Soaring on Ridgelift

Normal blogging will resume…

Out of the country on a trip this week – R&R and therefore not much time for blogging! As the BBC used to post during television outages (anyone else remember those???):

Normal service will be resumed shortly – we apologize for this interruption in service.

On our way out of San Francisco International, I did capture the following – a sign posted in one of the cafés in the gate area. Even MacDonald's doesn't do this!

Oh well… Welcome to San Francisco… now you are on your way home!

Grand Slam Valuation

Just catching up on my news reading after a busy and disconnected (from the 'net!) day – this article on the NY Times web site gives their take on the investment by Microsoft in Facebook.

This is surely a record valuation (Bubble 1.0 valuations NOT withstanding) for an investment in a private company – a staggering valuation given any conventional metrics.

Don't even try and think about this valuation in the context of an investment - Microsoft plays the classic role of a strategic investor in Facebook:

• It's not about a return on the capital
• It's all about access and strategic value to Microsoft
• Warning to startups reading this at home: Resist the temptation to think about this as a comp - #1 you aren't FB, #2 see above.
• Like the credit card commercial, the value to FB - $240M (very nice!), the value to Microsoft? Priceless!!!!

This is a bold, swing for the fences move for Microsoft to establish themselves as a player in the engagement world – don't think just advertising, this is about capturing the ATTENTION and ENGAGEMENT of the audience.

In a world with so much information, so many things competing for our attention, we're all becoming ADD – engagement is the interesting metric. Forget reach, CPM, CPC, CPA – it's about engagement – minutes (or hours looking at Meebo numbers) of focused attention.

The world just got even more interesting! Stealing a tag line from my friend (and fellow VC) Rick Segal…

I love my gig…

 

MusicIP – analytics for Music

MusicIP today released a new service for artists interested in how (and where) their music is being consumed.

You can see an example of one of reports in the graphic at the top of this post – click on it or here for a larger version – this shows the world wide distribution of Plain White T's track "Hey There Delilah".

I first wrote about MusicIP over a year ago in my post "Revenue from Control" where I described the MusicDNS service that is provided by MusicIP. MusicDNS lets you look up a track of music from a unique audio based fingerprint and recover the associated metadata for the track. I wound up joining the board of MusicIP earlier this year.

MusicIP Reporting Service flows from the data that is collected about track consumption – all data is anonymous with strict concerns for maintaining privacy – for example, the IP address of the consumer is discarded immediately after the approximate location is looked up – there's no record of the IP address kept after the lookup and no identification of the user.

For the first time, artists can see how their music spreads and also compare how their tracks are positioned relative to other, similar sounding music. MusicIP is a company with deep intellectual property for the analysis of music. For example, the technology that identifies similar sounding music is phenomenal – almost uncanny in its matching ability – backed up with a database of over 30 MILLION tracks and growing.

You can try out that technology by downloading the MusicIP Mixer – check it out, the playlists generated by Mixer are very good and a great way to explore your music collection.

You can get a sample of some of the other reports from visiting the MusicIP analytics page here.

MusicIP's Reporting Service is available on-demand with self-service via the MusicIP web site. It's a great example of building a business around a database generated from a service.

Cellular Choice

The Journal Report section of today's WSJ features a lead article by Walt Mossberg – Free My Phone. It's a great read and lays out a comparison of using a personal computer versus a cell phone. With the PC, you are free to choose vendor, operating system, ISP, applications etc. while with the cell phone you are stuck in a walled garden where the carrier tells you what you can do – if you don't like it, tough luck as the "competition" isn't any different.

Mossberg pulls no punches (my emphasis added):

"A shortsighted and often just plain stupid federal government has allowed itself to be bullied and fooled by a handful of big wireless phone operators for decades now. And the result has been a mobile phone system that is the direct opposite of the PC model. It severely limits consumer choice, stifles innovation, crushes entrepreneurship, and has made the U.S. the laughingstock of the mobile-technology world, just as the cellphone is morphing into a powerful hand-held computer."

Sadly we can say the same thing about broadband connectivity – while our elected officials proudly point to the percentage of US homes with "broadband" access, their definition of "broadband" is a low hurdle and leaves us with far less bandwidth and capabilities than countries like Japan and South Korea.

