a case. But, so say studies by library scientists and others, the lawyers aren't very good at sifting. Worn down by the anesthetizing process of flipping through thousands of digital images a day, they miss as much as they find. That's where a San Francisco company, H5, comes in. "Our work is to discover the ideal narrative to walk into court with," says Nicolas Economou, 42. "We give you the bullets designed to win."
Corporations are evidence machines, generating terabytes of electronic documents, e-mails and digitally recorded phone calls each year. Lawyers try to sift through all this dross in search of the smoking gun that can determine the outcome of a case. But, so say studies by library scientists and others, the lawyers aren't very good at sifting. Worn down by the anesthetizing process of flipping through thousands of digital images a day, they miss as much as they find. That's where a San Francisco company, H5, comes in. "Our work is to discover the ideal narrative to walk into court with," says Nicolas Economou, 42. "We give you the bullets designed to win."
Mexico or Bust
This article about Pandora in today's Oakland Tribune adds a little color to Tim Westergren's recent article in VentureBeat.
"At our worst moment, we were being evicted from our office, sued by four employees for back pay," Westergren said. "We owed almost $1.5 million in back salaries. We were living on credit cards: I was making plans to go to Mexico."
Instead, he went on the road — meeting potential investors, making constant pitches.
When it was over, the cash was in hand. He said he went back and counted how many times he spoke to investors in four lean years.
"I just kind of kept going. We had survived the bust when no one else had and we had built a pretty significant data base," he said.
Finally, Larry Marcus, managing director of Walden Venture Capital of San Francisco, got on board, followed by Labrador Ventures of Palo Alto.
Funding finally came on his 348th pitch, Westergren said.
"At our worst moment, we were being evicted from our office, sued by four employees for back pay," Westergren said. "We owed almost $1.5 million in back salaries. We were living on credit cards: I was making plans to go to Mexico."
Instead, he went on the road — meeting potential investors, making constant pitches.
When it was over, the cash was in hand. He said he went back and counted how many times he spoke to investors in four lean years.
"I just kind of kept going. We had survived the bust when no one else had and we had built a pretty significant data base," he said.
Finally, Larry Marcus, managing director of Walden Venture Capital of San Francisco, got on board, followed by Labrador Ventures of Palo Alto.
Funding finally came on his 348th pitch, Westergren said.
Motivated Investors
Check out this article in VentureBeat by Pandora founder Tim Westergren. In "What Motivates an Investor to Say 'Yes,'" Westergren explains that he was turned down 347 times before Walden's Larry Marcus agreed to invest the first institutional capital in Pandora. Here's an excerpt:
As I reflect back on this most unlikely turn, I have come to a belief about what motivates an investor to say ‘yes.’ Or perhaps more accurately, what causes an investor to shift from looking for ways to say ‘no’ to looking for ways to say ‘yes’. For, in my mind, this is the key to raising money. Venture investments by their very nature require a leap of faith (none more than ours) that only comes when an investor becomes aspirational – when he or she wants the investment to make sense (even though statistically deals never do make sense). I believe that shift happens when three things come together for the investor: They personally believe in the entrepreneur; they have a sense (and it’s often just a gut feeling) that the idea could be very big; and finally they have a personal interest or background in the industry that gives them a leg up the diligence curve. Put these together and an investor will start bending their investment criteria.
Larry M. was a musician (or at least a drummer) and an avid student of digital media. In the Music Genome Project he saw an idea that could be big, and as an expert in the sector he had the confidence to trust his own ability to spot potential, even if it was buried in mud. We also got along very well personally. So we had the three ingredients that tipped him into the aspirational mode. He wanted to make the investment and we started working together to make it happen – convincing his colleagues and other investors.
As I reflect back on this most unlikely turn, I have come to a belief about what motivates an investor to say ‘yes.’ Or perhaps more accurately, what causes an investor to shift from looking for ways to say ‘no’ to looking for ways to say ‘yes’. For, in my mind, this is the key to raising money. Venture investments by their very nature require a leap of faith (none more than ours) that only comes when an investor becomes aspirational – when he or she wants the investment to make sense (even though statistically deals never do make sense). I believe that shift happens when three things come together for the investor: They personally believe in the entrepreneur; they have a sense (and it’s often just a gut feeling) that the idea could be very big; and finally they have a personal interest or background in the industry that gives them a leg up the diligence curve. Put these together and an investor will start bending their investment criteria.
