Startup Addict Musings

Crowdfusion is on the move with $3 Million in the coffers from the likes of Marc Andreessen, Velocity Interactive Group and Greycroft Partners. The startup is attempting to be the next standard for “web publishing” (Think what wordpress did for blogging). There is a tremendous amount of buzz on this startup particularly because Andreeseen is involved. If you haven’t noticed his past track record, he basically has the midas touch. After signing up at the holder teaser page Crowdfusion relinquished this information:

Crowd Fusion’s mission is to revolutionize online publishing with a
unique combination of technology and strategy. Our platform is
engineered to help position topic-focused publications as the leaders
in their verticals by providing publishing engines for the entire web
content lifecycle.

The Crowd Fusion’s infrastructure and data-mining functionality equip
publishers with the ability to automatically scale as demand
increases. We provide a set of easy-to-use and dynamic tools that
accommodate a publisher’s needs as they arise.

The jargon laden business model sounds like the executive summaries I use to spew in my VC wars. What I find interesting is buddypress (a social version of wordpress) is right around the corner and with a 4 million plus built in audience. Matthew Mullenweg the founding developer of wordpress stated the following on his blog.

It’s clear that the future is social. Connections are key. WordPress MU is a platform which has shown itself to be able to operate at Internet-scale and with BuddyPress we can make it friendlier. Someday, perhaps, the world will have a truly Free and Open Source alternative to the walled gardens and open-only-in-API platforms that currently dominate our social landscape

As this category of more “integrated social publishing” heats up BuddyPress, Crowdfusion and many others are going to wage war on simplicity, monetization and plug&play for the little publisher who could.

Tags: Startups, Web 2.0 and Beyond by Startup Addict

PaidContent confirms rumors about additional funding for micro-blogging site Twitter. Spark Capital is behind the $15 million third round of financing placing Twitter at roughly $80 Million in valuation. Spark Capital is a fresh VC firm in Boston founded by Todd Darges who I had the pleasure of meeting when he worked at Battery Ventures.

The funding is timely as Twitter is clearly experiencing a growth spurt in users with constant server outages of late. The interesting trend to watch will be the advertising standard that will be used in micro-blogging services like Twitter. I mean…if Twitter is worth $80 Million it should at least make money right?

Other coverage
TC
OM

Tags: Web 2.0 and Beyond by Startup Addict

CBS has acquired San Fransisco based CNET for $.1.8 billion. CNET has numerous web properties and enormous traffic from the likes of Gamespot,TV.com, news.com and mp3.com. According to Forbes “The deal values CNET at a 44.6% premium to Wednesday’s closing price of $7.95. CBS said that the deal would catapult it into the ranks of the 10 most popular Internet companies in the United States, with around 200 million users worldwide.”

Pre-CNET purchase numbers indicated CBS lagging in 5th at around 23 Million unique visitors as of the middle of March 2008 according to Adage.

1. TimeWarner 123.8 M
2. Disney 48.1 M
3. NewsCorp 86.6 M
4. NBC Universal 51.5 M
5. CBS 23.6 M

Whether the CNET purchase will truly bring CBS to the number one position time will tell. The CBS Internet acquisition rampage puts some plush holdings under its’ belt:

CBS Audience Network
CBS Local Station Group
CBS Mobile
CBS.com
CBSGames.com
CBSNews.com
CBSRadio.com
CBSSports.com
CSTV.com
The CW (joint venture)
Dotspotter - Click here for previous coverage ($10 Million purchase)
Last.fm - Click here for previous coverage ($280 Million purchase)
MaxPreps Network
Showtime.com
StarTrek.com
The Showbuzz
Wallstrip.com Click here for previous coverage ($5 Million purchase)
CNET.com

*information based on Adage

I continue to devote coverage to CBS because of the bold moves the once traditional media company continues to display on where media is consumed.

Other coverage on the CBS - CNET purchase:

PaidContent

BusinessWeek

24/7Wall St.

