Tag: web2.0

Techcrunch misunderstands basic finance

Posted on by Daniel J. McKeown

As few exciting new startups emerge in the web 2.0 landscape, the flaws of a blog like Michael Arrington’s Techcrunch become more and more apparent.

Toward that issue, yesterday Dave Winer wrote:

‘Nelson Minar says he likes TechCrunch, but they’re not journalists so be careful what you say to a TC reporter at a party.’

That’s fine, but I’ll go one further–I don’t like Techcrunch, and furthermore, it’s a reminder that attending one of those insular web 2.0 bashes brings with it the constant danger of some moron coming up to you and talking business. How unrefined.

But my real problem is that their writers are often stupid, the staffers more so than Arrington. Duncan Riley sounds on the blog like a combative idiot and Nick Gonzalez’s work makes me think he’s a lousy writer. It’s too much work to recount all of their dimwitted mistakes of reasoning and logic, and their shameless hype of Microsoft products.

But unfortunately the site’s new writer, a refugee from a collapsed business magazine, is really going to fit in.

For example, today we have this moronic line of thought from Eric Schonfeld, who was writing about CNET:

‘If a stock buyback manages to jack up the market cap, a takeover could be averted.’

I’m not sure how stupid the market is, but here’s my guess–less so than Schonfeld thinks. Spending cash from the corporate treasury to buy up shares should, if proportions hold through the market’s reaction, jack up the price of the shares a bit. But the putting aside of the purchased shares into the company’s treasury stock will lead to reduced number of publicly available shares.

Market cap is, after all, price times number of shares.

Apparently Mr Schonfeld could be gamed this way; but I think the market is rather too smart for that.

In fact, the economic (though not the accounting) effect from stock buybacks is actually closest to the economic effect of issuing dividends. (I had to argue this one out with an accounting professor, but think it through–stock buybacks are the preferred method of dividend-type transactions [i.e. returning capital to investors] for some large traders because the money will be automatically reinvested in the same company instead of run through capital gains because of dividend payments.)

Yes, CNET is trading at what seems like a low total valuation of a little more than a billion, and it could become a target for corporate takeover or private equity. And if Facebook is really worth $15 billion like Microsoft seems to believe, then couldn’t a company with a suite of popular niche sites including Gamespot, Webshots, and Chow.com be worth more than a tenth of that?

But that’s an assumption I’m not ready to make. For now, we’ll have to wait for the news–preferably from a reputable source.

update 11:26 p.m. PT: The announcement is that Webshots is being sold for $45 million. No buybacks have been announced, and the minutia of stock buyback accounting is really peripheral to my denunciation of Techcrunch’s shoddy argument that some (hypothetical) balance sheet maneuvering (that Techcrunch was speculating about but was not subsequently announced) will change the underlying takeover value perceived of CNET. In fact, at its size, CNET.com has long seemed to me to be a very possible target for a larger internet brand–and now that Webshots is being sold to American Greetings, CNET has no Flickr competitor but it does have some targeted sites and a San Francisco location, two things a Yahoo looking to rejuvenate itself might be drawn to.

The lonely madness of the Twitter user

Posted on by Daniel J. McKeown

Love_Fest-SF-2006__CIMG1893

New competitors like Yappd (which so far really isn’t much to speak of at all, by the way) and Pownce are moving fast on Twitter’s market.

After getting a new round of funding in the last month, however, Twitter has started going down again in the last day or two. Sometimes it will work through an app but not through the front page, sometimes nothing loads, it’s all very unpredictable. I am not very pleased about this, as I had started using the service again more.

For now, I’m this close to stopping. But I like Twitter–the bird logos are great for any aviary enthusiast such as myself and the name and constant short sharing of random thoughts, sometimes with people you know and often with others–these are custom designed for someone with my personality.