Larry M. was a musician (or at least a drummer) and an avid student of digital media. In the Music Genome Project he saw an idea that could be big, and as an expert in the sector he had the confidence to trust his own ability to spot potential, even if it was buried in mud. We also got along very well personally. So we had the three ingredients that tipped him into the aspirational mode. He wanted to make the investment and we started working together to make it happen – convincing his colleagues and other investors.
Yahoo to Acquire BlueLithium
Here is an excerpt from Yahoo's press release, which is available here.
Yahoo! Announces Agreement to Acquire BlueLithium
Important Next Step in Yahoo!'s Mission to Lead the Transformation of How Advertisers Connect To and Engage With Their Customers
SUNNYVALE, Calif. & SAN JOSE, Calif., Sep 04, 2007 (BUSINESS WIRE) --
Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, today announced that it has entered into a definitive agreement to acquire BlueLithium, one of the largest and fastest growing online global ad networks that offers an array of direct response products and capabilities for advertisers and publishers. Under the terms of the agreement, Yahoo! will acquire BlueLithium for approximately $300 million in cash.
"BlueLithium's products, technology and team will be an integral part of our drive to build the industry's leading advertising and publishing network," said Jerry Yang, chief executive officer, Yahoo! Inc. "This acquisition will extend our ability to deliver powerful data analytics, advanced targeting and innovative media buying strategies to our customers, who are increasingly looking for these insights. By leveraging BlueLithium's complementary expertise and tools, we will be able to better address the needs of our performance-based display advertisers and enhance the value of our publishers' inventory."
Yahoo! Announces Agreement to Acquire BlueLithium
Important Next Step in Yahoo!'s Mission to Lead the Transformation of How Advertisers Connect To and Engage With Their Customers
SUNNYVALE, Calif. & SAN JOSE, Calif., Sep 04, 2007 (BUSINESS WIRE) --
Yahoo! Inc. (Nasdaq:YHOO), a leading global Internet company, today announced that it has entered into a definitive agreement to acquire BlueLithium, one of the largest and fastest growing online global ad networks that offers an array of direct response products and capabilities for advertisers and publishers. Under the terms of the agreement, Yahoo! will acquire BlueLithium for approximately $300 million in cash.
"BlueLithium's products, technology and team will be an integral part of our drive to build the industry's leading advertising and publishing network," said Jerry Yang, chief executive officer, Yahoo! Inc. "This acquisition will extend our ability to deliver powerful data analytics, advanced targeting and innovative media buying strategies to our customers, who are increasingly looking for these insights. By leveraging BlueLithium's complementary expertise and tools, we will be able to better address the needs of our performance-based display advertisers and enhance the value of our publishers' inventory."
Survey Says ...
The iPhone numbers are out, and they are disappointing. In a study conducted with IDC in June, Market Insight predicted that this would be the case.
Here's an excerpt from the joint press release:
The survey, designed to gauge consumer interest in the iPhone, found that only 10% of respondents were interested in paying full price and signing a two-year contract with AT&T, the only carrier currently slated to offer the device. AT&T has stated that it will not offer a subsidy for the iPhone, which will retail for $499 and $599, depending whether the subscriber wants 4GB or 8 GB of flash memory. Nearly 18% of the respondents indicated a willingness to buy the iPhone if it were priced under $299.
In addition to the cost of the device itself, the survey identified the cost of switching carriers as a deterrent to iPhone adoption. Given the widespread use of two-year carrier agreements with large penalties for early contract termination, consumers cannot easily change carriers whenever they want, wireless number portability notwithstanding. About 17% of the respondents indicated that they would buy an iPhone if it were offered by their current mobile carrier.
Here's an excerpt from the joint press release:
The survey, designed to gauge consumer interest in the iPhone, found that only 10% of respondents were interested in paying full price and signing a two-year contract with AT&T, the only carrier currently slated to offer the device. AT&T has stated that it will not offer a subsidy for the iPhone, which will retail for $499 and $599, depending whether the subscriber wants 4GB or 8 GB of flash memory. Nearly 18% of the respondents indicated a willingness to buy the iPhone if it were priced under $299.