The closed nature of the Cellular Carriers has a definite stifling effect on the evolution and delivery of new capabilities – just as it did before the wireline networks were opened to innovation.

I see a fair number of business proposals to leverage the mobile phone as it morphs into a computer – my first two questions are always the same:

• Do you need the carrier to do anything to enable your business? There's a degree of difficulty element to this – it ranges from getting the carrier to "sign" your app so it can be downloaded, to giving the carrier a cut of sales and ends with deck placement.
• What can the carrier do to stop you? This can be as simple as asserting terms of use that close off your ability to do business.

Mossberg points out this problem for small companies:

"As a technology reviewer, I have met with multiple small companies that had trouble getting their programs onto consumers' phones without the permission of the carriers; getting that permission often requires paying the carriers. Sure, there are some clumsy workarounds that can evade the carrier barrier, but it's nothing like the ability small software companies have had for decades to offer their products for installation on Windows or Macintosh computers."

There are also signs of change for the better – Apple announcing an SDK for the iPhone (we'll have to wait and see how much freedom this provides however), the possibilities of the Google gPhone and perhaps signs of enlightenment at the FCC.

Despite the obstacles, this is a space full of opportunities for startups – it just requires careful thought to deal with the above questions.

 

 

iPhone update

Its been a couple of weeks now since I swapped my Treo in favor of an iPhone.

Overall I'm pretty happy with the change and this weeks announcement that Apple will open up the iPhone for native app development was great news.

My wish list for apps starts with:
- search of mail and contacts
- remote integration with X1 desktop search
- Suduko

I had to prune my contact list - with 3,500+ contacts in Outlook, entering an email address was painful as the phone tried matching what I was typing with an entry in my contacts. I pruned to a shorter list of about 400 contacts and that works fine.

I love the UI of the phone and the display is awesome.

A taste of SPAM to come?

Thought you'd seen it all? SPAM in the form of embedded images, PDF documents, simple email text – yep, we've seen all that but wait, there's more!

Check out this article in the online NY Times this afternoon about the next wave of SPAM – audio and possibly video!

What's really bad about this is the increasing size of the SPAM messages – most of the crud I see in my SPAM folder today is about 5-7 KB – if audio SPAM catches hold, the size could increase 10x – a sizeable increase in the resources that are wasted by Spammers.

Viral Limits – take 2

The launch of the Hype Machine yesterday offers an interesting insight into the dynamics of viral marketing for the next generation of Internet applications.

Late last night after my previous post about the Hype Machine aiming to gather 10,000 "spectators" for their re-launch, there were about 3,000 users listed as active on the Hype Machine site.

Sometime overnight the Hype Machine went live without reaching that goal – you can see their candid explanation here.

What's interesting is the underlying dynamics of viral distribution – with so many applications and new web services looking to build users via a free to either ad supported or "freenium" (free to premium services for a fee) offerings, digging into what makes for effective viral marketing is illuminating – to say the least!

This follows on the heels of an article on Mashable giving some background on the "readership" of different blogs – at least according to their blog feed stats.  Getting to the bottom of active readers versus users just pulling a feed is a key metric for those using the Internet for marketing campaigns.

If my own feed stats are anything to go by, reach – defined as active users reading articles, is about 30% of the total number of subscribers to the an RSS feed.  Sadly RSS stats today don't differentiate between new or repeat readers in the same way that web analytics report them.  As a result, it's much harder to get a real picture of the readership of a given Internet "property".

So despite the PR of leading bloggers announcing the re-launch of the Hype Machine, they didn't accomplish their marketing goal in a reasonable time. 

Key take-away: PR alone even with A-list bloggers isn't enough – it's too passive – you have to engage your users and co-opt them into being your supporters.

 

 

 

 

 

Viral Limits?

Am I the only person who is underwhelmed by the "re-launch" of the Hype Machine? It's looking like a great demonstration of the limits of word of mouth as the precursor of viral adoption.

Why? Fred Wilson blogged this morning about Hype Machine not re-launching "until he gets 10,000 people to show up there at the same time" – this timed at 3:32AM PDT by my RSS reader. By 7:59PM PDT, Read/Write/Web follows up with a post that says there are just over 3,000 people hanging on the site with an open browser.

