Tag Archives: Microsoft

(Almost) Live from the Data Sharing Workshop

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The Data Sharing Workshop is getting into gear this morning at SFSU. About 50 people in the room, representing a wide variety of companies and technolgies. Kickoff speakers have included folks from Google, Microsoft, Plaxo, and SixApart.

Here’s a video of Joseph Smarr of Plaxo trying to frame the key problems that might be worked on:

And here’s a picture including three “share bears” (Chris Saad, David Recordon, and Joseph Smarr, plus Kevin Marks of Google):

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UPDATE:

Here’s a nice shot from Marc Canter’s fiery kickoff talk:

"Free the data!"

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Has Facebook “Jumped the Shark”?

The Wall

I suppose I should have seen this coming. Feelings run deep with respect to Microsoft and on the topic of privacy. If the Facebook/Microsoft deal gives Microsoft access to the Facebook social graph in detail for the purpose of ad targeting, might this cause concern and consternation, at least for some?

Apparently, the answer is, “Yes.”

In a post entitled, “This is a poke-free zone,” a South African blogger, Ivo, says he’s leaving Facebook, closing his account there, and heading over to Orkut. It seems he also the created a group on Facebook called “If Facebook sells to Microsoft, we’re leaving”!

And in a post entitled “Please Turn Out the Lights,” Wired Gecko jumps on the bandwagon, and indicates he’s leaving Facebook for Orkut and Plaxo’s Pulse. 

A few lone wolves, or the beginnings of a mass migration?

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Facebook/Microsoft Deal Analysis: Part 2

The Wall

The talk around many water coolers today is of the “incredible” or “crazy” deal that valued Facebook at $15 billion. Yes, $15 billion — for a three-year-old company that is just hitting cash flow positive on a mere $150 million in revenue. People ask, “Does this mean we are now formally in a Bubble again?”

My answer is, “No.” Why? Because Microsoft is Microsoft, not a VC firm. Microsoft couldn’t care less whether their investment valued Facebook at $1 billion or $100 billion, because this wasn’t a venture capital investment decision for them. It was a purchase, not of a piece of Facebook, but of a very unique and strategically important asset — the run of ad inventory on the Facebook network through 2011 (minus some portion reserved by Facebook), plus some undisclosed amount of access to user profile data essential for “social targeting” of the ads.

There is only one Facebook, and somebody was going to end up with the exclusive right to sell its ad inventory and leverage its user data. In the end, it came down to a question of which of the three big players needed it most — Microsoft, Google, or Yahoo. It is not at all surprising that once the bidding got high enough, Yahoo got priced out. Nor is it surprising that Google stayed in until the end, ensuring that if Microsoft had stronger need to win, it would have do so at the highest possible price.

For cash-rich Microsoft (they have over $20 billion on hand), this was not a terribly costly deal. For their $240 million, they get something that just might help them leapfrog Google in battle for supremacy in the huge and growing market of online advertising.

Oh, yeah. And one more thing. By agreeing to a deal that effectively values Facebook at $15 billion, they have made sure that neither Google nor Yahoo will buy the company. All in all, I’d say a very smart play by Microsoft, and a very well played hand by Facebook.

And, no, we are not in a Bubble.

To read what I think are the implications for others in the space, like Plaxo and LinkedIn, here’s a post I did yesterday

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Why Facebook *is* Worth $15 Billion

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The news has now broken. Microsoft has taken a minority stake in Facebook that places a valuation on the company in the $15 billion range. How could this possibly make sense? Is it just a simple multiple on a revenue number based on a current and projected growth rate? Probably hard to make a $15 billion case based on that alone. (100x current revenue!)

The real answer lies in how Facebook differs from the riff raff of “social networks.” Facebook has always distanced itself from that term, prefering “social utility.” Why? Because Facebook isn’t about friending strangers. It is, instead, one of a small number of players that have staked a play based on the belief that “who you know” is fundamentally valuable, and that if you could ever amass a large enough collection of who-you-know data, that “social graph” would enable a variety of monetization strategies. For Facebook, and now for Microsoft, the bet is that the social graph can turbo-charge online ad targeting.

The two other most prominent players in the who-you-know space are LinkedIn and Plaxo. (Disclosure: I run marketing at Plaxo.) Oh, and outside the U.S., a company called Xing, which is, like LinkedIn, focused on “business networking.” LinkedIn makes money from being a middleman between job seekers and recruiters.

Plaxo, on the other hand, got its start in the who-you-know business with a “networked address book” and a “freemium” business model. More recently, to the surprise of most industry-watchers, the company has been re-inventing itself as a next-generation social network, leveraging the huge piece of the social graph that they are hosting for tens of millions, by “bringing address books to life.” And how are they monetizing their social network, Pulse? With targeted advertising, of course!

With Facebook valued at $15 billion, what are the implications for others in the who-you-know business space? Will the rising tide lift all boats equally or some more than others? 

To really understand this deal, see Part 2 of my analysis, that explains what Microsoft actually paid for.

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