In addition to the cost of the device itself, the survey identified the cost of switching carriers as a deterrent to iPhone adoption. Given the widespread use of two-year carrier agreements with large penalties for early contract termination, consumers cannot easily change carriers whenever they want, wireless number portability notwithstanding. About 17% of the respondents indicated that they would buy an iPhone if it were offered by their current mobile carrier.
Mr. Fix It
In an article in today's Wall Street Journal, Pandora's Tim Westergren provides an inside look at ongoing discussions regarding music royalty rates for Internet broadcasters.
Both sides have more incentive to talk after a closed-door meeting with members of Congress last week. The message was, "Fix it," says Tim Westergren, founder of Pandora Media Inc., which allows users to create customized online radio stations. "If you don't, there's a bill waiting in the wings," he said referring to legislation on royalty rates introduced in both houses.
Both sides have more incentive to talk after a closed-door meeting with members of Congress last week. The message was, "Fix it," says Tim Westergren, founder of Pandora Media Inc., which allows users to create customized online radio stations. "If you don't, there's a bill waiting in the wings," he said referring to legislation on royalty rates introduced in both houses.
Clock Watchers
This development (which is reported in today's Wall Street Journal) bodes well for Pandora, whose users spend many hours on the site each month.
Nielsen/NetRatings, a leading online-measurement service, will scrap rankings based on the industry yardstick of page views and begin tracking how long visitors spend on Web sites.
The move, expected to be announced Tuesday, comes as online video and new technologies increasingly make page views less meaningful.
Although Nielsen already measures average time spent and average number of sessions per visitor for each site, it will start reporting total time spent and sessions for all visitors to give advertisers, investors and analysts a broader picture of what sites are most popular.
Currently, sites and advertisers often use page views, a figure that reflects the number of Web pages a visitor pulls from a site.
Nielsen/NetRatings, a leading online-measurement service, will scrap rankings based on the industry yardstick of page views and begin tracking how long visitors spend on Web sites.
The move, expected to be announced Tuesday, comes as online video and new technologies increasingly make page views less meaningful.
Although Nielsen already measures average time spent and average number of sessions per visitor for each site, it will start reporting total time spent and sessions for all visitors to give advertisers, investors and analysts a broader picture of what sites are most popular.
Currently, sites and advertisers often use page views, a figure that reflects the number of Web pages a visitor pulls from a site.
Glam Shows That Beauty Is More Than Skin Deep
Now pulling in more than 17 million unique visitors a month, Glam has surpassed iVillage on ComScore Media Metrix's Top 10 list of Women's Community Web Properties. It is also the fastest-growing 100 Web property year over year ending May, 2007. Here's the press release. Also, check out Matt Marshall's story on Glam in today's VentureBeat. Here's an excerpt:
The trends helping Glam are strengthening, [Glam CEO Samir Arora] says — as new blogs get created and advertisers search for new ways to reach readers beyond traditional media. “The deeper we go into this,” said Arora in an interview with VentureBeat last week, “the more it seems the fragmentation has increased. It is deeper and wider than we thought.”
The trends helping Glam are strengthening, [Glam CEO Samir Arora] says — as new blogs get created and advertisers search for new ways to reach readers beyond traditional media. “The deeper we go into this,” said Arora in an interview with VentureBeat last week, “the more it seems the fragmentation has increased. It is deeper and wider than we thought.”
Glam Teams Up with Google
The Wall Street Journal has a story in today's issue about Glam and Google. Here's an excerpt:
Glam Media Inc. plans to announce today that Google Inc. will begin brokering advertisements on Glam's fashion and lifestyle sites and some of the more than 300 blogs and sites affiliated with the company.
The agreement is part of Google's efforts to broker advertisements for high-end sites such as Glam, as the Internet giant tries to lure big-brand advertisers to purchase ads through its online system and expand aggressively in selling graphical and video ads.