Right now (8:29PM PDT) it's reached 3,294 people – 17+ hours of A-list bloggers and only a third of the way to the goal?

This looks like a viral marketing campaign that caught a cold!

I look forward to seeing the re-launch but it's already failed to live up to expectations.

Better weather on iPhone

As I've written here before, I'm a weather geek – born in the UK alone makes for being weather passionate but add being a pilot on top… well, you get the picture.

One of the best weather sites just got even better – surprised by some unexpected light rain today; I dialed up the Weather Underground on my iPhone to check the weather. They've added an iPhone specific formatted weather page that is accessible via http://i.wund.com which is also hyperlinked from the top of the Wunderground home page.

Check it out! It has a great summary of the weather for a specific location including current conditions, the METAR (surface observation) of the nearest airport, current NEXRAD and the 5 day forecast. Loads in about the same time as the much less useful weather information accessed from the iPhone icon for Weather.

You can access the iPhone page as a summary from a regular web browser but it's much better on the iPhone.

Excellent addition!

Social Networks and Airlines

No – this is isn't a post about starting a new airline based on a social network of passengers! But like the airlines, social networks have their own hubs and spokes.

The airlines leverage a hub-and-spoke system for their network of interconnecting flights. The hub is a major population center that provides an interchange point between different destinations and the spokes are the airways between hub airports.

The hub and spoke system lends itself to network efficiency and helps drive up passenger load factors but it has inherent problems. Contrary to the claims of the airlines that General Aviation is the cause of flight delays and "overload" of the ATC system, it's the hub-and-spoke system itself that is the root of their problems. Any delays caused by weather, mechanical issues or crew problems have a ripple effect that can cripple multiple airlines. Even a single flight delay can cause cascading problems throughout the system – multiple flight delays cause temporary system failures.

Social networks have their own examples of hubs and spokes – both internally and externally. For example, within a single social network, the hubs are people with above average numbers of friends and the spokes are the relationships between people. This makes the hub people both valuable and influential within the network.

Hub people are valuable because their high level of interconnection means that "what they do" gets seen quicker by more people. They are the hotspots of driving viral adoption assuming that there is wide appeal of what they choose to do.

They are influential for the same reason – if they decide to leave a particular social network, they are more likely to drive a higher number of defectors to follow!

Now consider the implications across social networks – some individuals are going to be major hub people in multiple social networks. Think about one of your highly connected friends in Facebook that also has a large network of business contacts over at LinkedIn. These people represent űber-hubs and if we apply Metcalfe's Power Law of Networks, their value increases non-linearly.

Űber-hubs are also the people most likely to push the boundaries of what can be done within a social network – I've already heard comments by some of my highly connected friends that they've had the social network equivalent of a "cease and desist" notice as they try new things. Inevitably there is a conflict between how the social network wants to control its business (by setting the terms of use for example) and how the network will evolve.

Some implications:

• Identifying and marketing to Űber-hubs is a critical element in a distribution strategy that leverages social networks for reach.
• The intersection of Űber-hubs and serial entrepreneurs are of great interest to VCs like me!
• Social networks should identify and nurture Űber-hubs as they are both the keys to success and long term failure!
• Interconnecting the hubs is very interesting business proposition – take this view over on the AOL developer's blog as an example.
• Identifying the set of core social networks is going to be critical!

 

 

 

Xobni - update

Hats off to Xobni for their technical support – these guys have been super responsive.  They quickly figured out that I had an ancient build that for whatever reason, hadn't been updated.  They shipped me the new installer, followed up, asked for more information and are on the track of resolving the problem.

The performance is much improved and I'm optimistic that the hang will be nailed… and I'll get to keep Xobni!

Credit where credit is due!  You never know who the customer might be – check out Rick's post "An interesting Exercise – Bug Mail" - some food for thought!

So, what’s it worth?

How do you value a company when it's a) private and b) you are raising money?

The simple answer is that the valuation is set by the investor putting in the money. After all, there's no market for your stock and using any form of financial analysis would give you an answer you are certain not to like absent revenue with solid growth.

Today's WSJ has a sobering (and long!) article ("U.S. Investors Face An Age of Murky Pricing") on the issues of pricing illiquid financial instruments. It includes this quote from Warren Buffet:

Billionaire investor Warren Buffett advocates more transparency in pricing. "Some marks can be pretty imaginative," he says. "They call it 'marking to market,' but it's really marking to myth."