It could be said that Twitter is a time waster, but that’s not too serious a concern for anyone who could throw off 140 words of the top of his head easily and is using the 140 character text entry field that Twitter allows. It’s very convenient to post to Twitter, and messages have to be short, so normally all I would do would be just pop open a chat window in Gmail or open a widget in Netvibes, type in my quip, and go back to reading my email or checking my feeds.

Once the site stops working, though, the time wasting factor kicks in with a vengeance. I’m checking my profile page to see if it has my latest update. I’m wondering if my hordes of Gmail filters are failing to properly direct tweets from friends when the tweets just aren’t coming in by IM. I log into Facebook to see if tweets are being added to my mini-feed. I go to my web page and it loads slowly as the Twitter updates widget chokes.

None of this should really matter, but for a Twitter addict this can seem a maddening process. The economy of the Twitter message length–the text-messaging-friendly 140 character limit–also imbues those short messages with their own elevated importance in the fevered mind of the Twitter user.

I’ve been using Pownce and Jaiku a bit, and I like them fine, but instead of looking for a real replacement for Twitter I should reach back to my old posts and bring back the idea of being a Qwittr.

Pownce has some really nice features, but what it needs right away is a first-party blog widget and Facebook app, and customized home pages. (Maybe for the pro package at least? Might interest a lot more people.)

It doesn’t seem like many people use Jaiku as their main updates service anymore but it is able to accept RSS feeds from the user’s other sites and that feature seems to have become the key part of Jaiku’s formula–many people, for example, send their Twitter feed to Jaiku so people following them on either get the message, but on the Jaiku feed you might also see the user’s recent Last.fm listens and del.icio.us bookmarks or blog entries. The ongoing stream of the user’s content works much the way a tumbleblog does in practice for many–and an additional feature on Jaiku is the ability to comment and follow others.

Yappd I cannot say very good things about. I just heard about it and decided to try it, and have just found that it does not allow perma-links for individual notes. This is not a good feature, and its lack of widgets and overall Twitter-copy feel did not seem to cover much new territory. Maybe it will add some new features and take off but for now it’s definitely back in the pack.

Yappd doesn’t even allow their vaunted add-a-picture feature for web-based updates, only via email or SMS. Overall it doesn’t seem like a fully developed offering. The pictures are supposed to be their big differentiator, but then recently people like Dave Winer have started using Twitter as a “coral reef” for Flickr photos anyway, so not much at all makes Yappd stand out at the end of the day now. I’ve been looking at some of the debate about whether the market spewing out such lackluster lookalikes is a sign of a financial bubble in the web 2.0 space, and I personally still think it is.

But the latest tulip over-valuation has to come some time, cyclically speaking. The new social and economic phenomenon symbolized by Twitter, however, is generating much discussion on the future of media and telecommunications and gaining broader notice.

My take on all the talk about how shortening the message to 140 characters makes one concise is a very skeptical one, however. People who congratulate themselves for all their great writing just become more appreciative of each of their own words. Yes, in some ways Twitter seems to symbolize the isolation and narcissism that gnaws at the guts of so many titans of tech culture and their copious followers and wannabes.  And it symbolizes a backlash against blogging, yes, the same way tumbleblogging does–for many seem to be relieved of the pressure of producing so many words or managing that sidebar.  And it can symbolize the lonely challenge of the pioneer–many tech early adopters have jumped on Twitter but haven’t yet had many of their friends join in.

Those are all fascinating angles, but I think what Twitter symbolizes is the re-learning of basic PC tasks going on with the techie set because of the popularity of mobile devices from iPhones to Blackberries, Treos and other cell phones to PSPs. Twitter scales blogging back ten years, just as most of those devices take the user interface back about that long.

Why web 2.0 is a bubble, and why the deflation will be gradual

Posted on by Daniel J. McKeown

I think I went a bit too hard on Mahalo in my earlier post. Not that I take back anything I said–I can’t make any sense out of their business plan.

I’ll take a wait-and-see approach though. And if I think that taking on Google sounds grotesquely grandiose, I think the “human-powered search” idea might still carve out a profitable niche.

