August 2005 Archives
This news shows that there is great life and lift for Time Warner with their AOL assets. Time Warner can really make waves if they can somehow forego their huge dial-up revenue and port such users over to AOL.com for email (without having to use the different AIM email address). By taking such a risk I believe AOL.com would significantly increase its advertising and keyword search revenue. In the long run this is where the money is and not with the dial up revenue that they are trying to hold onto at AOL. The dial up business is going to show continuous declines. Rather than watch this revenue dwindle, Time Warner should do something brave and bold.
I am delighted that I received a number of comments about my post of 21 August. I even have one from Saunders. I have chosen not to respond in this blog to comments in the comments section ---I do, however, from time to time respond directly to commenters. In this case I re-stated directly to Saunders in an email that he was dishonest in his dealings with me. My feelings have been aired about the matter and now it is part of Internet history. Anyone reading about this tiny matter in years to come will find Saunders accusing me of "sour grapes" (I could care less that he cashed in nor could I care one iota about Light Reading) and me accusing Saunders of being dishonest. I would rather be tarred with sour grapes than being tarred with dishonesty.
Stock Photo analyst Jim Pickerell has just published an opus analyzing Getty Images' future. One can agree or disagree with Pickerell, but in either case there is good food for thought. (Pickerell's reports are available only to paid subscribers. For readers who want a steady commentary about the stock photo industry I suggest they subscribe.)
I had no input in this analysis. The article is objective. What is important about it is that it shows a stock photo industry in flux. It illustrates, what I have been saying for months, that Jupitermedia and other competitors can take on Getty Images and win market share. Read it and reach your own conclusions.
Congratulations to Stephen Saunders and Peter Heywood who sold their LightReading.Com business to CMP Media for $30 million last week.
LightReading is a terrific site and business. I should know since I helped to create it---a bit of history.
In 1999 the two founders, named above, approached me after losing their jobs at the same CMP Media that just acquired them (check out their "history" and selective memory). I gave them hours of my time and coached them on how to launch LightReading.Com --- in turn these two gentlemen made a deal with me and our then VC operation -- we would obtain a 15% interest in the "idea" for $500,000. We shook hands. We met several times. Then these two shafted us and walked out on the deal.
It has worked out well for Stephen and Peter. Once again I offer congratulations for executing so well on my ideas and lessons. Stephen and Peter obviously made the right choice in being dishonest.
Back in the late 1990s it was not uncommon to find the then CEO of Lycos proclaiming on CNBC that Lycos had more "eyeballs" than Yahoo! Such proclamations usually followed a recent acquisition such as Tripod.com etc. Bob was probably correct, but we all know who won the "eyeball" wars of that era.
Eyeball arguments have been replaced by "Number of Pages Searched" debates. Only now it is Yahoo! that is doing the proclaiming. And Yahoo's opponent is Google. Yahoo claimed, according to a report in the Tuesday edition of The Wall Street Journal, that it now searches 19 billion Web pages compared to Google's 8 billion. Danny Sullivan, master search guru is quoted in the same article that such claims, even if true are irrelevant and a "waste of energy."
I doubt that Yahoo will have the same fate that befell Lycos --- financial failure and irrelevancy. So what is the point of such "proclamations? It has to do with creating a stir on Wall Street. There can be no other reason since I doubt any Google user would turn to Yahoo because it searches more pages.
Turning back to Bob Davis. I believe Bob is now a full time venture capitalist out of Boston? Bob is now largely forgotten, but he should be remembered for trying to make Lycos a media company rather than a mere search engine company. Bob also almost engineered a great deal by merging with Barry Diller's Web build up that began in the late 1990s. Certain Lycos stockholders stupidly killed the proposed merger. Lycos was later sold to Terra of Spain who utterly destroyed a fine property. Barry Diller went on to build IAC and he finally got his search engine with his buy of Ask Jeeves a few weeks ago. Bob and Barry had the right idea in the late 1990s. Both were ahead of the times.
I grew up in the media business in awe of Ziff Davis. In the 1980s and 1990s publishing power was personified by ZD. The company got sliced and diced in several transactions during the 1990s. The involvement of Softbank starting in 1995 turned out to be the key reason for ZD's decline. Over a period of years Softbank management basically destroyed the fiber of the once mighty ZD. And perhaps the killer of all moves was the sale of ZD Net (the Ziff Davis network of Web sites) to CNET in a really absurd and strange transaction in late 1999 (perhaps 2000).
ZD recently published their quarterly numbers (thanks for pointing this out goes to rafit ali). Check these out and you will find a sick company with declining EBITDA. The published information does not tell the reader that ZD has debt approaching $400 million. But it does tell us that the CFO has exited. An exiting CFO is not a good sign. The CFO usually knows the health of an organization better than anyone. When the CFO leaves the ship that usually means the vessel is sinking.
Interestingly the press release mentions that ZD is having growth in the Internet space. This is good news for Internet companies such as Jupitermedia and others that compete with ZD for ad dollars. ZD's decline means that print business magazines are losing ad revenues to online media properties --- a trend that will only accelerate.
Several weeks ago I wrote about my experiences with the Google Desktop Search. I had to drop this fine service because it literally took over my computer for many minutes at a time while it was updating files.
With the help of Jupitermedia's CTO, Mark Berns, we analyzed several competitive products and settled on the Microsoft Desktop product. It has been performing admirably.