Marking to myth – great description! Take a brand new company that succeeds in raising $3M by selling 50% of its stock. On paper that makes the company "worth" $6M. But with no product and no revenues, if you tried to sell it the moment after you closed on the financing, the company value is purely a function of assets – which means a little less than $3M after taking legal fees, corporation closing costs etc.

The investor agreed to give $3M for "only" 50% of the company because they want the founder and employees to be motivated – no motivation and the investor winds up with the keys to the kingdom and a lot of wailing and gnashing of teeth!

Ultimately, valuation of a private company gets based on progress (reducing risk) and what a new investor thinks the company might be worth at some time in the future.

Going out to raise money with a minimum value in mind is setting yourself up for disappointment at a minimum or failure at the worst (absent the above revenue and strong growth). Why failure?... because some investors will ask the question "what valuation are you looking for?" as a reality litmus test – if you give them a number and they don't agree, many will smile politely and you'll never hear from them again as they don't want to be the one that bells the cat.

The only right answer is "the market will tell us the price"… and the market is the new investor.

Thought round-up

Sorry for the late post today – got behind on some things yesterday and the ripples are just subsiding.

Request for help – I've only had a couple of suggestions for new companies on the Open Source Company List – if you have a suggestion, please send them to me via email – put "OSCL-XXX" in the subject line where XXX is the name of the company.

I'm pretty pleased with the iPhone – the UI is great and the utility is high especially being able to use an "almost real" browser on the phone via WiFi. I miss the ability to search emails and contacts, email a URL or cut and paste between functions. Hopefully Apple will add these… soon!?

Blogging everyday is getting easier – now I need to convert "every day" from working days to "every day of the FULL week!".

The No-Harm, No Foul meeting offer still stands – I get a couple of these in every week and they are great! Keep 'em coming!

 

Risk (Aversion) Capital

Over the last two years I have seen a marked change in the willingness of my fellow venture capitalists to invest in early stage companies. It's become much harder for a small founding team with a business plan to raise money – almost regardless of the space.

Recently, articles have appeared such as "Venture Capital's Hidden Calamity" from BusinessWeek suggesting the the VC world is in crisis or "New VC Model For Small Scale Financing" by Bernard Lunn on Read/WriteWeb describing how the model needs to change.

It's worth taking a moment, stepping back and thinking about the different factors that are at work:

• Lack of exits
• Size of funds
• Pay up for proof

Lack of Exits

We're a long way from a robust IPO market – at a presentation yesterday by an investment banker, the suggestion was made that we'll probably see 50 or so IPOs this year – an improvement over the last couple of years but way short of even pre-bubble years where 150-200 companies went public each year. The average time to get from formation to IPO is now 6.5 years with the typical company going public having north of $100M in revenue, 15-20% pre-tax profit and growing 35+ percent year over year.

Acquisitions (which have always been the most likely way for investors to exit their investment) are also pretty unattractive as a way to get big exits.

Taken in combination, VCs are sitting on growing portfolios of companies which take time to manage even if the companies no longer need additional financing. As a result, there's not a lot of spare capacity to look at new deals and the bar for making a new investment has been raised significantly in terms of return potential, business plan and team.

Size of Funds

The average VC fund has become much larger - the amount of capital (per fund) that must be put to work by each partner has grown to $50M – about double what it was 10 years ago. With a lot of VCs already tight on time, increased capital means the VC has to look for opportunities where they can put larger amounts of money to work.

But there's a downside to putting more capital into an investment – more capital in means more capital must come out. The size of a "desirable" exit goes up as you raise more capital. This can put management and investors at odds – both in terms of the strategy of the company (swing for the fences versus build as you go) and dealing with lower value M&A opportunities which might put good money in the hands of the management/employees/founders but not represent a good return for the investor.

Pay up for proof

Ask anyone involved with early stage companies and they will tell you that innovation is alive and thriving – there is no shortage of ideas, indeed no shortage of great ideas!

Faced with the pressures of exits, fund size and almost overwhelming deal flow, many VCs are changed their strategy to "watchful waiting" – let someone else fund the early round(s) of the company, wait until there are significant proof points that the company is succeeding and then pay up to invest in the next round.

