Facebook chalks up another $500,000,000 ::: UPDATE – NOT TRUE!

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 Update:  This story was FALSE.   Facebook had an MS deal but not additional capital

Facebook founders were still sipping champagne from their 240 million deal with Microsoft as they scooped up 500 million from two hedge funds yesterday.   I’m not clear yet if the valuation was the same but presumably this was all a related deal, and Facebook is now solidly valued at 15 billion.    WoW. 

That’s a lot of money, especially when you recognize that the value is all in people like …. me and you.   Facebook sold our eyeballs to advertisers for something like  $175  per user eyeball.   15 billion / 42 million users   Jeez – I think they are cheaper on Ebay!

[No, this really is not a legit metric – investors are placing huge value on Facebook’s team and future potential more than simply the users, though users are the key to any social network kingdom as the information serfs, and deserve more respect from the social network kings and queens and capitalists]

Marcus at PlentyofFish always has great insight about the relationship of ad revenues to success and to expenses.     Marcus notes that even with the  huge pageviews at Facebook he calculates the advertising to yield to be only  $0.10 per thousand views compared to the $15.00 per thousand Google expects to pull in at their site.     Marcus’ important point is that even as online advertising is exploding most of those revenues are going to the very top sites, most revenue comes from very low CPM advertising, and the number of sites dipping into the advertising pool goes up every …. second.    He doesn’t sound as optimistic as he used to, and that should be alarming for small time web publishing guys like … me.

Hmm – it would be interesting to calculate a theoretical upper limit to the total social online advertising market using:

Total number of online people x  hours spent online x pageviews per hour x  .10 CPM. 

Just off top of my head I get this for USA:

200 million x 2 hours online day x 30 views per hour = 12 billion pageviews per day
 x .10 CPM =   $1.2 million per day

Huh?   This is incredibly low, but I must be missing something here.    The .1 CPM is a fraction of what is normally negotiated so I’ll recheck that..

Microsoft loves Facebook

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Microsoft bought a 1.6% stake in Facebook today for $240,000,000.   Reported at NYT here.  This give a market value to Facebook of right about 15,000,000,000.   

WoW

I do think Microsoft is smart (and Facebook stupid) to make the cash outlay much smaller than most had thought, giving them an alliance and a powerful foothold without spending the “billions” that apparently would have been required to buy a big stake in the internet’s latest wonder site.

With *revenues* of about 150 million Facebook is now valued at …. wait for this ….. one hundred times revenues.    This is simply a spectacular and speculative valuation, even by internet standards where  even a Google is only valued at about fifty times earnings.   Note that if Google was valued at 100x their expected revenues over the next year their capitalization would be something in the neighborhood of 1.5 trillion dollars.    

Many will suggest that the value in keeping Facebook away from Google was so great that MS has won big, but I’d predict not much will come of this alliance.     Like many online regulars I’m already tiring of Facebook and looking for a completely open, portable social application.   To justify today’s value Facebook will need to grow pretty much like nobody’s ever grown before.    Sure, it’s possible, but I think this will go down with Google’s YouTube aquisition as good money after bad, because monetizing Facebook traffic will be far more problematic than Microsoft seems to think.

All that said, congratulations to the Facebook team who must be popping a few corks about now…. no champagne is good enough for this news.

Science on a Sphere

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Wow, NOAA has a great educational tool – a large spherical display representing earth, using computers and projectors to animate the display.  It is called Science on a Sphere.

Here’s a list of locations that have this.

It looks like a schools could build one of these for themselves, though I’m not clear any have done it and not clear on copyright issues – they say this is not an open source project.   It appears the cost would be in the neighborhood of 5-10,000 for the hardware consisting of 4 projectors and 5? computers, but I think the main challenge for schools would be the room.   Many schools don’t have a “spare room” they could easily dedicate to this project and it appears it’s complicated enough that it would be difficult to put up and take down for each lesson.

But what a great concept!   A few years ago we visited the Delorme world HQ back east and they had a  scale model of earth that was 3 stories high and rotated.   But the NOAA Science on a Sphere is better because you could project data and topography and vary the lessons.

Of course as a cheap alternative teachers should (MUST!) get “Google Earth” to all the students they have.    Google earth is arguably the best cheap visualization tool ever to hit geography and if you have not seen it get it now – it’s free and fantastic.   

Google v Microsoft over Facebook

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Henry Blodget over at Silicon Alley Insider has a thoughtful post today predicting that Google will beat out Microsoft in the Facebook sweepstakes, and that the real winner here is Facebook founder Zuckerberg who will walk away from any deal with a jaw dropping, market driven valuation of Facebook.     Blodget notes that even if Microsoft spends enough to win the Facebook bidding war Google wins again because Facebook will simply milk Microsoft’s cash cow leaving them with little in the way of a superior online MS environment.