Under the multi-year deal, Google will sell some of the video ads and graphical display ads such as banner ads that appear on Glam's sites, including its flagship Glam.com. Google will also provide search technology and sell small text ads that will appear alongside Web search results and selected content on Glam's sites and partner sites that opt for it.
Glam Media Inc. plans to announce today that Google Inc. will begin brokering advertisements on Glam's fashion and lifestyle sites and some of the more than 300 blogs and sites affiliated with the company.
The agreement is part of Google's efforts to broker advertisements for high-end sites such as Glam, as the Internet giant tries to lure big-brand advertisers to purchase ads through its online system and expand aggressively in selling graphical and video ads.
Under the multi-year deal, Google will sell some of the video ads and graphical display ads such as banner ads that appear on Glam's sites, including its flagship Glam.com. Google will also provide search technology and sell small text ads that will appear alongside Web search results and selected content on Glam's sites and partner sites that opt for it.
Everywhere at Once
Last night, Pandora launched the Pandora Everywhere platform, which encompasses Sprint mobile phones, Sonos home music adapters, and Xing handheld devices. Here is the Techcrunch story. The announcement was also covered by Wired, CNET, PC Magazine, Engadget, Gizmodo, Valleywag, VentureBeat, San Francisco Chronicle, Associated Press, CNN Money, Billboard Online, GigaOm, Scobleizer, USA Today, CBS News ... The list goes on.
Made to Measure
In its current issue, BusinessWeek explores the resasoning behind recent M&A activity in the online advertising sector and calls out BlueLithium as a company to watch.
Now marketers are spoiled. And as big-brand advertisers move online in greater force, they're demanding the ability to apply the same kind of targeting and measurability they get from paid search to all the other ads they run. "Everybody's got the mindset that everything should be measurable," says Erik Qualman, head of North America marketing for travel site Travelzoo Inc. (TZOO) One reason: While targeted ads online may cost about twice as much as untargeted ads, they can produce twice the return on investment. As a result, says David R. Verklin, chief executive of Carat Americas, the agency that buys online ads for the likes of Pfizer Inc. (PFE), "data and data analytics are the next big battleground in marketing."
And on the Internet. Ad networks such as Specific Media, Blue Lithium, and 24/7 Real Media (TFSM) appear to be on the short list for acquisition by major media and tech companies.
Now marketers are spoiled. And as big-brand advertisers move online in greater force, they're demanding the ability to apply the same kind of targeting and measurability they get from paid search to all the other ads they run. "Everybody's got the mindset that everything should be measurable," says Erik Qualman, head of North America marketing for travel site Travelzoo Inc. (TZOO) One reason: While targeted ads online may cost about twice as much as untargeted ads, they can produce twice the return on investment. As a result, says David R. Verklin, chief executive of Carat Americas, the agency that buys online ads for the likes of Pfizer Inc. (PFE), "data and data analytics are the next big battleground in marketing."
And on the Internet. Ad networks such as Specific Media, Blue Lithium, and 24/7 Real Media (TFSM) appear to be on the short list for acquisition by major media and tech companies.
Make Music, Not War
The Defense Department has decided to block soldiers' access to a number of popular Web sites, including Pandora.
"This recreational traffic impacts our official DoD network and bandwidth ability, while posing a significant operational security challenge," [a Defense Department] memo said.
The armed services have long barred members of the military from sharing information that could jeopardize their missions or safety, whether electronically or by other means.
The new policy is different because it creates a blanket ban on several sites used by military personnel to exchange messages, pictures, video and audio with family and friends.
Members of the military can still access the sites on their own computers and networks, but Defense Department computers and networks are the only ones available to many soldiers and sailors in Iraq and Afghanistan.
"This recreational traffic impacts our official DoD network and bandwidth ability, while posing a significant operational security challenge," [a Defense Department] memo said.
The armed services have long barred members of the military from sharing information that could jeopardize their missions or safety, whether electronically or by other means.
The new policy is different because it creates a blanket ban on several sites used by military personnel to exchange messages, pictures, video and audio with family and friends.
Members of the military can still access the sites on their own computers and networks, but Defense Department computers and networks are the only ones available to many soldiers and sailors in Iraq and Afghanistan.
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