My daily traffic all of sudden up up to over 2,000 uniques a day yesterday. This is ridiculous. . . 5-10x of what I usually get, especially since I blog at most once a week now. . . (yap, I’m getting a little bored of spouting my opinion on any random thing).

Of course this is due to the new PageRank update . . . mostly to penalize companies that sell links or does reciprocal linking. My PageRank stayed the same, but a lot of top publishers got their pagerank demoted. For example, the Washington Post. Thus comparatively, I just got more “authoritative” overnight!

( I wonder what this is doing to glam.com ’s link scheme and if their investors are now a little worried )

Anyways, the point of this post is that by no mean am I more important than Washington Post . . . and if Google’s PageRank starts diverging from the reality of the offline world (thinking that I am as important as Washington Post), its relevance will slowly but surely disappear as well. I applaud its efforts to fight search engine spam, but it seemed to me a little reactive, short sighted, not mentioning vindictive to go to this length - burning the forest just to punish off a few sick trees.

Its probably obvious now that Google believes it is the ultimate arbiter of relevance online AND offline . . . and thus regardless of what I might think. . . overnight. . . Washington Post is (or is about to be) as important and relevant as little ole me.

The horror . . .

15 years ago when Microsoft, IBM, and the like ruled the earth, product management was mostly a “technical” function. Technical not in the sense of function (ie coding), but in the sense of its scope. Today, Product Managers have become the heart and soul of many technology companies . . . extending its tentacles through out the entire organization, owning P/L’s, running strategy session, and generally holding court for the rest of the company. Ask any person at a technology company, if you have an idea or concept, who do you grab first? Your favorite PM, ideally with an offer of coffee or lunch!

Things have changed rather quickly. And it all started with Hotmail and eventually culminated with social networks (friendster -> myspace -> facebook).

So what happened? Back in the day (the days of pascal, assembly language, and C w/o the “+” ) software delivery and marketing was distinct disciplines. You talked to the customer, you asked them what they want, you build what they want, and you throw it over the wall to the marketing and the sales guy. Brochures and presentation are produced (sometimes even a prototype), and off goes the sales person knocking down doors trying to make a sale. For the shrink wrap guys (MSFT), it was a little different but still the same old. The marketing guy figure out the print and TV ads, while a partner/sales guy try to get your box on the shelves of ComputerLand and bundled with the latest PS/2 (no, not playstation 2).

The Internet came along and changed EVERYTHING. Instantaneous distribution, usage, installation, and ACQUISITION. Word of Mouth changed to the Spread of the HyperLink. The wall between acquisition (which used to be a pure marketing/sales) function and product definition / management crashed down. . . But no one quite noticed (too busy searching for porn? ) until Hotmail came along and BUILT ACQUISITION DIRECTLY into the product. Hotmail didnt need a sales guy, it didnt need ComputerLand, it didnt anything but a group of developers and a very smart Product Manager (who understood marketing, sales, and acquisitions).

Friendster came along and added fuel to the fire. It added Vanity & Peer Pressure into the “product as an acquisition channel” equation. Potential Hotmail users simply noticed the link and signed up. Potential Friendster users were FORCED to signed up by their friends. Back in the days of Jobs & Woz, they wold call it the transition from simple word of mouth to evangelism. Your existing customers were REQUIRED to advocate your company/solution as part of getting the most out of their own investment in the product.

The geeks who knew how to productize the acquisition channel, skipped the rest of the company and reached directly into the minds of the customer . . . and became superstars for helping to build internet empires.

Today when I look at a new company or product idea, this is the first thing I looked for. Whether the company has productize (or the opportunity to productize) the customer acquisition channel. Whether the founders (or PM’s) understand the customer conversion funnel (from awareness to close), and built FUNCTIONALITIES to address each of the steps in order to drive potential customers towards usage, conversion, and retention. Its not always as simple as Hotmail or a social network; not all business models, fit so nicely into this framework. But all along the way, there are many many opportunities to use product features to shepherd potential customers towards an desired conversion event.

The shrink wrap machines are sitting pretty idle these days . . .

eBay took an “impairment” charge for the Skype acquisition today of $900M . . . its totally hilarious how people that do not really understand accounting & finance are interpreting this action.

First of all, here is a technical definition of impairment charge. In short, when Company A buys Company B. Any amount of the purchase price above what the book value of Company B is put onto the balance sheet as goodwill. That goodwill is charged as a deduction from earnings every quarter for up to 40 years (something like that).

By reducing $900M from the goodwill of the Skype transaction, eBay is taking that one time hit this current quarter while decreasing its future goodwill amortization amount in earnings.

Couple important back of the envelope calculation first. . .

Skype was bought for $2.6B in 2006. The earn out ended up being $530M. Not taking into consideration time value of money, the total acquisition cost was around $3.1B.

