Microsoft is a company so ridiculously successful and possesses so much cash, it simply cannot stand companies (like Google) that add any meaningful competition to the game of web domination. I came across an article in InfoWorld that totally floored me. Apparently it is okay for Microsoft to make purchases in the online advertising area with the aQuanitive acquisition for $6 billion along with smaller diversifed acquisitions like European mobile ad company ScreenTonic (oh did I mention AdECN as well). But for Google to score a nice purchase price ($3 billion) on ad powerhouse DoubleClick just won’t do for the Redmond forefather. Let’s not forget the third player Yahoo playing Pacman on RightMedia for a cool $680 Mill.
Microsoft as a result is launching an entire campaign against Google stating too much consumer privacy information and clickstream will be at stake if the M&A goes through. Now don’t get me wrong…. a valid point and one that should be investigated accordingly, but coming from Microsoft is laugh out loud funny. I mean if you look up Monopoly in the dictionary it says Microsoft. The point I’m trying to make is the online Ad market is clearly heating up and just like the traditional television networks there will be continued consolidation and a few conglomerate players in the online ad space at the end of the day. I just think that Microsoft needs to realize the web is more volatile and uncertain of a frontier than the brilliant but simplistic bridge of operating system to hardware in the Windows world.
I debated on whether I was going to post on the Microsoft Facebook deal seeing how all the usual credibles had it covered such as Om, Valleywag and VentureBeat. Even so, I couldn’t resist the juicy WSJ story and had to add my two cents. History tends to repeat itself and if over-valuation didn’t teach us anything in the Web 1.0 days, it will likely teach us this trip around if a social network such as Facebook sells for $15 billion (the speculated high of the valuation). It was not long ago (less than a year) various sources thought $2 billion was a little rich and now we’re between $10 to $15 billion?
Lets pop a sober pill for a second and look at the facts for rational sake.
Facebook is monetizing their traffic through advertisers and premium services like any other venture but it’s pretty hard to clear the break-even mark on $15 billion with adsense, ajax and advertisers.
Speaking of breakeven, let’s touch on that. If the influx of traffic and multi-million-user base actually paid the bills the Web 2.0 community would be a Utopia. Just imagine if 50% of the Facebook users paid $10 bucks a month and those same subscribers paid the monthly bill for 6 years…voila! Breakeven on $14.4 billion. Of course that is assuming Facebook is free of expenses over those 6 years and also assumes that 50% are subscribing (20% is probably more realistic with the rest advertising revenue). Facebook’s real revenue figures float around $150 million a year right now. No, I didn’t forget a zero.
Remember the $580 Million News Corp purchase? Facebook is clearly the better social network but Rupert Murdoch has a much better shot at profitability. Actually at these valuations News Corp could flip the social network and make a cool $10 billion.
Even “Mad Money” Jim Cramer stated Microsoft is a nice buy as a stock if they don’t do anything stupid like buy Facebook in a high froth web environment. At the end of the day I truly love Facebook and the creator’s success story. I think Mark Zuckerberg is the poster child for my Startup Addict motto “Dream Big, Be Great”…but even greatness has a price tag and $15 billion just ain’t it.
For all you entrepreneurs out there that have been through the various freelance and outsourcing sites with little to no luck, ODesk will be a breath of fresh air. StartupAddict.com version 1.0 (which is live now) took 3 months longer than scheduled and was riddled with bugs and bad programming code. I hired programmers from Getacoder.com and they were marginal at best. I experienced all the classic problems and cardinal sins of an outsourced, custom programming job.
The programmers over-promised and under-delivered on both features and schedule
The tracking of the project was a nightmare. I never truly felt their commitment to the project
The hiring process was difficult and the rating/feedback systems in place was flawed
Enter Odesk–Launched at Web2.0 Summit in 2006 with two fundamental goals in the business model.
(1) Manage remote work as if it were local on an hour by hour basis (2) Hire freelancers from a pool of global talent that has been pre-screened and qualified by Odesk first.
The proof is certainly in the pudding, as you read this post, StartupAddict version 2.0 is being converted to the Drupal platform with all the customized features and functionality version 1.0 attempted. My team only has 2 weeks left before the entire SA site will be converted, updated, debugged and functioning. My favorite feature is the recording of screen shots of the programmers computer in 15 minute intervals. In addition, I have 24 access to the programmers via skype, IM, etc. A great deal of my time is spent managing real estate projects in New England and I can Yahoo IM my programmers half-way around the world from my crackberry. - Gotta love it, and kudos to Odesk!
This is the first posting for Startup Addict on the wordpress platform since our move from the blogger platform. The old blog site will be up for one more week before we take it down fully. Please update your RSS/Feeds accordingly.
Hope you enjoy the new look and feel. The new blog site will allow us to better report startup news and explain the nuiances of how get the most from StartupAddict.com
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