March 2009 Archives
Facebook continues to grow at prodigious rates. Of course this is traffic growth and not revenue growth. Business Week has an interesting analysis about Facebook's money needs. The main requirement for the financing is to cover servers and related tech to handle Facebook's storage needs.
Will Facebook make money? Facebook is private so we do not know its true financial picture. Most likely it is losing a ton of money. My guess is Facebook will never be a money maker. One reason for this thought has to do with the many key executives who have left Facebook. If insiders leave then there has to be trouble with the business model. I have read that the main reason people have walked is due to the fact that founder Zuckerberg is difficult to work with. The chance of making big money usually removes the pain of working with a difficult person.
Perhaps Facebook will make billions down the road but I doubt it.
Cisco's purchase of the Flip line of camcorders from Pure Digital Technology Inc. was great reading. At a time when all seems down and out in the tech and financial worlds this deal shows that ingenuity is alive and well in the USA and the world.
I will not go into the details and history of Pure Digital Technology Inc., but it is well worth studying. The key take aways are that good ideas are always around the corner and that companies will be big money for good businesses.
I purchased another 1.9 million shares of WebMediaBrands earlier this week. I have purchased over 3 million of our shares since early December and hope to buy more. Now that we have sold our image business I feel we have a great platform and great employees to make WebMediaBrands a solid Internet media company. Therefore I am open to buying more shares in coming weeks.
These times remind me of the weeks and months after the Internet crash of 2000 followed by the shock of 9/11. Our company stock went from $76 a share in March 2000 to $0.96 a week after 9/11. I bought our shares back in 2001 and the stock went to $24 a share in early 2005 and of course now we are at $0.32 a share. Lots of ups and downs over the years but the downs present opportunities if one believes in the intrinsic value of our business.
Ironically those who were battered as CEOs of Internet companies back in 2000-2003 were "tempered by the fire" by those rough times. Most companies were not hurt by the Internet crash unless they were in Internet business. CEOs of those days who are still CEOs had little to no training in handling economic crisis. The silver lining to having been a CEO back then of an Internet company was preparedness and training for what is happening now. Today things are even worse than 2000-2003, but not much worse for an Internet executive who was in the arena during that time.
So we shall see how WebMediaBrands does in coming months and years? I make no guarantees on results, but I have demonstrated my beliefs.
We all know that Tim Armstrong is now CEO of AOL. I do not know Tim. I am sure he is extremenly bright and of course has a great track record at Google. Tim did a great job at Google, but then again being head of ad sales at Google is not unlike David Ortiz batting in front of Manny Ramirez of the Red Sox. Ortiz was a great hitter until Manny got dumped by the Sox and banished to the Los Angeles Dodgers. Ortiz then became just a so-so hitter. In other words Tim might be great at ad sales at Google, but he just lost the Google product to back him up (or the protection of Manny Ramirez, the best pure hitter baseball has witnessed in years). It reminds me of some Yahoo history. After Yahoo went public and the world went agog over Yahoo, Tim Koogle was brought in as CEO of Yahoo. Everyone thought Tim was a genius, but in reality it was the Yahoo juggernaut that made Tim so bright. Tim has never been heard of since he left or was pushed out of Yahoo. Or take Terry Semel. Semel was brought into Yahoo from Hollywood as CEO just as paid search was taking off. Yahoo was also in the midst of buying Overture (a leader in paid search). Lo and behold, Yahoo buys Overture, paid search becomes a bonanza and Yahoo's revenues numbers go through the roof. Semel appears to be a genius. The genius part was just lucky timing. In fact Semel thought he was so smart he passed on buying Google. What a mistake! Google started to destroy Yahoo and soon Semel was banished from Yahoo. Terry had some good timing and really bad timing, but in the end he walked away with $500 million and most remembered for not buying Google.