I think this last point is particularly relevant, and poses one of the key threats to Microsoft’s long term viability.    Unlike Google and even Yahoo, new companies don’t appear to see a Microsoft aquisition as much more than a big payday.   It’s not clear to me that Google does any more for the companies it aquires than Microsoft does, but I do think the perception is that Google will inject innovation and enthusiasm where Microsoft will just absorb you into their failing online collective.    I don’t think these assumptions are, on balance, valid, but I think they are part of the equation when new companies and their generally young, inexperienced founders are courted by the big players.

TechMeme Secrets

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TechMeme has rapidly become one of the key techno watering holes in the blogosphere thanks to how it helps sift through tech blogs and posts to winnow out those getting maximum buzz.     Todd recently suggested he thinks a lot of SEO firms  are gaming techmeme, especially by post plants from A list bloggers – the implication is that they are paid for this.

He’s largely wrong about this and has given *way* too much credence to the always inflated claims of SEO companies (his inspiration for the post was a small SEO firm in Honolulu).

Of course Tech blogging, and most of the web for that matter, and much of the offline world, have been “damaged” with respect to objective quality content by various tactics that come about as the inevitable result of content monetizing.

But take a look at the prominent TechMeme posts tonight – it’s clear that these are generally spawned from sincere interests and not “planted” as part of advanced SEO tactics. Do any plants happen? A few, but in SEO you have to balance the chance you’ll “sneak in” a good plant against the greater chance that you’ll permanently tarnish the blogger’s reputation cause a scandal (Wal Mart’s Edelman fiasco), or simply spend a lot of time and money for a marginal result. The best SEO strategies rely more than ever on getting legitimate content and placements.

Now, Robert Scoble has a great video post today that is a lot more interesting because he’s trying to reverse engineer TechMeme, something a lot of people in tech are interested in for several reasons.   Robert also manages to feed the new little Scoble during his impromptu 2am advanced tech blogging lecture, which is really a fun statement about how far social networking and life/work integration has come in the past few years.

I hope Gabe responds to Robert to clear up some confusion though he may want to keep the TechMeme algorithm top secret, following in Google’s footsteps.

Some key points by Robert as he speculated about the TechMeme algorithm:
Tech blog database of perhaps 10,000 blogs.
Blog rankings (see TechMeme leaderboard) used to reflect their authority and thus “weight” the power of outbound links from  those blogs.
Reciprocal linking is not as heavily weighted as one directional outbound linking.

Robert suggests an experiment to test some of his ideas and I hope he does it, though Gabe may simply shut down that post or (if he wants to mess with his TechMeme folks) manually override the algorithm so it does funny things that lead to wrong conclusions.  Scoble’s Breeeport experiment was fun a few years ago, and this stuff can be a great way to bring more transparency to the mysteries of content ranking.

Bad News for Good Newspapers

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Nick Carr summarizes a study in the UK that suggests more perils for news organizations as they move online.    The online editions appear to be “cannibalizing” the offline edition readership.   A university study looked at how online news readers are less likely to buy a newspaper from the same company they read online.

If this proves true across the newspaper landscape it presents newspapers with the twin challenges of needing to beef up the online portal to keep up market share even as their total advertising revenues are tending to go down.   Offline readership generally gives a better ad return per reader, so even as online advertising increases that extra revenue is not likely to keep pace with the offline losses. 

Pearls before Twine

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update:  I think I was in a bad mood on this – not fair to be so hard on a new company without even trying it.   Sorry Twine, I hope you … ROCK! 

Twine is the new social network applications just “launched” at the Web 2.0 summit in Silicon Valley.   Like Paul Kedrowsky   I’m skeptical before I’ve even had a chance to test Twine.   (I will test it and review as soon as I get an invite…).

No, this is not fair but I’m getting sick of applications priming the buzz machine with hyperbole before they have even put out the application to enough people that you can figure out if it’s “Web 3.0” as Twine claims it is, or just another overhyped social application that needs widespread adoption to be useful.   

My favorite 2.0 observer, Tim O’Reilly, has a detailed review of the Twine demo after which he wonders if they’ve succeeded.    Note to Twine – if you can’t convince people in a demo that you are great you probably have some work to do, and you might even suck.

Now I really feel like an Assclown 2.0 to be so critical of what is clearly a thoughtful and potentially great application from Nova Spivak, a very clever Web 2.0 fellow. 