And singling out Mahalo doesn’t really get to the point exactly. A lot of the trendy new companies have no visible business plan. So many web 2.0 startups are flooding into the market, and though the bubble will probably get as big as the bubble 1.0 eventually it will take a long time and it won’t deflate nearly as quickly because this bubble has few companies twisting in the wind of the public markets. Most of them are owned privately and, seeing Google and Facebook as models, plan a long gestation period during which they are funded by private equity. The problem is that few of these companies will ever be profitable and eventually the people providing the funding will bail out. But these decisions will be made in boardrooms on a case by case basis, not at shareholder meetings or bankruptcy courts, so the deflation period might be so slow that one day five years from now everyone might look around and say, what happened to all those second rate startups?

Those venture capitalists on Sand Hill Road used to be seen as the colossus of the private equity market. Now the power of hedge funds and private equity buyout groups puts them in the shade–to the point that the notable startup funder of the moment isn’t even in the Silicon Valley–it’s called Union Square Ventures but it’s in New York.

So it seems to me that these private equities, flush with cash from other investments, are funding way more Internet startups–especially in social networking and search–than makes sense. But their deep pockets and lack of need to respond to shareholder demands or file quarterly reports means that a lot of these sucker’s bets won’t be called for a while.

Netvibes rocks

Posted on by Daniel J. McKeown

If you’re looking for a page to start your travels on the Internets each time you log on, try Netvibes.com. It takes a while to customize, but when you do you get your favorite RSS feeds and widgets all recently updated on one page, plus special apps for Gmail, del.icio.us and Twitter.

Pageflakes has a slightly prettier look (which makes it slower) and makes it easy for anyone to set up a customized public page (Netvibes “Universes” are still for the big organizations) and Google Reader is faster for full article reading, but as a start page Netvibes is the site of the moment.

Humans and rats battle it out for second place in search

Posted on by Daniel J. McKeown

I’ve already tried to pour cold water all over Wikia, and I remain a skeptic on Spock. To the point: the machine powered search algorithms used by companies like Google and Technorati actually aggregate human decisions in a much more effective market-style system than small teams of web professionals judging what content is relevant. The search engines said to be community powered are interesting, but the idea that they will be able to give people what they want more effectively is elitism run amok, an attempt to build a new online “mainstream media” establishment when no such thing is needed, and an admirable but forlorn attempt to substitute labor for capital and taste for popularity.

Oh, I forgot, this is some well-intentioned attempt to save the world from SEO spam. What nonsense.

I had held out on writing a sour note that ripped on Mahalo because I like the idea that people believe that someone might seriously challenge Google in search in the next decade. It’s a silly belief, and certainly not an analysis of any sort, but it is amusing and maybe even a bit inspiring.

What a time to start an Internet business. It will take a very long time, warns Mahalo chief Jason Calcanis, before the search engine will really work well. Or make much money. How convenient.

As a practical matter, most searches end in Google results and then Google ads right now.  The site has an unserious florid look and even the established results pages are pretty weak when you click on the directory-style front page.  It is a new site with apparently a good amount of investment–here’s post from May about its launch–and for now people seem inclined to take it seriously.  But after some pretty positive press about his “human-powered” search engine from Read/Write Web, Jason Calcanis gave a conference speech this week that went sour with the attendees. Dave Winer explains on his blog:

‘Yesterday, and in all his previous marketing, he rails against advertising and spam, which ironically, was exactly what he was doing to the environment at this mostly non-commercial conference. What we said (and I wasn’t the only one speaking back to him, I wasn’t even the first) was a response to this. It didn’t come out of thin air. If he had given a similar speech to venture capitalists, if he offered them no way to win, they would have had the same response, but it probably wouldn’t have been as patient or polite. Now, clearly he doesn’t have the same respect for us that he has for VCs. But it seems that to some extent the success of his company depends on winning over the people here at Gnomedex. If it didn’t, he should have stayed home, because his pitch, as delivered, doesn’t work here, because he didn’t offer us anything we want. We get a better deal from Google, believe it or not.