Back to Tim Armstrong. He has a rougher road to travel than Koogle or Semel. He has no chance of catching Luck. Instead he is getting a hodge podge of Web sites and lots of traffic. Most likely AOL will throw off cash as it slowly continues its path of deterioration. AOL's only chance of success is to drop the pretense of being a portal that matters and instead repackage the solid Web sites such as TMZ.com into verticals that by themselves might prove to be powerful brands or perhaps separate companies down the road. If nothing else this should be fun for Tim. He has made a boat load of money at Google and should now look at AOL as a great chance of thinking outside of the box as I have suggested above.
Much is being written about the future of daily newspapers. Dailies in many cities are failing on a regular basis. I just read about the main daily in Tucson possibly closing after 138 years of publishing.
So what about The New York Times?
My guess is that within five years The Times goes to a tabloid design. Within 10 years it publishes daily as a 16- page tabloid, but produces a hefty Sunday paper full of ads and other special features and sections. Of course hand in hand with this will be the continuous development of a dynamic Web site.
The Wall Street Journal should be able to weather the storm in print. But it too will go tabloid as it has in Europe and Asia for several years. And of course it will be a very slim tabloid.
What will the Internet crush next?
All the pundits are in love with the Kindle! I too love the Kindle. I have the original edition and find it handy for travel. I will probably spring for the new version and sell my present Kindle on eBay.
My biggest problem with the Kindle is that I would like to know what page I would be on if I was reading a physical book. I do not consider this a flaw, but it would be a nice feature.
The flaw is this: if you travel outside the USA a lot as I do, then the wireless feature of the Kindle is useless. The service is based on the Sprint system. Sprint only works in the USA as far as I know. Therefore if you have the urge to download a book you cannot do so. Even more frustrating is the fact that you cannot download any daily newspapers.
I am not sure why Amazon chose Sprint? The decision to not have an international wireless presence is shortsighted and a major flaw.
Most readers of this blog know that our company recently sold its Jupiterimages division. We were in the image business for nearly 6 years. I will not bore readers with the details of the history or the highs and lows. However there are a few salient lessons that I learned from the experience.
1. It is good to be paranoid in business. Always be paranoid about your competition. Today be very paranoid about the Intenet and the force of its creative destruction. I more than anybody should have been aware of this power, but I was slow to realize that user generated content in the image space was certain to destroy large parts of the traditional stock photo industry. I had an inkling about what was coming in late 2003 and had a chance to purchase iStockphoto for a few hundred thousand dollars. I was talked out of this purchase and later paid a big price for this horrible mistake.
2. Be careful with debt. I have always been debt averse. My choice has always, if possible with a public company, to sell stock to raise capital. In late 2004 we started to buy several image companies. Bank debt was available and we jumped into what proved to be a debt hornet's nest. Little did I know that a combination of the growth of user generated content photos sites and a bad economy would make our debt a terrible burden.
3. Be wary of bankers and banks. Bankers are friends when you have money in the bank and business is swell. Bankers will quickly turn on you if things go south. In our case I worked like a dog for nearly 15 months and was able to pay off $81 million of bank debt. At the end of the process and in the worst economic times this country has witnessed in 80 years, I found dealing with the banks an ordeal. Even as the banks were about to get their money back, they threw curve balls at us and showed an unwillingness to give in inch on any help that was requested. I actually thought our paying off the debt was heroic, but one would never have detected this in dealing with our bankers. Perhaps I am just too naive even though I have been running companies since 1971? When it comes to money and debt remember that, at best, you only have fair weather friends at the bank.
4. Be optimistic. I am and am now armed with the lessons above.
Yahoo Finance has significant customer service problems. Many readers know that my company is public. We have a rotten stock price. Regardless, if WebMediaBrands (WEBM) is going to be listed and covered on Yahoo Finance one would think that Yahoo could delliver correct information? Yahoo cannot.
We have called Yahoo, we have emailed Yahoo, we have begged Yahoo to correct the information they have about WebMediaBrands but to no avail. Therefore my only hope is to blog about the inept service in the hope somebody will get the message to somebody who cares at Yahoo. Perhaps the new CEO?
Bad customer service is usually an indicator of a company in decline. Now let's contrast Yahoo customer service with Amazon customer service. Amazon rates a top score -- a solid 10 in my book. I am fascinated with Amazon's care and responsiveness whether for a book order or a Kindle question. Yahoo on the other hand rates a low score -- about 1 on a 10 scale. Which company has the better future?