Skype is doing about $90M a quarter. Conservative projection would be that Skype is on track to about $500M in revenue for the forward 4 quarters. Given that these are probably high margin revenue (p2p means no hardware cost), I would give the company a conservative revenue multiple of 10x. (aQuantive was bought for 7.6x revenue multiple - a much lower margin business). The resulting number would be that Skype is probably worth around $5B TODAY.

Ok, so eBay probably overpaid for Skype 2 years ago. But today Skype is certainly worth more than that acquisition price. So the question than becomes, why is eBay taking $900M impairment charge?

hmm . . . thus goes the intrigue . . . . if you guys noticed, eBay stock price started down after the news, but actually went up afterwards. For the fundamental investor, the explanation would be that Skype as a failure is already priced into the stock price. I, on the other hand, believe in the power of market manipulation investor relations . . . i.e. eBay got on the phone with institutional investors after the announcement and detailed the rationale of the write down and the going forward financial strategy for the company. The mutual funds must have liked what they heard and bought up the stock.

I don’t want to insinuate anything but write downs are a well-known financial engineering instrument. . . it has absolutely nothing to do with admiting failure or not on an acquisition. The “when” is much more important than the “why”.

I’ll say this. eBay WILL exceed earning estimates for the next 2 quarters. Either they are so confident of the future to take this hit today OR . . . . . . (click here for research)

From Long Short Capital - the “Llama of Lame.”

This is exactly how I feel about the current rate cut . . . that Helicopter Ben is raining worthless money on the “poor and huddled” masses of wall street while the rest of the country suffers the effects of stagflation in the not too distant future. America’s inability to take the bitter pill will turn the economy into the mess that was Japan in the 90’s.

I would wholesale copy and paste the entire post if I could, but that wouldnt be right . . . just click over the read it . . .

You suck. You don’t have a backbone and as a result you are slowly and very surely making our country and our currency irrelevant. Usually the masses rebel and bring down great empires but luckily for us democracy fixed that problem. Unfortunately, democracy can’t fix how lame and fickle you are and so you will be our ruin.

1) Inflation isn’t 2% like your pathetic CPI ex-Food & Energy says it is.

2) Grow a spine you slimy invertebrate

3) You’re lying to yourself if you think we still have real GDP growth in this country.

It’s like a company doing a 5 for 4 reverse stock split every year and claiming to have 20% eps growth, you haven’t changed the earnings just the units those earnings are measured in. The rest of the world is telling you our country is worth less by massively selling our currency and you still naively think we’re growing value - I feel like I’m at a gathering of the flat earth society or in Zimbabwenomics 101.

Ok this is getting kinda sad. . . I was just doing some research on the payment industry on Google and came across the most blatant abuse of search engine spam by a venture funded company EVER . . . especially one with as high of profile as OboPay. Other companies have done much more, but this really takes the award for being tactless and stupid.

Check these links out (I wont hyperlink them for obvious reasons) . . .

https://www.obopay.com/resource/household-mastercard.html

https://www.obopay.com/resource/student-credit-card-visa.html

and look at all the links on the footer too . . .

Obviously made for search engine pages . . . with absolutely useless content stuffed with keywords for search engines. Even worse, they are violating other banks (HSBC’s Household division) copyright just to get some traffic.

The sad part is that these guys are obvious SEO amateurs . . . if they do some homework, it could have been done a lot more subtly . . . and not get caught by me.

When a company has multiple subsidiaries/company names and they have less than 100 employees . . . a red flag should go up. When a company spends way too much time trying to incorporate any combination of the words: “no evil” , “ethical” , “privacy” , “trust” into any portion of their name, tagline, or mission statement - its time to ask some hard questions . . .

These TrustFuse guys (dont even know which name call them) are begging for it . . . I was reading “At Rapleaf, your personals are public” and it made me speechless.

First reaction - brilliant business model and concept

Second reaction - please stay as far away from me as possible

We should not forget that Abacus was a legal business and so was DoubleClick . . . but the combination of the two was completely toxic (and thus the merger was canceled) . . . the velocity with which personal information can travel in the digital world very much re-define the moral responsibility of the company holding such an information.

Sites like Rapleaf are also trying to be social networks, urging people to become members and claim their identities across multiple networks so they can manage their reputation and privacy. In fact, Hoffman says Rapleaf is designed to help people protect their privacy.

“We’re helping you manage your privacy. You might not even know there’s all these things about you out there. We’re learning all this stuff about you. And now you can manage all this information,” Hoffman said.

Let me get this straight . . . you gather all this information about me, put it at one location so that credit card marketers can find easily . . . and for the privilege of not being spammed, I need to give into the blackmail, sign up on your system and opt out. How about this, why dont you NOT share this information by default. And if I happen to change my mind, I’ll go sign up and let people contact me . . . in return . . . I get a cut of what ever money you made off me? Sounds more fair?