Lo and behold, out of nowhere I got an email from a Google employee quizzing me on what problems I had had with the Google Desktop software. I was impressed that my blog post ended up at Google customer service. I am not sure if I will hear from the Googlemen again after looking into my complaint. I have to admit that this action bodes well for Google's future. If you can get the small things right, the big things are sure to be successful.
I think many of you know that I have been "around the block" in terms of Internet history. I go way back: 1990. I have been fortunate to see all the development. It is hard to believe that most people did not know what the Internet was in 1995!
The other benefit from having been "around" is that I have gotten to meet some amazing people way before they became "Internet Stars." Which brings me to Jack Ma, founder and now billionaire owner of Alibaba.com. I am sure most readers know that yesterday Yahoo announced that it was buying a 40% interest in Alibaba for $1 billion and at the sametime turning over its China operations to Alibaba. (This is quite similar in nature to the Softbank investment in Yahoo! back in 1995 which turned out to be the salvation of Softbank.)
I had the privilege of Jack wanting to meet me in Hong Kong in 1999. He sought me out for a meal on one of my frequent trips to Asia. I was a bit puzzled about what Jack wanted during the meal. We were doing venture capital in those days. I asked him if was he looking for us to invest in Alibaba? He responded that he did not need investment, but that he wanted to get my opinion on what he was setting out to do with Alibaba etc. I told him he had a good concept. It was a pleasent 90 minutes.
I cannot tell you that I knew at that moment that Alibaba would be worth billions, but I did know Jack was a winner.
Yesterday Rupert Murdoch of News Corp. indicated that his company was preparing to spend a few billion on a major Search company. This prospective purchase would follow their acquisition of InterMix for $580 million last month.
So who would News Corp. consider buying? I would guess InfoSpace could make sense, but also wonder if CNET (while not Search) would not be a good fit for News Corp? CNET would offer huge community for Murdoch and it would be a good companion for the InterMix readership. CNET's readership would fit nicely alongside Murdoch's entertainment and newspaper properties. Also CNET would make News Corp. one of the largest owners of Web eyeballs. Finally CNET indicated several weeks ago that it was going to explore selling itself -- thus the timing is right. We shall see.
I spent part of Monday at SES San Jose. It was a bittersweet experience. SES San Jose was jumping and the exhibition hall was gearing up for its Tuesday opening. I was proud to be part of the show and then had to realize that it was no longer a Jupitermedia property. I chatted with my erstwhile SES show team and then bid them adieu as I headed to Los Angeles to visit our PictureArts division and then onto Tucson to spend a day with the ArtToday group (but not before spending two hours with our San Francisco JupiterWeb and JupiterResearch employees).
There has been some commentary about the motives behind the SES sale. Check out John Kelsey's comments. I have no more to say on the topic.
Some readers might have noticed that the Street has not been kind to Jupitermedia shares since last Tuesday. I am not sure why the downdraft as we had a terrific second quarter, our guidance for the remainder of the year is terrific, and we paid down a considerable part of our debt.
Interesting article to read about the image industry and an investigation in the UK.
On other matters we had an interesting week at Jupitermedia. We completed the transaction to sell Search Engine Strategies to Incisive Media of the United Kingdom. I might add that we are going out with a bang with SES San Jose. Jupitermedia is running the San Jose show -- we get the profit as part of the transaction. We have record registrations and record exhibitors. I will be present for a quick looksee on Monday, but then turn over the show to CEO Tim Weller of Incisive.
It will be strange to move on from SES and the ClickZ network. These are great properties run with great people. I wish the properties and the personnel Good Luck.
MacTribe has just published an interview with me dealing with our JupiterImages' initiatives.
My post of yesterday (August 2, 2005) drew some interesting comments relating to our decision at Jupitermedia to sell the SES and related Web site properties. I have posted some of them in the comment section of the entry.
I presume you have read the news that we signed an agreement today to sell our Search Engine Strategies trade shows along with our ClickZ network of Web sites?
Why the sale? The simple reason is that Jupitermedia has evolved from being a media company with images into an Image company with media. A good part of the evolution came from the acquisition of 7 image companies since June 2003. Over a 25 month period we have spent close to $200 million making the above referenced acquisitions along with dozens of photo library collections. Most of these deals were done with cash. The cash came from our treasury and from bank borrowings. We plan to make more acquisitions and we plan to continue using cash. So how do we get more cash? Simple, we either go to the public market and offer our stock for cash or we sell assets such as the Search Engine trade shows and ClickZ network in order to raise more funds for acquisitions.
Recently I would have been prone to go to the public market and sell equity to raise cash. But even with our stock closing price yesterday of $22.80, I think Jupitermedia was undervalued based on what I believe the company will be worth over the coming years. So I chose asset sales and additional borrowing based on the fact that I think Jupitermedia should be more valuable tomorrow. Of course I cannot guarantee that this scenario will play out as planned, but then I am the major stockholder and feel that the decisions I reach effect me more than any other stockholder --- thus I do not take such decisions lightly.
So there it is. Now you know the reasoning behind the sale of some superb assets. In business one has to constantly make evaluations and calculations about a variety of issues ranging from business direction to personnel. In this case I believe I made the right decision to sell some assets, avoid stock dilution, and dramatically grow our JupiterImages division. Hopefully all of our stockholders will applaud this thinking in the coming months.