Some of his argument against Google rings true, very few people love them as we did in their early days, but their proposition to web writers and podcasters is basically fair, it’s a win-win. We get flow from them, they get ad revenue. They also offer us a way to put ads on our sites, so we can profit financially from the relationship. Nothing in Jason’s pitch offers us anything like that. No flow, no money. And technically, it’s not a platform, so we can’t build on it.

We’re people, and we’re smart, Jason, just like you, just like your investors. If you come making a pitch, there should be something for us, or it’s not going to be well received.

So there’s a big bug in the concept behind his company and he tries to blow by it with an attack aimed at one person. That might convince really stupid people, but smart folk can see right through it.

Bottom-line, he needs to figure out a way to build the company so that many others can profit from it. Otherwise I don’t think it has a prayer against Google, which we like less and less as a company, but who basically offers an equitable proposition to the users of the Internet, who the Gnomedex crowd represent in a loose kind of way.

His pitch here failed. He can’t blame me for that. A good CEO goes back to the drawing board and figures out what works.’

Yes, a very, very good CEO finds a way to make the “human-powered” search engine idea work. Like, work in a small niche or something.  But a CEO with a bad idea will keep trying to sell his idea as long as its plentiful funding provides a constant prima facie reminder of what a success it is.

I don’t think I write hyperbolically when I say that you’re about as likely to beat Google’s machine-powered search system now with Mahalo or another “human-powered” system as with a “rat-powered” search where rodents sniff out the best-smelling morsels.

How Last.fm creates business for Beatport

Posted on by Daniel J. McKeown

DJs__Love-Fest_2006_SF_CIMG1931
I think Last.fm is one of the most important sites of the web 2.0 era. It’s an Internet radio station, you’ve probably heard of it but if you haven’t tried it you should. Probably my favorite background listening when I’m relaxing is the trance tag radio station.

Many people use Last.fm’s soical networking features, and why not–for music fans it’s a great way to meet people online. But I use enough social networking stuff and the reason I go to Last.fm is for the music–because recently it’s become my favorite place to discover new music.

When I put on trance tag radio, it plays songs that others have tagged trance. Some of them don’t belong, but most of the selections do at least somewhat and it’s easy to skip to the next song anyway. And once in a while, I find a new song that I really like.

But this is where Last.fm needs an upgrade. Instead of sending me on a search on Amazon.com for the whole album, I should be able to buy the mp3 right away. They should partner with Apple iTunes or Beatport.com or build their own music store, and sell individual tracks. As of now I just head over to one of those places for the song, sometimes after finding it on Last.fm. (Tabs pose an underrated threat to e-commerce sites, because they put so much information–crucially, from different sources–on the same browser at the same time).

It’s true that other sites like di.fm have something close to that, in terms of Internet radio and a music store. But that site lacks the web 2.0 features and buzz that Last.fm has.

Now, Last.fm has a lot of good music but since so many of their listeners like rock and roll they don’t exactly specialize in electronic music the way a more focused site could–and because of the tagging and things the more listeners in a certain genre the more interesting the radio station for that genre so that means something.

Come to think of it, maybe this calls for all these ideas being thrown together into a new electronic music radio/record store site. Of course, maybe not–the market seems to be flooded already with half-baked Internet startups.

Podcast 6 featured on Webshots

Posted on by Daniel J. McKeown

Webshots, one of the photo sharing sites that I like and have written about, has a video front page that features new content.

I’ve been lucky enough to have my latest entry into the podcast album, pacificpelican.us podcast #6, picked for the video page today!

[Here’s a screenshot to show what the video front page looked like the day this was posted, as Webshots has new video coming in all the time.]