One big question about Rapleaf is how it obtains access to people’s social-networking profiles, considering that sites like Facebook, MySpace and LinkedIn don’t publish their members’ e-mail addresses as a matter of policy. When asked, representatives from these social networks said that they do not have partnerships with Rapleaf, nor other search engines, to provide access to e-mail addresses.

Rapleaf’s Hoffman said that the company finds profiles through the e-mail search at certain sites, including MySpace, LinkedIn, Facebook and Amazon. MySpace, for example, lets visitors find a profile by e-mail address or first and last name. But for other sites, Rapleaf employs a “secret sauce,” according to Hoffman. It’s not always easy either. Hoffman said the company hasn’t figured out how to crack into accessing members on Digg, for example, even though it would like to.

Eh . . . so you guys violated the terms of service at a social networking site, used a functional loop hole to get my personal information (such as my email address) - which I explicitly told the social network not to share to anyone outside of my friends . . . . Sounds brilliant to me, definitely worth a patent - “Method and System to Circumvent Privacy Policy of Websites to Gather Private Personal Information.” The chief privacy officer dude at Myspace is just about to freak out envisioning all the lawsuits he is going to get for the security breach.

Being serious for a second. RapLeaf’s argument that these are already publicly available information is certainly valid. The point that they need to re-examine is the fact “with great powers data comes great responsibilities” I.E. . . the aggregation of the data and the ease with which they made the data searchable IS the defining difference which re-assigns the responsibility of privacy away from the end user onto the company.

I’m not going to rag on Glam.com . . . I actually admire companies that take some chances, break some rules in the search for new business models and opportunities. So instead, I spent a better half of a sunday morning a few weeks back, when the news broke about their crazy round, doing some link analysis of all the affiliates in their “advertising network” trying to find out their secret sauce. (mental note: Allen & Co is THE place to go if you ever need to raise some money and don’t want to spend too much time begging VC’s). What I found was fascinating . . . (ok, maybe only to me)

Before I jump in, Jeremy Liew’s post about synthetic channels is an important piece on the vertical-ization of ad networks. Synthetics channels are the re-incarnation of private equity roll-ups which arbitrage between two ends of several spectrum around scale, focus/scope, and cost leverage.

Synthetic channels, like the channels on the big portals, have an advantage in this respect. By guaranteeing that all sites in their network are about a single topic, they can aggregate a critical mass in traffic while still enjoying endemic site RPMs. This is, in a sense, a “hack” to true contextual targeting, but it has the advantage of being simple to understand and hence simple to sell to advertisers.

While this is certainly interesting, what is even more amazing is what Glam (and other vertical ad networks) don’t explicitly tell you HOW they work as an ad network. Glam doesnt just syndicate advertising banners . . . they syndicate content as well as links.

Huh? you might ask? Glam serves up banner ads across their network of site. They also serve up content/posts from one affiliate to another. Often they embed advertising along with that content which they syndicate. Even more importantly, links within that content is also syndicated to its network participants.

Why is this such a big deal . . . ?

Ostensibly, the ability to guarantee the surrounding content of an ad unit helps increase CPM and reduces advertiser resistance/reluctance (rememeber that facebook UK debacle about advertisers and white supremacy groups?).

More sinister clever are the links that are syndicated across the network. . . . . Its all about SEO.

Many of these links points back to Glam.com, thus hugely increasing the main destination’s page rank, since from a search engine’s perspective, it looks like another domain is linking to Glam.com (Google has no idea that the link is being syndicated).

These links also cross pollinate across the entire network which give many new publishers/web site owners a good reason to join Glam . . . it raises their page rank significantly from the inflood of links from rest of the network. Due to a deficiency (?) of many search engines’ algorithm, these reciprocal links create a sort of “page rank network effects” that improve the rankings of the ENTIRE network each time a new site signs on.

Adding fuel to the fire, due to the freshness of the content being published constantly each day through out the network, these links are being built in a dynamic and consistent manner which is something search engine LOVES. The fact that all these sites are clustered around the same general topic also help search engines over-weight these links compared to other sources.

Blackhat or not, I gotta give these guys props for “inventing” something so insidious and executing it to perfection! . . .

I know I’ve been gone for a bit . . . mostly cause I’m lazy and my dog ate my keyboard (honest!). So for the past 3 days, I’ve been surfing like mad, looking for an interesting topic / news / company to blog about to keep this blog from being a splog.

I found . . .nada, zilch, nothing . . .

There was some stuff about DRM, some more stuff about 10+ different social networking site getting more funding, more stuff about Google, some more stuff about enterprise 2.0, and oh ya, lots of bitching about Skype.

The only thing remotely interesting was a social networking site for exhibitionists (found it on TechCrunch, so don’t you get to thinking I was doing some sort of shady surfing) . . . and that has nothing to do with the site being interesting . . . it just had “interesting” pictures . . .

