80 posts from November 2006
I was talking to my friend Mark about Yahoo! recently and he said something like "as long as they maintain their audience, I think they'll be in good shape".
The same point was made by Randy Befumo of Legg Mason, in today's New York Times in the piece about Yahoo! being a "value stock":
“If you have a traffic problem, then you have a fundamental business problem because you have nothing to convert into revenue dollars,” he said. “But if you have a monetization problem, which is what Yahoo effectively has, you always have options.”
So I went and ran some charts on Comscore. Here they are.
What these two charts show is that the top 10 properties (US and non US) are fairly mature with the exception of Wikipedia and Fox/Myspace. If you include a few more properties, you get this chart:
When you look at Yahoo! and many other properties on this list, you see that they are mature properties, even on a global basis and their audiences are growing in the single digits.
While the Internet may be far from mature, many of the leading businesses on the Internet are starting to be.
You can see this even more dramatically in the worldwide page view numbers below:
Yahoo!'s worldwide page views are flat, Microsoft's are in decline, as are eBay's and Time Warner's (AOL's). Only Google and MySpace grew last year.
Now some of this may be a move to ajax and other more interactive web page technologies that dampen page views. But I think its more likely the deportalization of the Internet and the move of audiences to other places where they get more value.
So I go back to Mark's post that I linked to at the top of this post. Mark says:
what i care about is that they deliver a high quality, targeted audience to major advertisers. if they lose share to myspace and google, it still doesnt matter because the overall market is growing rapidly and will bring them with it.
I am not sure that last sentence is accurate. The market Yahoo! and everyone plays in is maturing. Market share matters now. And Yahoo! is losing share to Google and MySpace and more importantly, the rest of the Internet (the long tail). That's what I think.
I went to see Borat yesterday. Maybe it was because I had seen all of the funny stuff from the movie on YouTube already, but it mostly bored me.
That said, I think Sacha Baron Cohen is hysterically funny.
This video I found on YouTube (courtesy of the vodpod on this blog) cracks me up:
Brad Garlinghouse's memo is worth reading if you do business with Yahoo!, work for them, own their stock, or care about competition at the top of the Internet pyramid.
Having sold a few companies to Yahoo! and watched another sell out before we could invest, I found this part of the memo to be particularly true.
We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.
• YME vs. Musicmatch
• Flickr vs. Photos
• YMG video vs. Search video
• Deli.cio.us vs. myweb
• Messenger and plug-ins vs. Sidebar and widgets
• Social media vs. 360 and Groups
• Front page vs. YMG
• Global strategy from BU'vs. Global strategy from Int'l
When Delicious was sold to Yahoo! I hoped and expected that they would merge delicious and myweb, at least the backends, and ideally the entire services into a single social bookmarking system they could propogate across their entire network, particularly search. It never happened and I think they missed a huge opportunity, in fact the opportunity that Delicious presented them.
It appears that Yahoo! likes to hedge its bets. But that means they don't have confidence that they can make the right ones.
Brad argues that Yahoo! must make the tough calls:
Kill the redundancies. Align a set of new BU's so that they are not competing against each other. Search focuses on search. Social media aligns with community and communications. No competing owners for Video, Photos, etc. And Front Page becomes Switzerland. This will be a delicate exercise -- decentralization can create inefficiencies, but I believe we can find the right balance.
It's good advice and I hope they listen to Brad.
Jessica, our oldest daughter, was too old to play in the GVYC league (at PS41 in Greenwich Village) this year. So she signed up to be an assistant coach. But in the first game of the year, her head coach couldn't make it.
So she got a battlefield promotion and was head coach.
It was fun to watch her handle a team.
I have become a huge fan of Flash. I never liked websites that were built in Flash. They took too long to load. I never understood what was wrong with html. It's still true that a website that is entirely built in Flash is not attractive to me. But delivering certain services in Flash, the way Etsy does with the shop by color or shop by geography, is a smart approach.
But to me what is happening with Flash players and widgets is even more interesting. Flash players/widgets are becoming a new paradigm for content distribution and consumption. I can imagine a time when my desktop is covered with Flash applications that look like Apple's dashboard.
It's already happening. When I go to the Hype Machine, I do a search for something I like, and then click listen. The cool brazilian open source Flash player pops up in a new browser window and plays music for me. I often keep that Flash player open for hours on my desktop.
The other music widget I really like is the Streampad widget that I run on the left sidebar of my blog. I gave that Streampad widget my blog's feed. It picks out all the mp3s I post on the blog and puts them into a single flash player widget.
But the best thing is that you can click on the lower right of the Streampad widget and it will pop off the page and play the music for you for as long as you want. You get to keep surfing and the music stays with you.