I’ve always noticed a good audience for my pictures and videos on Webshots compared to other sites, and I’m sure that this feature will really add a lot more to the numbers of views! Thanks to Jessica and the whole Webshots staff!

Does Yahoo signal critical commercial mass for open source?

Posted on by Daniel J. McKeown

 Tim O’Reilly thinks that Yahoo has made a major announcement for open source:

 

‘One of the most important announcements at Oscon last week was Yahoo!’s commitment to support Hadoop. We’ve been writing about Hadoop on radar for a while, so it’s probably not news to you that we think Hadoop is important.[…]Let me unpack the two parts of this news: hadoop as an important open source project, and Yahoo!’s involvement. On the first front, I’ve been arguing for some time that free and open source developers need to pay more attention to Web 2.0.[…]OK — but why is Yahoo!’s involvement so important? First, it indicates a kind of competitive tipping point in Web 2.0, where a large company that is a strong #2 in a space (search) realizes that open source is a great competitive weapon against their dominant competitor.’

 

Read the whole article here. 

Webshots adds tagging and other features

Posted on by Daniel J. McKeown

Is there really a major difference between users of different photo sites? Probably not, but Flickr’s preponderance in the northern California area where I seem to talk to people about photo sites belies statistics that seem to indicate that Photobucket is more popular in the country, just as Myspace is more popular than Facebook still.

Webshots.com, the photo sharing website owned by CNET [personal disclosure: it’s well known that I’m very close to someone who works there], has introduced a few new features that round out their offering and make it more competitive in the hotly contested online photo site market.

Both sites allow users to give titles and descriptions to the photos they upload, but how they handle them has been different otherwise. Flickr puts all new photos into the user’s “photo stream” and uses (optional) tags to describe photos. Webshots, which has been in the photo sharing business since the late 1990s, has always organized photos into albums. So users could select categories and give keywords for each entire album, but not tag individual photos.

This has now changed and Webshots is allowing users to put tags on each photo. This is a major evolution–they had to take the previous categories, for example, and make them work in the new system. So far it looks like it has worked well and it opens up a lot of new possibilities for user navigation.

Flickr also caught on with the web 2.0 crowd partly because it allows easy access to its API which allows users to build tools and mashups from its photos. Now that it has tags, more interest might be turned toward the API at Webshots, which currently requires special permission to access.

Another feature that really could benefit Webshots is their installation of a system called Gigya that allows users to post an individual photo to a handful of social networking sites like LiveJournal, Blogger, Myspace and Xanga. This kind of feature is essential both for allowing visitors to quickly share interesting photographs and for making the site an multi-faceted part the user’s online experience. Call it web2.0 lock-in or whatever.

While Flickr has recently confirmed that they will have video sometime soon, Webshots already managed to add video capability back in 2006.

One of the interesting facets of Flickr, and something that seems to keep many people coming back, is the popularity of the site as a social networking destination. That is to say, even with rather basic social features, Flickr still offers enough community and content to make a compelling offering to the web 2.0 crowd in the social networking space. It merits saying that Flickr is Yahoo’s most successful entry in the social networking space (sorry GeoCities and Yahoo 360).

Webshots also has some solid social networking features, and it has plenty of comments on popular photos just as Flickr does, but the user base is not as nearly concentrated in the techie demographic, so for example I would say anecdotally that I’ve seen a lot of Flickr accounts that are used as blog photo storage where I’ve only noticed that a handful of times browsing Webshots. But with the Gigya feature, more people may start using Webshots to store their blog pictures. It’s also worth noting that Flickr users are often also using Twitter, last.fm, their WordPress blog, Facebook and other cool sites–so speculatively speaking Webshots may have a bit more of the attention of its users for longer periods at a time.

