With barely seven weeks until the midterm elections, Americans have
an overwhelmingly negative view of the Republican-controlled Congress,
with substantial majorities saying that they disapprove of the job it
is doing and that its members do not deserve re-election, according to
the latest New York Times/CBS News poll.
The disdain for Congress is as intense as it has been since 1994, when Republicans
captured 52 seats to end 40 years of Democratic control of the House
and retook the Senate as well. It underlines the challenge the
Republican Party faces in trying to hold on to power in the face of a
surge in anti-incumbent sentiment.
It's one of his classic "how to" posts that make Brad's blog a must read.
Here's the summary paragraph in case you don't feel compelled to click thru (you should):
Our experience suggests a private, venture-backed company should have
between 8 and 12 meetings a year, with at least half of them face to
face. As a company grows and matures, the number of in person meetings
will logically decrease, but should never fall below one each quarter,
preferably in the first month of the quarter so the performance of the
previous quarter can be reviewed while it is still fresh and current.
I think that's solid advice. But I like monthly meetings myself and I hate doing board meetings via phone. The only thing you can do well over the phone is update people. Forget about having a meaningful discussion ovder the phone unless the call is very short and you have a very specific item to discuss.
Behavorial Targeting has really opened up these two industries (more
than others) as to the power of RETARGETING consumers on inventory,
that is just not as expensive as portals....
Thus, when a large company with a "considered purchase product" (like
auto or mortgage) is faced with a choice on HOW BEST TO SPEND MONEY
ONLINE ---- the highest CPM placement will often times lose...(unless
they see their consumers at a higher frequency than others)
this is one scenario where portals and large branded websites (with high CPM's) will lose and not be able to compete.
It's about ROI - and the auto makers (and their agencies) understand
the value of media and technology online, more than most verticals...
Yahoo has huge problems that will not be soon corrected.
1. our customers spend $30M a year on Google and only a fraction of
that on Yahoo because Y!'s management systems are so messed up;
2. internal Yahoo product development and management on the search
engine ad side is in a shambles, and they can't find their way. You can
bet that Panama will be delayed again. We have had many meetings with
Y! tech people over the last 18 months to try to make our product work
for our customers on Y! and have gotten nowhere, meanwhile at G,
everything works like a charm. So the money flows to G and away from Y.
3. IF Y! could fix their problems they could take back a lot of $$'s
because all my customers would love to diversify away from G a bit and
spend more on Y!
We spend > $2.5 million a year on Google and Yahoo can't manage
to show enough ads to clear even $50K from us. We put in the same
keywords for both, so ...
Time to clean house at the exec level at Yahoo.
Don't be misled by your cashflow analysis. They will keep finding a
way to disappoint. I remember buying 3Com on similar cashflow basis in
1996-7. That was a genius move alright - NOT. This is not to say that I
would buy Google at these prices (Cisco is back at 98 prices now, so
Google in 2014 could be still at $400), just that Yahoo isn't the
bargain you think it is, considering they are losing altitude rapidly.
If you want to know what's going on in the trenches, just ask. And they will tell you. Anyone who buys and sells stocks, particularly tech/internet stocks and doesn't read blogs are really missing out.
I didn't get around to placing my buy order on YHOO today and guess what - I am rethinking it.
Thanks Andy, Joe, James, and everyone else who left a comment. You are the best!
On July 20th, I blogged that I was going to buy Yahoo (YHOO). I did just that and was up 15% on the trade until yesterday when Terry Semel announced that the Sept quarter is going to be at the low end of the range on revenues and earnings. The stock is back down below $26, and my 15% gain is up in smoke.
So what to do? One friend doubled down on his YHOO trade yesterday. He hasn't blogged about doing that so I won't link to him. Another friend is taking a wait and see approach.
I did some digging around yesterday and from what I hear, the display ad market is healthy for everyone I checked in with. Search seems to be doing fine too.