That's the magic move I want from all the Flash players/widgets I come across on the web. And it's one of my few beefs with the YouTube flash player.
You can popout the flash player from YouTube by clicking the box at the lower right, but the new browser window takes over the whole screen when you do that. You have to fuss around with the browser to get it to shrink to a more manageable size. But once you do that you can move on and still watch the video.
It would be great if the YouTube flash player that pops out from the web page had a few more controls on it so you could use it to continue to play videos from YouTube from it instead of having to go back to YouTube.
In fact, if you click on any of the two suggested videos that come up at the end of a YouTube video and you have the flash player open in a browser window on your desktop, it will take you back to YouTube. That doesn't work for me. I end up just shutting the widget down.
Google video works the same way as YouTube. You can pop out the flash player into its own browser, but it takes over the whole screen and you have to fuss with it to get it to be a widget on your desktop.
The Google video widget doesn't even give you more videos to look at after the video you watch is over. It runs a post roll thing like Revver does. They gotta turn these widgets into a persistent video app that you can keep on your desktop all day long.
The other flash widget that I love on my blog is the Oddcast avatar. There is no way to make it popout of the page and onto my desktop. But there should be.
Take a look at this screenshot. This is what happens when you are in Sitepal previewing an avatar you created. That exact same popout should be available on the lower right of the avatar on my blog and it should have community functions on it so people can leave me messages and I should even be able to IM through it. I know that Oddcast is working on stuff like that. I hope they plan to let my avatar live on my desktop instead of on a page if I so choose.
I love the idea of using Flash to create a persistent set of apps that I can keep on my desktop all day long. As I've been writing this post, I've been building that desktop. Here's what it looks like. It doesn't work exactly the way I am imaging it should. But we aren't far from the day when it will.
I have no idea if we are headed for another bust. I sure hope not. But having lived through the 2000 bust with a portfolio that was not "bust proof", one of the things I think about all the time is how to build a "bust proof" portfolio.
And part of my thinking about this notion of a "bust proof portfolio" is driven by what happened with the Flatiron portfolio when the market broke. We had about 36 companies in the portfolio at that time, as we had exited about 21 companies before the market broke. Of those 36 companies, one third were out of business within 12 months, one third were sold during the "nuclear winter of 2001-2003", and one third made it through and are doing great. What was it about the ones that made it through? And what if you could construct a portfolio that had the characteristics of the companies that made it through and are doing great?
So here are the things that those "survivor" companies had in common:
I hope nobody takes this post as me saying that we've built a "bust proof portfolio" at Union Square Ventures. We may not have another bust, and if we do, we'll find out then if that's the case. What I am saying is that when you are taking the kinds of risks we take in the venture business, you really shouldn't increase the risk profile beyond what is required.
I am seeing some things in the market now that concern me. Rising private company valuations (particularly in the Series B and Series C rounds) that may not be sustainable in a different market. The rise of strategic investors in the capital structures (we saw how quickly those investors bailed when times got tough). Increasing burn rates. Rising expectations on exit valuations.
I am pretty sure that we are not in for a rerun of 1998-2000 because there is a lot that is different now about Internet businesses and Internet investing. But I am also sure that there are lessons to be learned from the bubble that burst in 2000 and we should not forget them.
I've written a bit about attentiontrust and what it's all about on this blog before. Lindsay gets Seth talking about it in this interview and he does a great job of explaining why our attention matters and what we all need to do about it.
The question Lindsay didn't ask Seth is if Google is a short when users take full control of their attention. I don't know the answer to that, but it certainly came to mind while I was watching this.
And Joe's versus John's isn't even a question. Joe's wins every time.
Delicious was sold to Yahoo! almost one year ago now. The team has dispersed, some to Yahoo!, others to their own startups here in NYC, and some have moved on to new jobs.
But for some reason, last night was a delicious reunion. I bumped into Chris Fralic (VP Business Development) and Dan Kantor (developer and the creator of the playtagger) at the NextNY event at Columbia University.
And then I headed downtown for a bite with the Gotham Gal and then on to see Modest Mouse at Webster Hall where I bumped into Max (network operations and development) who was at the Modest Mouse show with a friend.
It was good too see the old gang who used to hang out downstairs from us on the 11th floor and do the Shake Shack and Jamba Juice trips with us.
Modest Mouse was awesome. Isaac Brock is a unique entertainer. Part punk, part country, part classic rock. And always high energy. They sounded good with Johnny Marr (The Smiths) on guitar. My favorite was a long and crazy version of Tiny Cities Made of Ashes. My videos of the show are up on YouTube. Here's the new one I like so much called We Tried Everything.