Unlike the first two dynamics, this works in the favor of the entrepreneur (assuming you can raise money from angels or a VC that doesn't have the above dynamics!). Unfortunately it doesn't bode well for returns at the VC Fund level because the exit dynamics remain the same!

 

Like Mark Twain, reports of the death of venture capital are greatly exaggerated but many VC funds are on the horns of a dilemma – morph strategy to cope with these dynamics or raise smaller funds.

For the entrepreneur and those of us committed to work with companies very early on, there are some key take-aways:

1. Raise less money up front.
2. Identify milestones around market, team and technology that remove risk and build value –then achieve them before raising more money!
3. Match the capabilities of your investors (Fund size AND expertise) to the capital requirements of your company.
4. If you have a capital intensive business, face the fact that you are embarking on a longer (and likely riskier) journey – hopefully the risk/reward equation will solve and make your journey worthwhile.

 

 

 

 

The secret lives of Venture Capitalists

One of the interesting insights I've had since installing Xobni is how many of my VC friends are morning people. I suppose I shouldn't be surprised, I'm one too!

My early morning isn't as structured as Brad Feld's but like Brad, I'm awake and out of bed early. When it's too dark to ride my road bike, I hit the stationary bike and read the morning newspapers (WSJ guaranteed but the NY Times often doesn't get delivered until after 7am) – then make a cup of coffee and start my work day with email.

When you select a message in Outlook, Xobni shows you details about the sender including a frequency graph that shows email arrival against time. The majority of my VC friend's show the bulk of email arriving early in the morning – mostly clustered between 5 and 8 am.

So, if you send a VC an email after 8am, don't be surprised if the reply doesn't arrive until the following morning – they aren't ignoring you, it's just the routine of the job!

Updating the Open Source Company List

It's been over a year since I published the Open Source Company List here on my blog. I'm the process of updating the list through a combination of research and "heads-up".

If you'd like to give me a "head's up" on new companies you think would be a good addition to the list, please drop me an email with "OSCL – XXX" in the subject where XXX is the company name. Please include a link to the company in the body of the message.

I'll re-publish the updated list in a couple of weeks.

Facebook – Business as a database?

Unless you live in Los Angeles you probably won't have seen Fred Vogelstein's article "The Facebook revolution" in today's Los Angeles Times.

Fred is a great journalist and always thinks outside the box – the premise of his article is that another way to look at Facebook is as a huge database of interactions between friends, neighbors and colleagues – a digital version of word of mouth information distribution.

Facebook could find some interesting ways of monetizing that database – not only does it have a detailed set of relationship data, it also has a rich transaction stream – every time you add a friend, change your profile, interact with an application… Facebook generates a transaction. Mining both the database and the log of transactions could provide very valuable data.

I've become very interested in business opportunities that monetize information mining – I think this is another way of building revenue for Internet facing companies that offer a substantially free service and build a large user base. Information mining provides an adjunct (or alternative!) to revenue from advertising that could be very useful in getting to profitability.

Xobni – useful but may have to go

I've been using Xobni for a couple of weeks now since their launch at the TechCrunch conference. It has a couple of features I really like – for example, displaying the last email you looked at when switching Outlook from Mail to Calendar. As simple as it sounds, this is a great feature as it saves having to remember the date and time of the meeting you are about to add to the calendar or having two windows open for Outlook – one for mail and the other for the calendar.

Unfortunately, since installing Xobni the performance of Outlook has fallen dramatically and from time to time Outlook hangs consuming 50% or more of the CPU. After a few of the hangs I'm beginning to believe there is an interaction between Xobni and X1 – X1 is the fast-as-you-can-type search tool that makes search for everything (mail, contacts, files…) so fast that it's a corner stone of my workflow.

I'm going to wait for another release update of Xobni before deciding whether it stays or not – I hope the interaction problem gets nailed but in the limit, Xobni is a nice to have and X1 is a MUST have for me.

Medical records - who will YOU trust?

Bill Gates op-ed piece in today's WSJ misses the mark and instead strikes the nail a glancing blow in "Health Care Needs an Internet Revolution".