I suspect it's an issue of being overly agressive in forecasting. As Dave Moore of 24/7 Real Media says in Saul's article:
Mr. Moore said it was possible that Yahoo, in its race to compete
with Google, was simply overoptimistic in its forecasts and too eager
to appeal to investors. “You are expected to grow every
quarter,” he said. “There is a law of large numbers. It just gets
tougher and tougher to please the Street.”
Wall Street is a game of expectations. But I prefer to look at the facts. If Yahoo! does come in at the low end of the range, they'll have revenues of $1.1bn and operating cash flow of $450mm this quarter. That's an annualized rate of $4.5bn of revenue and almost $2bn of cash flow. At its current market cap of $35bn, that's 17.5x cash flow, not taking into account its balance sheet and its ownership in Yahoo Japan which is a significant asset. And cash flow is growing at 15% year over year.
News Corp has annual cash flow of $3.8bn, which is growing at less than 10% year over year, and trades at 16x cash flow.
So I think Yahoo! is fairly valued, and possibly cheap, at $25/share. I am going to join my friend and buy some more.
PS - Thanks to Drew for the title of this post. That was the subject line of his email to me yesterday when the news hit.
It was a good run. But it ended in apathy and rebellion (from the kids).
We had a lot of fun doing it and I hope those of you who checked in now and then enjoyed listening.
Here's where I come out on podcasting:
It's a fun thing to do for a while. But it's really hard to sustain. It requires setting things up, getting a show together, and then editing the audio, making sure the sound is right, and then uploading the file to a hosting service, and then publicizing it.
In the end it was too much work.
And as a listener, I'd much rather read than listen to people talk. Music works for me, but I'd rather have the individual files than one long mp3 that I can't do much with.
Podcasting is cool, but my feeling is that there are better ways to connect with an audience on the web. Blogs, videoblogs, feeds, and mashups are all way more compelling to me than podcasts.
Yesterday I threw out "It's better to beg for forgiveness than to ask for permission".
I first heard that line from Tom Evslin who used it to describe the way he got things done when he was AT&T rolling out their first ISP service. I am certain that asking for permission is not the way to get things done at a big company like AT&T.
In a small company, I think asking for permission works a bit better. The maverick will always be valuable at times, but they break a lot of glass and may not be effective over a long period of time. In a small company, I would advise that you try to work as a team and get alignment early on all projects and initiatives. The lack of bureaucracy in most small companies means you don't need to work outside the management system in order to be effective.
But small companies may need to act like mavericks when it comes to the market they are operating in. I discussed how YouTube and others have taken that approach to the online video market yesterday. But it happens in many markets all the time. The upstart can get away with breaking the rules because they are too small and they get ignored. That allows them to get things done that would not be possible under the traditional ways of operating. Then as they get bigger, they can change their stripes and behave more like the other market participants and "beg for forgiveness" in the process.
A good example of this is Google. They crawled publisher's pages without their permission. Had they asked for it, many big publishers would have said "we don't want you doing that". But they did it, built a great service for consumers and drove tons of new traffic to the very publishers who probably wouldn't have wanted to had their pages crawled in the first place. Now, the same publishers employ search engine optmization strategies and even buy keywords to get more traffic out of Google.
So while I don't recommend hiring mavericks inside startups, I do recommend that startups act like mavericks in the market. It's frankly the only way to get somewhere fast, which should be the objective of every startup.
If you've read this blog in the past four days, you'll know that Ben Kweller is a big favorite in our house. Meeting him in front of the hotel on Saturday night just confirmed for me what a great guy he is (this is a photo of Ben with the Gotham Gal and our friend Chana).
According to last.fm, he is fifth on my all-time listened to artists on iTunes since I started using last.fm roughly a year ago. Clearly I play the Sha Sha and On My Way records a lot.
Ben's latest record, called Ben Kweller, was released today and is now available at Amazon. We've had the record pre-release for a month or so and it has easily been the most played record in our home during that time.