Huffingtonpost

Tags: Web 2.0 and Beyond by Startup Addict

Live Universe continues the acquisition tear by acquiring Pageflakes according to TechCrunch. Many of you may recognize the Live Universe brand from the Revver acquisition earlier in the year for $5 million. Apparently Live Universe is making quite a business model out of companies that have exhausted their funding and burn-rate. It appear Live Universe has acquired its’ second victim in the Web 2.0 space. Reportedly $4 million has been pumped into Pageflakes to date before the acquisition.

Pageflakes is a compelling web property but always played second fiddle to Netvibes (one of my favorites) in the ajax social widget space. Live Universe continues to build momentum with 100K uniques per month to the main site.

Tags: Web 2.0 and Beyond by Startup Addict

How to monetize your eyeballs and the social media craze for your next Internet startup is the clear and present danger of web 2.0. Humans are the most intelligent species on the planet (supposedly). Yet learning from our mistakes is simply not in our business DNA. We are doomed to repeat past mistakes similarly to the inevitable demise of protagonists in Greek tragedy.

Alley Insider has a great post about the current “free” situation that continues to be rampant on the web and is attributed to the usual suspects “VC”. Venture Capitalists have distorted the market by infusing massive amounts of money to massively scale startups and use Facebook, Myspace and LinkedIn as the poster children of success (thousands die you don’t hear about). My analysis of blame is less on the VC’s and passionate entrepreneurs and more on the consumer. The consumer aka “eyeballs” aptly named “eyeballs” because that is the only value they lend for their refusal to pay for Internet services. This has left anemic business models scrambling for revenue to find refuge in advertising. The only catch is the web advertising model is based on scale, the more eyeballs, the more advertising revenue. The day subscribers pay $9 bucks a month for web 2.0 services is the day advertisers may mean less.

Or will they?

Take the existing model of television and your cable bill. Let’s use Bravo programming for instance (I use to produce content for). They’re content is subsidized by advertisers and yet consumers still pay $80 - $180 a month to a service provider like Comcast to have the 900 channel universe, HD and DVR services. So what is lost in translation? Web 2.0 is Web 1.0 reincarnate? Is the consumer expectation of the web free? Netflix, Amazon, Ebay and Google all managed to make the consumer/business pay for services. This makes me wonder if we’re all crazy to continue down the social media path when it’s so clear that other Internet business models are more effective. What are we missing in the social media web 2.0 space.

Answers welcome….

Tags: Web 2.0 and Beyond by Startup Addict

Amazon had a unknown server outage today starting at around 5am and lasting until quarter-past 7am. The reports in main stream media and blogs have been comical based on how quickly people want to throw AWS (Amazon Web Services) under the bus. Granted Amazon does not have a SLA (service level agreement) but, is that really any different than owning your own infrastructure. Unless you are hosting applications on the edge (think Akamai) and other CDN’s, hosting is bound to fail at some point….even SLA’s that offer 99.999% uptime have cryptic legal language that exonorates them from legal damages. I had a webhosting company for 2 years before selling off the assets and referring business to parnters and downtime is inevitable. It’s how well you manage the downtime and your customer service requests that matter.

Startup Addict has AWS in our business plan…although not implemented for 1.0 and 2.0 release it will be incorporated by 2.5 release, it just makes good business sense. The impressive aspect of the downtime was how quickly it came back up and you better believe Amazon will be throwing resources at rectifying and preventing this problem in the future. As I reported on earlier, numerous startups are attempting to compete with AWS and are offering SLA’s but, this practice is limited because the SLA is inevitable for Amazon. The reason one is not in place now is very clear after this event –Amazon is still working out the kinks. A new startup will not find a better economy-of-scale anywhere than at Amazon web services for infrastructure (unless your VC funded and have a high burn-rate).

Tags: Uncategorized, Web 2.0 and Beyond by Startup Addict

Google is rumored to be buying Plaxo for $200 million. According to ValleyWag the move may be out of complete friendship between Brad Fitzpatrick at Google and Joseph Smarr, Plaxo’s chief platform architect. Whatever the reason this acquistion does fit in with Google’s OpenSocial plans dispite a heavy price. I might just be frugal but wouldn’t 50M have covered it?