Like Gates, I believe very strongly that we need to bring the Healthcare industry into the 21^st century and automate the information and workflow that is the foundation of quality patient care. This quote from the article is dead on target:

I believe that an Internet-based health-care network like this will have a dramatic impact. It will undoubtedly improve the quality of medical care and lower costs by encouraging the use of evidence-based medicine, reducing medical errors and eliminating redundant medical tests. But it will also pave the way toward a more important transformation."

Healthcare as an industry (with its highly fragmented set of providers and service companies) lags in its adoption of IT technology. Companies like Microsoft, Oracle and Cisco stand to gain significant revenue from the adoption process and rightly target it as a priority – not just because of the revenue opportunity but because of the true benefit it would bring to all of us.

Where Gates and Microsoft (with its announcement yesterday of HealthVault) miss the mark is the fundamental issue of trust. Simply put…

Who would YOU trust with your most sensitive data?

There are very few entities that have earned a trust relationship with their customers –insurance companies, most corporations, the phone companies, and (at least in the US) the government (whether federal, state or local) are unlikely to make the list.

The banks may be the best positioned of all to be the custodians of record for highly sensitive data like healthcare records – after all, most of us trust them with our money. The banks are a natural choice on top of the trust relationship because:

• They already use IT to automate their business.
• Have experience with massive databases and high transaction rates
• Provide audit trails.
• Operate with regulatory oversight.

Entering the market for healthcare records might be unlikely for the banks as it takes them away from their core competence – managing money (even if money is largely information today).

Trust is going to be pivotal in getting mass adoption of consolidated and online healthcare records. If not the banks, WHO would you trust?

 

 

 

Theory B for Facebook apps

Today's NY Times has yet another article on the Facebook application gold rush – "In Facebook, Investing in a Theory". It's worth a read because it exemplifies what I call "Theory B" investing.

Theory A is investing in a company with a clear upfront business model (it doesn't mean it will work but the company has a specific path to making money from the get-go). Theory B is investing in a company that hopes to grow fast, aggregate a large user base and then figure out the monetization strategy later. Faced with a prospect set of theory B investments, investors often look for acceleration (rapidly growing user base) and wait until they see a dominant player emerge before jumping in.

Bubble 1.0 showed that a large user base doesn't mean a successful outcome and worse, can consume a large amount of capital demonstrating that point!

The success of Google in leveraging advertising changed the perspective of investors and entrepreneurs alike. Theory B gained the illusion of a safety net – let's get big, gain a huge user base and lots of page views then if we can't find some other way of monetizing the user base, we can fall back on advertising.

But how valuable is the advertising? This quote raises an appropriate warning flag:

Precisely because Facebook is such an appealing and engaging environment, he says, Facebook users click on ads significantly less frequently than elsewhere on the Web."

This is a good point and worth considering with another – users can quickly become saturated by advertising and either ignore it or get annoyed by it. Monday's WSJ has a good article on keeping user's engaged with ads in "Marketers Get Creative to Stave Off Ad Fatigue".

With any theory B investment (regardless of whether Facebook or otherwise) it's important to keep the burn rate as light as possible until you have some idea of how monetization will occur. Using infrastructure services like Amazon EC2 can also help reduce the amount of capital required to prove out whether users will adopt the idea or not.

Many of the Facebook "applications" I've seen so far are more like "featurettes" – they aren't even full blown features. We need to see applications that:

• Offer real value to the user
• Have a high switching cost
• Low barrier to user adoption and make users want to tell other users of the value they derive

Facebook is attractive because it's a marketing channel – it's an easier and cheaper way of getting promotion to large numbers of people. Let's not confuse that with an "application platform" or a "marketplace" – you still have to figure out how to make money!

Miles and Miles and Miles…

An email reminder from American Airlines showed up today as a prompt that my miles in their frequent flyer program were set to expire at the end of the year.

Since I haven't flown AA in quite some time I wasn't surprised but it did remind me that Jim Anderson's weekly newsletter might not be familiar to many of you. 

Jim is the Editor of Silicon Valley Bank's weekly email/web newsletter – Investment Strategy Outlook and this week's edition was on the value of airline frequent flier programs and the staggering number of miles they have issued via affinity programs with credit cards.

The article is titled "Fly a Mile in My Shoes…" and you can click through to read it.  This newsletter is worth the weekly mail traffic – Jim is a great writer and the articles are always informative, often amusing.