This will probably be my last post having anything to do with the stock photo industry. In fact I have my surprised myself that I am writing this entry. However I could not resist mentioning a mailing I received today from the image company Corbis via its Veer subsidiary for "Veer Marketplace."
Veer Marketplace is Corbis' second attempt to get into the microstock business. A few years ago, and way too late, Corbis created Snap Village to compete in the rapidly growing microstock space. It was clearly too late with the offering, but it was also totally misconceived. Pundits predicted the demise of Snap Village and they were on the mark.
Now the Corbis braintrust is trying microstock again with Veer Marketplace. If Corbis was late with a microstock offering a few years ago it is now lightyears behind iStockphoto, Shutterstock, Fotolia and Dreamstime. In fact it is so late I have to wonder why Corbis would bother?
Regardless, the most amazing part of "being out of the picture" on microstock, is the hugely elaborate and costly multi-color mailing promotion that Corbis produced to announce Veer Marketplace. The beauty of microstock and the main reason for its success is that the whole operation is conducted on the Internet. A combo of social networking, user generated content, email and more is what makes microstock tick.
Based on the promo I just opened, Corbis is trying to launch a product that is three years too late by a form of promotion that went out the window years ago.
I guess it is great to run a non-profit commercial enterprise?! We should all have such a luxury.
Our new company name is fast becoming known. WebMediaBrands was born a week ago and we have gotten lots of press. Unfortunately the press comes because of the employees we let go earlier this week. Obviously the media business is slow. Otherwise our employee story would hardly be news. Yesterday paidcontent did a thorough job of reporting on the firings and what our plans are for the time being. Not sure if there will be more action on this story but stay tuned.
The word is getting out in the blog world that we laid off 60 people yesterday. Some bloggers seem to get joy in telling the story which is a pity. These are rough and tough times. Even Eric Schmidt, CEO of Google, mentioned yesterday that Google was not immune to the economic mess we all face. I certainly do not equate WebMediaBrands with Google, but very few if any businesses are not greatly effected by what certainly appears to be a depression.
There is a story behind the lay offs. The economy is overall most responsible for the firings. However our company just underwent a huge change. We sold our images division on 23 February to Getty Images. We were left with a great platform of BtoB networks. Most of the changes we made were based on better integrating the operations and Web sites of our three main networks. For example, we had two tradeshow teams. Now we have one team for all three networks.
I wrote a memo to our remaining employees. It was supposed to be for employees only, but one of my colleagues decided to disseminate the letter. I presumed it would be sent to the press and have nothing to hide. I remain confident about our future. We have no debt and now are structured to last out the depression. I am not so sure that those who take joy in writing about our lay offs will have operational employers should the depression go on for two more years. There are many blogs and news Web sites that thrived in the period 2003-2008 that were fooled into thinking that the high times would last. This is not unlike what happened to the IPO high flyers of the late 1990s who got drunk on VC money only to see their cash burn rates destroy their aspirations. There are dozens of high flying blogs out there today that will suffer the same fate if the depression drags on.
The economic news becomes worse daily. I cannot believe how inept the new Obama administration has been on handling the situation. They had a great opportunity to come out guns blazing and give the country confidence. Instead we are getting mixed messages from the whole team which is driving the country into a greater funk.
We mortals have to worry about the day to day of life and business. Fortunately I have my health because business is not great. Regardless of the bad business times we are having greater interest in our content then ever. Traffic continues to grow. One day the business climate will improve and this traffic growth will pay off financially.
Yesterday we launched a new blog that is appropriate for our times - "Media Jobs Daily." Ably written by Becky Heller and Rachel Kaufman, Media Jobs Daily is on top of what is happening (or not happening) in the job space for media profressionals, recruiters and HR. Becky and Rachel will tell readers who is hiring and who is firing. Lots of stories too about innovations and new media positions.
Mediabistro has more coming for media professionals in coming weeks. I will keep all informed.