Ben Kweller writes pop songs that are based in rock n' roll (his band Radish - signed to a record contract when he was 14 - was compared to Nirvana). His songs make you sing along. Our whole family breaks out into song when the chorus comes on most Ben Kweller songs.
And the new record delivers a bunch of new sing along pop songs. My favorites are I Gotta Move, and the Lou Reed inspired I Don't Know Why (which Ben sang acapella for us in front of the hotel on saturday night).
Do yourself a favor and get this record. It's certainly one of my top ten for 2006.
I was in a cab coming home from the airport in August or September of 1984 and listened to Doc Gooden strike out like six guys in a row in a complete game. It was humid and the game crackled on the radio. I was hooked. I had just moved to NYC and I was going to be a Met fan.
I've been a Met fan ever since and there's been some hard years. But not this one (so far anyway).
And so it was fitting that I was in a car home from the aiport last night listening to the Mets clinch the NL East, a foregone conclusion for the past month and a half, buit it doesn't matter.
"It's better to beg for forgiveness than to ask for permission"
One day I'll cover this one in my VC Cliche of the Week series, but today I am going to use it to discuss the dance that is going on between user generated content services and the copywright owners. Bob Lefsetz says in the opening of his post on Doug Morris' comments last week about YouTube:
Call it the Napster effect. You’ve got to steal the labels’ wares, because you’re never gonna get a license.
That's right. Technology is moving fast. We can use technology to do stuff today that wasn't possible five years ago. We can go to a Flaming Lips show, shoot a video, upload it to YouTube, and share Wayne's wacky crowd surfing move with the world:
Or we can upload The Flaming Lips song Yoshimi to our blogs and share that with the world (like I did yesterday).
These are amazing things we can do. We can record and share media with others. We can be the TV network, radio DJ, the record critic. I am convinced that when the audience becomes the media and the distribution system, artists are going to be much better off than when they had to rely on middlemen to do that job.
Technology entrepreneurs are building new services every day that makes stuff like this possible. They have two choices. They can ask for permission or they can beg for forgiveness.
Have a good idea for a business employing music? Try to be
reasonable and ask for permission? You won’t get it. You’ll spin your
wheels, wasting time and money, and eventually be forced to go out of
business, or launch on such a limited, hamstrung basis, that you’ll end
up with a site/service that no one wants to use.
brazenly, steal with impunity. Maybe, like the principals of Hummer
Winblad, you’ll be sued personally for your efforts, but you’ll go down
in the history books as bringing the future to the people, as pushing
the envelope, as doing a good thing.
Without Napster, there’s no iTunes Music Store.
Without the Rio, there’s no iPod.
Bob is right about this. We've watched the entrepreneurs and VCs who have chosen to work with the RIAA. Where are they? Nowhere for the most part.
We've also watched the entrepreneurs and VCs who have "just done it". They are generally in a much better place.
Many people ask me why I haven't ever invested in a music related technology company. There's your answer right there. I won't invest in a "ask for permission" deal. They don't work. And I haven't had the stomache for "begging for permission", at least yet.
But YouTube is begging for permission and beginning to see the fruits of that effort. Yesterday Warner Brothers cut a deal with YouTube where Warner will give its music video catalog to YouTube on a revenue sharing basis and even more importantly, they will license their songs to YouTube so people like me can upload our favorite Flaming Lips video without breaking the law. Hell Yeah!!!
That's the ticket. Maybe Doug Morris was just negotiating via the media when he made his antagonistic comments about YouTube. Because he ought to know what Edgar Bronfman knows. It's what Bob Lefsetz said at the end of his post (I linked to it three times because I want you to read it).
The key is to get in bed with the enemy, to play along and invest in them, rather than shut them down, because you can’t shut them down.
That's going to happen. That's why YouTube is going to win bigtime. They've built the audience. They've built the value added services that make their service fun to use. And eventually they are going to get the content owners to play ball.
Begging for forgiveness is going to work for YouTube. And when it works for them, its going to work for others too. Precedents are hard to break.