But I think I’m suffering from Web 2.0 stress syndrome where the hype, lies, and video clips are overwhelming me with irrelevant stuff while I try desparately to winnow out the good stuff from the bad.   We need an automated routine (aka ‘search agent’) that  does the preliminary winnowing of content and organization of other stuff and my stuff for us.  Now THAT would be web 3.0 and THAT would be worth my time as well as the time of all the moms, pops, and kids out there who are the backbone of the new web.   Silicon Valley often spills out silly companies and ideas as if the other 99.9% of the global population is clueless or irrelevant.   Theoretically Web 2.0 was to change that and make people, not computers, the center of the internet universe.   But sometimes I wonder if the Silicon folks have even paid any attention to that change.  

Yahoo Mash – Yahoo!, don’t forget about Yahoo! Mash

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Yahoo’s social networking tool “Yahoo Mash” offered up a good first entry into the social networking space by a major player.    But I’m noticing how it seems to be languishing after the initial positive buzz, and I think this is because Yahoo’s taking too long to go out with full bore, full online network promotion.  

Yahoo Mash offers some features I really like compared to Myspace and Facebook.  It’s an open architecture meaning that you can mashup mash with modules that show pictures or RSS feeds like this blog.   I think my favorite thing about Yahoo Mash is the way the comments stream from profile to profile, so you don’t have to keep bouncing back to a single spot to remember what you said to somebody.    I’m not enough of a social networking person to know if this is a real innovation or not because Myspace and Facebook also have some features that cross pollinate across profiles, but somehow Mash feels more like a “social networking” experience to me, even though I with it had the kinds of business networking features you find at LinkedIn.  

If Yahoo Mash is just working out kinks and getting ready to scale up to full release soon that is fine, but if the idea is to scale the project *slowly* over a year or so I think they are making a big mistake.  Why?   Because social networking is an explosive phenomenon both in the sense that it has quickly become a key online activity across all users but also because it seems to me that social networks don’t gain momentum gradually, rather they become “in fashion” as did Myspace and Facebook and grow quickly and explosively.   Facebook is still in this growth mode while I think Myspace growth is tapering off (I’m too lazy to go look at graphs to see if this is true).  

Disclaimer – I’ve got some Yahoo stock.  Not enough to prejudice my views, but perhaps enough to make me unreasonably optimistic. 

China redirects searches to Baidu? OR NOT!

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TechCrunch is reporting today that China is redirecting internet searches from Google, Yahoo, and MSN and I assume all other engines – to Chinese search engine Baidu.   However I can’t find anything but little anecdotal posts to support this.   Looks to me like some videos and blogs have been affected, but that the big search engine issues may have related to a temporarily problem or testing of DNS stuff.

They suggest this may relate to the recent award given to the Dalai Lama I’d guess China is spending a lot of time thinking and experimenting with ways to maximize their search revenues, and this redirection, if it really did happen as dramatically as some suggest, would probably be testing ways to gather data on how well Baidu monetizes search compared to the agreements they have with other players.

Wait – here’s a blogger in Beijing, China saying that he’s getting to places TechCrunch says have been sent to Baidu, like Google.   Not sure what’s up …

Is this a false alarm?   I think so, though it might be another example of how China’s centralized socialist economy can create power and monopoly conditions the most ruthless old style US capitalists could only dream about.    Increasingly control of the online landscape is control of the business landscape, and as China’s massive economic expansion continues it will be very interesting to see how the China wields her power.

Note – I just edited this post quite a bit thanks to the new info.  Still dunno what’s going on.

G Phone Musings

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David Berlind has a very insightful piece about the upcoming offering from Google in the cell phone space.   Usually this is called the “G Phone” (or maybe “gPhone”?  “gee, Phone!”), and it’s certainly coming soon to a handheld device near you.  

It is still not clear if Google will actually endorse the hardware as well as the mobile software they’ve been working on, but there will be a phone by next year (I still predict it’ll be out in time for Christmas), and it will feature rich integration with Google maps, search, and probably a bunch of other clever Googley applications developed for the explosive mobile market.

Berlind notes that we are all seeking technological “religious experiences” with our devices, and the current crop of phones, even including the iPhone, do not deliver enough of them.

David is harder on the Apple iPhone than I have been but I agree that the holy grail ain’t here yet, and also agree that Google, learning from iPhone’s mistakes and all the hype and feedback about that project, might hit the cellular nail on the head with the gPhone.      I predict a major Google phone innovation in using advertising to defray the cost of calling.   This could take many forms but I think a clever integration of highly targeted advertising during web browsing and text messaging could be fairly inoffensive to users but provide a decent portion of the revenues that the carrier would need.   Frankly all Google needs to do is reduce the cellular cost enough to the customer that they’ll switch over from other carriers like ATT and Sprint.     These companies have done little to create brand loyalty and a better system will have users leaving in droves.

But we may have to wait until 2008 to find out how good the gPhone is going to be.  

Unless they are out by Christmas, in which case I may actually do my Christmas shopping early this year.