To tempt you to click through here is a quote from Jim that I found thought-provoking!

"Based on this example, investors going by the name of FL Group are maumauing AMR Corp. (American Airlines) to spin off their rewards program. FL believes the program is worth $6 billion. If true (and given AMR's total market cap of $5.5 billion), it's difficult to avoid the implication that the airline itself is worth, well, less than zero."

This is the same American Airlines that wants to cancel out my miles at the end of this year – right!

My recent experiences flying United Airlines left me wondering if UAL every truly cleans their aircraft.  My flights to Burbank and San Diego this last couple of weeks were on old 737 aircraft that were dirty enough to be on the borderline of disgusting.

Air travel is far from glamorous that's for certain!

Enjoy Jim's thoughts on airline miles!

It’s just a bubble…

There's a ton of press today on yesterday's write-down by EBay of their Skype asset.  A couple of particular quotes caught my eye in the NY Times coverage in "EBay Revises Its Ambitions for Skype".

The first quote…

"It has seemed relatively clear that Skype has underperformed even modest expectations for the last two years," said Derek Brown, an analyst at Cantor Fitzgerald.

… triggered thoughts about expectation setting and management – a lot of the expectations about Skype came as a result of the price that EBay paid but despite the write-down and the negative press on Skype's "lack" of performance, a business with a run-rate of $360M in revenue can't be described as a failure!

The second quote unfortunately rings true with what I see in Silicon Valley today:

"Right after the bust, people started focusing on business models and revenue," said Greg Sterling, a Silicon Valley analyst and consultant. "There has been a little bit of departure on that, with a focus on building the biggest audience and figuring that revenues will follow. That is the attitude that has prevailed over the last couple years, and it may not be sound."

Too many of the companies I see think about audience and haven't thought through a path to monetization.  At the very least, you need an idea of the monetization strategy from the beginning – you won't know for sure but as long as you keep the burn rate low and under control, building a user base and testing out different monetization strategies is to be expected – and necessary.

Credit: Picture above by Frank Hermers of Mill, Netherlands.

 

I Gave In

Ok, another confession - today I surrendered my Treo for an iPhone. Its the fault of my friend Tom who let me try his for a while over a cup of coffee at our favorite - Cafe del Doge in Palo Alto.

That plus the Typepad blogging interface won me over - not withstanding Apple's clumsy handling of third party apps nor the lack of a search function on email or contacts - I have faith that both of these and the third party apps will get fixed.

The blogging interface is very cool. No excuses on the blog front now!

Group discovery

There's a good introduction to FriendFeed in an article featured in the Business section of today's New York Times – "Service Helps Friends Share Their Online Discoveries".

I read the article early this morning and went and signed up for a beta invitation – Bret Taylor sent me one about an hour later and so I created my profile and started to test drive FriendFeed.

I think this is a great idea but needs an addition – let me create separate feeds of what I find interesting for groups of my friends. This would a great tool for sharing research, stream of consciousness etc. with a group of like-minded friends or business colleagues.

It would also be nice to have the ability to tag a page into a feed without having to use Digg or one of the other services that FriendFeed tracks to extract your interests. In some respects, FriendFeed reminds me of Ted Shelton's PersonalBee (now a part of Technorati) that allowed an "editor" to create a feed of information that could be reviewed by subscribers.

There's a fantastic amount of information out on the web but having to share it via email links is hard work and doesn't lend itself to group conversations. I think FriendFeed is a great step in the right direction.

Why I don’t ride in the rain…

It's true – I am a fair weather cyclist. I was reminded of all the reasons I choose to not ride in the rain during my ride around Woodside this morning.

Slick roads, slick tires, brakes that don't work, lower visibility, stupid pedestrian tricks (walking on the road when there was a perfectly good trail… on a narrow road, side by side with dogs and on-coming traffic as I was going downhill with wet brakes – sorry to rant!) and slick manhole covers.

The weather was a little overcast when I set out but the fog lowered and it started drizzling just as I was at the half way point of my ride. Oh well – the upside was that the air was fresh with that early-rain-after-a-long-summer smell.

Too bad about the rain – I think I may have another month of regular riding before having to pick the dry days. Back to the stationary bike after that!