What’s impressive about this deal is not just the pricetag, but the fact that it was done without VC.
They hat $60mm in sales with $25mm EBIT. Nice work, ladies!
I’m reading Tech Beat, “Amazon Thinks Out of the Search Box, Again” and John Battelle’s “Alexa (Make that Amazon) Looks to Change the Game” and I’m thinking there may be some kind of an interesting opportunity here.
Alexa is essentially going to turn their whole model inside out and allow anyone to essentially pay for using their content and infrastructure. You will now be able to write code that sits atop their 100 terabytes of data and oodles of computing power to mashup your own search engine.
I can see this warranting some in-depth research for my search-engine impassioned client, for sure, and for anyone else that wants a potential piece of the current search engine frenzy market.
Update:
Then again, Here’s Jeff Clavier’s “Repeat after me: the index of a search engine is a commodity” take on it.
If you like coming up with good ways to spend a lot of time on doing basically nothing, yet feeling you’re getting something done, check out:
where you can use mathematical formulas to come up with your own ring tones. Very cool.
Here’s what I came up with after “investing” 15 minutes:
http://tones.wolfram.com/id/GqAr7bT6K3NsPnBu23ZVHFEDYElwlwmdixIKNicWkRynse
My good friends at BBiTV have a cool idea which, among other features, allows end-users to publish video content which is then viewed by other digital cable subscribers.
I just read about Brightcove, a $16M startup which is taking a slightly different spin in that it lets anyone syndicate their content and sell it. Brightcove inserts ads and earns a % of the total revenue. Check out the news.com articles, “Site will cater to offbeat films” and “Net TV start-up lands $16 million in funding” for more info.
I think Brightcove typifies the type of stiff competition that BBiTV will be facing. While digital cable is going to be around for a while, I think the key will be to tie the Web/Internet to my TV.
What I would DREAM about having would be a way to surf around the web, find (legal) videos, then direct them to be downloaded to my Tivo, which I could then watch at my leisure. And if the site has an RSS-type feed, let me subscribe to it, podcast-like, and get new videos sent to my Tivo.
Now you’re talking.
John Battelle’s blog is reporting that Yahoo and Google are effectively setting themselves up as VC firms, sorta.
The logic is simple: if they see a promising company that’s in their space, they have the expertise to do a good due-diligence, and they also have the cash to snap them up before VCs get to them and raise their valuation.
In short: Google/Yahoo are getting startups for cheap by getting in earlier than VCs do.
Now, we don’t know how long this will last, but you could do a lot worse than identify some technology that Yahoo/Google will want and then building it “real” enough so that you get bought out.
Wow, talk about a great burger!
There’s apparently some hot and heavy rumors flying around the Valley that Riya, a cool company that can do facial recognition on your photo collection (Imagine searching for all the photos with “mom” and “baby” in them!) was acquired by Google for $60M.
What’s even more interesting is that they didn’t even officially launch the company yet! Apparently they are (were?) going to launch at a party this Friday.
Riya was started with $4M.
Hmm….invest $4M, flip for $60M. Not bad. Not bad at all (depending of course on the pre money valuation at which the $4M was invested). Some say they sold out too soon, and that may be true, but that kind of thinking is based on a belief in Scarcity, not Abundance. The Abundance way of life says there are many more Riyas waiting to be built. The Scarcity way of life says there’s only one Riya and it’s your only chance to succeed.
I believe in Abundance.
Hat Tip:
…and that’s “Word of Mouth”.
I’ve been thinking about this for a while and this post from Brad Feld, “Are Customers Your Best Marketing?”, drove me to finally jot down some bullet points on how I feel about Word-of-Mouth marketing.
Here’s Kay’s law #21: “The amount of marketing dollars required to generate sales is inversely proportional to the product’s buzzability”.
Buzzability = ability to generate activity via word of mouth discussions.
Whenever I think about spending marketing dollars, I think about how much money Google spent to market their search engine: Zero.
I’ll bet you can remember exactly how you found out about Google and of course it was through a friend.
So what simple rules can we take away from the Google lesson that can help you figure out how to increase your product’s buzzability?
Leighton Chong once made a point that many new inventions are really superior, but they take too much effort on the part of the customer and so they fail. One of the biggest problems I had with one of my previous companies was that our product rocked but was difficult to explain, hence customer’s couldn’t explain it to their friends, and so we had a big challenge in getting the word out.
You want success? Make sure your product hits those three points and watch your word-of-mouth marketing take care of the rest.
I had the pleasure of meeting Paul Graham in person at MIT when I was invited to speak about Titan Key’s technology. He’s a good guy.
He raises some interesting questions in this essay, “The Venture Capital Squeeze“. His main point is that there is too much VC money chasing too many deals and this is further exacerbated due to a dramatically lowered cost of developing web-based technology.
Paul may be correct on this points, in the realm of Web 2.0 startups, but I’m not sure if I would make that kind of a blanket statement that applies to the VC industry in general. Biotech companies need tons of money to get started, so I’m sure that once VC’s figure out that software startups need 1/10 the cash they used to, the other 9/10ths will go to different kinds of companies (or, perhaps China and India) that needs the money.
First-time entrepreneurs are so enamored w/ the idea of getting outside investment that they overlook all the non-money issues that need to be considered to make the partnership a successful one.
Scott Maxwell wrote up a nice post here in “Choosing a VC- You need to squeeze the avocado!” that’s a good read, filled with common sense stuff that one typically forgets about in the rush to get a check.
(BTW, you might notice our designs are identical. I liked his page and found the designer that did it, then (legally) downloaded her “design theme” and installed it on my blog. Thanks Scott!)
There’s a fine line that we need to walk in the Burger Model (a company built to flip) way of life. You can get a little too cheesy (no pun intended) and end up creating an el-cheapo McDonalds burger, or you can really put your heart and soul into building a burger to die for.
I picked up Russell Beattie’s blog post by reading Mark Pincus’ blog and Russell has done a very nice job of pointing out a lot of wannabe companies that are looking for a quick way out instead of really innovating something that will change the world. If what you’re doing is on this list, I’d take a long, hard look at it.
P.S. Jeff Clavier responds with a little more balance. The message is still the same: do something significant as opposed to going for a quick hit that you pray will be gained by adding a feature to something that another company is already doing quite well.