Really though, this whole user generated content, community, and long-tail web 2.0 trend has gotten all the permutation it could have gotten for the past 2 years. (Digg for golfer, myspace for bankers, virtual world for LSD abusers etc etc).

I certainly believe that true that innovation never stops, and that we will never “run out” of new ideas or better ways of doing things . . . interesting, ground breaking companies and concepts are being launched all the time . . . even as I’m bored to death at this current moment. What I’m complaining about is that we (including me) tend to see the world in lenses . . . and the current lens is so tainted with the “2.0 mindset” that we tend to filter out people/companies that does not fit in our neat little way of viewing the world.

I’m ashamed to say that if someone showed me Myspace in 2002 I would have told them that I already got tired of Friendster and GeoCities. (and that I refuse to visit any site where black background is still encouraged). Actually this is a true story, I bounced off the site in under 60 secs after signing up.

So I’m bored, and its all our fault . . . wake me up when 3.0 happens.

P.S. I was bored before he was bored . . . (and before he was un-bored)

Pligg is for sale on sedo.com of all places. I didnt even know you can actually “sell” an open source project/community. What if Linus decides one day to “sell” Linux? Can he even do that? This selling of an open source project is NOT a good trend to start but I do understand that someone (who?) deserves to make some money from the value generated from Pligg. Maybe there should be otherways to get to the same objective?

Before I jump in, a little background on pligg. Pligg is a popular open source software project that allows anyone to create a clone to Digg. John Battelle’s SearchMob is an good example of what Pligg is capable of. Its highly popular and I would estimate that over 5K websites run a version of Pligg.

Sedo seems like such a wierd place to sale a website/company/project too but, if I think about it; the main asset for sale is really just the domain & its associated website more than anything else. According to the listing, the following assets are for sell

- Domain name, Pligg.com
- Website sofware on Pligg.com (not the source code)
- Users on Pligg.com (around 10K)
- Admin Account to Pligg’s Sourceforge project area

Whats not for sale

- The source code
- The “trademark” Pligg

Which begs the following questions

- Who is actually selling these “Pligg related assets” ?
- Whose pocket is this going to?
- Does the contributors to the open source project deserve to get some of that cash?
- How about the contributors to the forum?
- Can “Pligg” the non-profit org sue the “owner” of Pligg.com for trademark infringement in the future?
- Does the new “owner” get to keep the donations coming to the site? (see the donate link on Pligg.com)
- Will the contributing community sit idlely while this new “owner” mucks with Pligg.com and try to make an extra buck? (more ads? consulting services? commercial version?)
- Will there be a showdown between those that made off with the dough and those who did not?
- Is this even “legally” possible? (ie sure those assets are “sellable” but can it be debundled? )
- How is this different than some user from Digg selling his or her account?
- Can the community block the sell? Esp with regard to the source forge account? (just like Digg can block a sell of an username)

In the end, the bigger question is. . . what is an open source community really worth? Who (which individual) has the right to sell an opensource community? If this becomes popular, one day, will Linus sell his “position” as the ultimate arbiter of Linux releases to Novell? Why wouldn’t someone like MSFT go out and just “buy up” an open source community to either control it or to kill it through random muddling thus forcing the code and community to splinter and fork?

I don’t have the answers, but I don’t see this ending up well if this trend moves beyond Pligg (which in the grand theme of things, is not that important of a open source project).

P.S. Lets not forget Source Forge is run by a for profit company while lots of “open source” projects are really controlled by private enterprises. So maybe this is not that out of the norm?

Lots of questions, but no answers . . .

eBay just launched an application on Facebook called (unimaginatively) eBay Marketplace. As of now, there are only 250 people on the app so I’m guessing its only in beta. Otherwise just by encouraging the employees to get on, it would have a huge number of users.

There are a few cool features. For one, you can actually “push” an eBay item to your friends’ watch list. For another, you can solicit comments from friends on items you are looking to bid on. All very cool. . . I was surprised a third party app hasnt been launched to do exactly the same and make some money off eBay affiliate program (damn, another item crossed off my crazy idea to-do list).

Another thought is that Facebook has it’s own “marketplace” application which is somewhat competitive with this ebay app. Wonder what they will do. Speaking of conflict of interests, given that Rock You’s “super wall” has become such a big hit, it is inevitable that Facebook enhance the its own “wall” application to allow embeded codes. . . When that happens, I wonder if people are going to start screaming the usual “extend and embrace” MSFT-ish rants about Facebook stealing ideas from its api partners.

Not letting eBay off the hook either, why hasnt eBay’s own social networking app “My World” been given the same the same functionality? My World is a 2001 implementation of a social network . . . ie more like friendster than myspace (win on personalization) or facebook (win on relevance).