This is interesting news seeing how previous reports stated Facebook was acquiring Plaxo (in the $100 million range…explains the 200M purchase) from VentureBeat and TechCrunch

For those of you out of the loop on Plaxo, the site is allows users to sync contacts through its web site, to create an aggregated universal address book. Contacts and profile information from Yahoo, Google, LinkedIn etc… in one manageable interface.

When a property is hot, it’s hot. Google’s on a social graph mission and Plaxo is a natural stepping stone for the company’s completion of the death star. I guess Facebook was still working out the kinks on Beacon.

Tags: Web 2.0 and Beyond by Startup Addict

The rumors flying around over this past year may very well come true. Microsoft makes a $44.6 billion dollar bid for Yahoo. According to NewYorkTimes that represents a 62% premium to the existing stock prices and places a $31.00 valuation on Yahoo. The stock is already up 59% in pre-market trading for today on the news. This comes two days after missed earnings and a 7% layoff of the work force (roughly 1000 people).

The likely-hood of the transaction consummating is extremely high in my opinion for 3 reasons:

1. Microsoft has a boat-load of cash and can entice Yahoo with more cash than stock in the deal.
2. This offers a truly high premium to existing shareholders and business mantra is still to “maximize shareholder wealth”.
3. Micro-hoo will become the premium destination in terms of traffic on the Internet and a powerhouse in search advertising.

This may cost Microsoft in the short-run but will put them in a dominating advertising revenue position on the Internet. Remember Microsoft purchased advertising companies aQuantive for$ 6 Billion and Yahoo purchased RightMedia for $680 million. Couple that with MSN and Yahoo portal along with all the ancillary services like Yahoo Mail, Answers, Hotmail etc.. surely a lethal combination to compete against the Google-DoubleClick merger.

This will be fun to dissect and compare as we move forward on this news.

Tags: Web 2.0 and Beyond by Startup Addict

You know an industry is over or at least nearing an end when everything is for sale (real estate sound familiar?). We’ve gone from a flurry of “startup acquisition” headlines to a flurry of startup “for sale” headlines.

Spark Networks is looking to unload its’ JDate online dating property to the tune of $185 Million. This time last year, it would have been acquired for that amount not “for sale” for that amount. Spark Networks much like Affinity labs (Monster.com just acquired) and like StartupAddict.com’s holding company HyperActive Media all have multiple web properties that focus on niche verticals. Apparently some properties are getting mature in terms of valuation and need unloading before the web 2.0 craze is completely over.

Tags: Web 2.0 and Beyond by Startup Addict

For the thousands of dedicated beta users of Startup Addict 1.0, I give a humbling thank you for using and testing the social platform. The wait for version 2.0 is almost over and with Drupal as the core open source code the future looks very bright for version 2.x and beyond. Drupal was a decision that makes sense right now and a whole lot of sense in the future.

“Drupal is a free software package that allows an individual or a community of users to easily publish, manage and organize a wide variety of content on a website. Tens of thousands of people and organizations have used Drupal to power scores of different web sites, including”:

* Community web portals
* Discussion sites
* Corporate web sites
* Intranet applications
* Personal web sites or blogs
* Aficionado sites
* E-commerce applications
* Resource directories
* Social Networking sites

Drupal includes features to enable content management systems, blogs, collaborative authoring environments, forums, newsletters, picture galleries, file uploads and download, and much more. Drupal is open source software licensed under the GPL and is maintained and developed by a community of thousands of users and developers. Drupal is free to download and use.”

The Startup Addict choice mixes well with recent comments from Matt Asay:

In other words, open source lets enterprises focus on delivering customer value, rather than on the “overhead” of software (licenses, contract negotiations, closed APIs, etc.). “Old school” enterprises get this. “New school” web properties do, too. In fact, just about everyone is getting on board…except 20th-century software companies.

Web 2.0 is officially over (not really, we’ve just moved on from the name). Open-source is being supported by multiple enterprises and very large organizations like Google. Rapid development, third-party plug-ins and easy road maps for software expansion will continue to drive choices for startups and make open source an obvious choice over proprietary.

Wordpress won the Content Management System (CMS) of 2007, but I think you’ll find Drupal the winner of 2008. Let’s hope Startup Addict 2.0, can get Drupal the exposure it deserves.

Tags: Web 2.0 and Beyond by Startup Addict