The same way that many people in the web 2.0 bubble have made Flickr the site of international cool photography for the Internet crowd, many people who are digital photography fans from all the way back in the web 1.0 era continue to visit Webshots and upload their photos. Webshots has more lurkers per uploader on its site than Flickr [that part is just speculation too, by the way]–meaning more viewers per photographer. The layout of the sites is different–Webshots offers a front page with featured photos and then a handful of sections with content specific to each of them: photos selected by editors, with short descriptions and links to the albums, while Flickr offers a front page that displays four new photos by the user, four new photos by that user’s contacts, and four seemingly random photos by others on Flickr, with links to the photos but no descriptions of them by any editors.

So for people who are using a site to upload photos or keep tabs on friends, Webshots or Flickr can both work, depending on the user and what site his or her friends are on already. For the geek crowd, for example those who want to use the site’s photos to build apps, Flickr has established an early lead and has even inspired copycat sites in its own new sub-genre, like Zoomr. But for people dropping by a site looking for some entertaining photos that they can read about, download the full size of, and share easily through email or on social networks, Webshots works well and the tags should make it easier to find stuff.

Will Spock.com, a social listings service, be worth using?

Posted on by Daniel J. McKeown

[Title updated 8/3/2007]

I read about Spock.com on O’Reilly Radar a few months ago, and couldn’t help but be intrigued. Mr. O’Reilly wrote:

‘Michael Arrington wrote the other day about spock, the new people search engine, but I have to say that I don’t think he did it justice. Spock is really cool, and performs a unique function that is well outside the range of capabilities of current search engines. What’s more, it’s got a fabulous interface for harvesting user contribution to improve its results.

You can search for a specific person — but you can do that on Google. More importantly, you can search for a class of person, say politicians, or people associated with a topic — say Ruby on Rails. The spock robot automatically creates tags for any person it finds (and it gathers information on people from Wikipedia, social networking sites like LinkedIn and Facebook), but it also lets users add tags of their own, and vote existing tags up or down to strengthen the associations between people and topics. Users can also identify relationships between people (friend, co-worker, etc.), upload pictures, and provide other types of information. This is definitely a site that will get better as more people use it — one of my key tests for Web 2.0. It also illustrates the heart of a new development paradigm: using programs to populate a database, and people to improve it.’

The service is a closed beta, but I finally found a way to check it out–I left my request for it at InviteShare and moments later, I was invited. [Check that service out if you are wondering what new web2.0 stuff is coming down the pike or want to join Spock or Pownce. In fact, InviteShare itself could actually develop into a pretty cool social networking site–at least until everyone in line gets their invite to the red-hot BitTorrent closed beta sites like SuperTorrents, Demonoid.com and Torrentleech.org.]

So I got my invite and went and looked at the Spock.com site, searched a few tags and a few people, and one thing that struck me is how dependent Spock seems on Myspace profiles–useful enough for lots of people but hardly a reliable main source. Also, some sites are based on LinkedIn profiles and entries about famous people rely heavily on Wikipedia.

I think at the end of the day, if nearly everyone joins and tends to their profile (although I don’t know how much control a user has over their own profile because when I was clicking the link to finish the “claim this profile” process it repeatedly gave an error message) it will basically become a social networking aggregator, a hot field at the moment but different than what the site seems intended for.

Why will it not work as a people listing? Basically, because I don’t know how it won’t become a major spam magnet once it opens up to public users. Besides that, it has all the potential to have all the problems that Wikipedia has with user credibility, self-promotion, grudges and personal attacks.

I went in and added my web site, so now people who look at my entry can find that page alongside my less-recently-updated Myspace page. That’s pretty cool. And since you can tag people, I guess I could have tagged myself “MBA” and “Midwesterner” or stuff like that–maybe I will. But then, what’s to stop someone from going to my profile and tagging me “capitalist pig” and “hillbilly” as well? Nothing, it seems. I guess maybe I can vote those down or something–but for now that’s not enough to convince me it will work, or that in the current social networking blizzard I’d really want to spend much time using this particular site.

It’s all kind of unclear how the site will look with heavy traffic, so my observations are quite preliminary. But does Spock match the hype so far? I don’t think so.