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Archive for the ‘Investments’ Category

CafePress files for IPO, looks to raise up to $80M

Posted in Board Of Intellectual Capital, boic, Business models, Economy, Gerbsman Partners, Investments, IPO news, tagged , , , , , , , , , , , , on June 12, 2011| Leave a Comment »

Article from GigaOm.

“The tech industry’s initial public offering waveis showing no signs of slowing.

CafePress filed its S-1 with the Securities and Exchange Commission on Friday. The San Mateo, Calif.-based company is looking to raise up to $80 million in an IPO to be underwritten by J.P. Morgan, Cowen and Company, and Jefferies, according to the filing.

CafePress was founded in 1999 and sells user-customized products such as clothing, accessories, posters, stickers, and housewares through its flagship website CafePress.com. The company also owns a portfolio of other sites, such as CanvasOnDemand, which turns photographs into canvas artwork, and Imagekind.com, which sells artwork from independent artists.

CafePress is profitable and apparently growing. According to the filing, the company made $2.7 million in net income on $128 million in revenues in 2010. In the first three months of 2011, CafePress made $32 million in revenues, about 45 percent more than the $22 million it made in the first quarter of 2010. Last year, the company posted adjusted earnings before interest, taxes, debt and amortization (EBITDA) of $14.5 million.

But while the company’s financials are certainly solid, one could argue they’re not exactly spectacular. CafePress’ average order size has hovered around $47 for the past three years. The company’s top-line annual revenues have see-sawed recently, from $120 million in 2008, down to $103 million in 2009, and back up to $128 million in 2010. In the filing, CafePress blamed the 2009 dip on “macro-economic conditions in our primary markets that reduced discretionary spending by our customers coupled with the absence of election year sales.”

CafePress is just the latest in a recent series of Internet companies making moves toward the public markets. In the past month, LinkedIn, Yandex and Fusion-io have gone public, Groupon filed an S-1, and Kayak and Pandora have issued optimistic S-1 updates. Whether the activity represents another tech bubble or just a healthy and growing economy, it’s certainly shaping up to be a very busy summer for Silicon Valley.”

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Groupon is no Google and here’s why

Posted in Board Of Intellectual Capital, Business models, Investments, IPO news, Market research, Social Networks, Strategy, tagged , , , , , on June 9, 2011| Leave a Comment »

Article from SFGate.

“The lofty language in Groupon’s initial public offering filing is prompting comparisons to Google’s highly anticipated premier seven years ago, as are the lofty valuations.

Various sources have pegged Groupon’s implied worth at $20 billion to $30 billion, dropping it squarely in the neighborhood of Google’s $27 billion at the time of its 2004 IPO.

Groupon is a fast-growing business, luring 83 million subscribers to its daily deal e-mails in 2 1/2 years. And it might end up a perfectly solid one. But for one simple reason and a lot of complicated ones, Groupon is no Google.

Here’s the simple one: Google reinvented an industry. Groupon tweaked one.

There are limits on how transformative a force the Chicago company can ever be, at least pursuing its current business model.

Why?

Strip away all the hope and hype surrounding Groupon and you’re left with this: It’s a coupon company. Its major innovation was to distribute them through e-mail instead of the Sunday paper.

Granted, Groupon does this very well, with a colorful corporate culture that has deservedly won it plenty of fans and attention. Andrew Mason is one of the most refreshing, entertaining and straightforward CEOs in the last decade. His letter in the IPO filing last week carried loud echoes of the “Don’t Be Evil” sentiment in Google’s S-1.

“We want the time people spend with Groupon to be memorable,” he wrote. “Life is too short to be a boring company.”

He added that the business is “better positioned than any company in history to reshape local commerce.”

But coupons have long had limited appeal among retailers and consumers for very specific reasons, and thus restricted sway over the larger retail market.

Small fraction used

In 2010, marketers distributed $485 billion worth of consumer packaged goods coupons, according to a report by NCH Marketing Services. But only about 1 percent of coupons are actually redeemed.

Everyone will occasionally take advantage of a deal that lands in their lap (or inbox), or wait for a sale on a high-priced item. But it’s a limited subset of people who routinely start their shopping by thinking, what can I buy, do or eat that’s on sale. Most people, most of the time know the brand, model or service they want and go from there. There’s no particularly compelling evidence that this is changing.

Here then is a key difference with Google: Thanks to the query you enter into its search engine, Google knows what you’re interested in at the precise point you’re ready to buy, and serves up ads to match.

Even its worst critics acknowledge this revolutionized advertising, bringing to the marketplace a level of scale and targeting never before seen. It unleashed a tectonic shift in how businesses spent their marketing dollars.

Since then, the Internet giant has plowed its huge profits into cutting edge research and development, pushing ahead the fields of information retrieval, language translation, image recognition, satellite imagery, self-driving cars and much, much more. There’s simply an order of magnitude difference in the respective levels of imagination and innovation on display at the two companies.

Reticent retailers

Groupon does remove some of the traditional friction surrounding discounts, by directly delivering deals that are increasingly personalized, while also – not incidentally – eliminating the stigma and hassle of clipping coupons. But the real sandpaper remains on the retail side.

Coupons are typically loss leaders, the discount a business is willing to swallow in order to get new customers in the door. By definition, such marketing tactics can only ever represent a sliver of the retail pie.”

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Amidst Spotify Rumors, Facebook CEO Talks Music & Media

Posted in Board Of Intellectual Capital, Economy, Gerbsman Partners, internet, Investments, Market research, Social Networks, Strategy, Technology, tagged , , , , , on May 26, 2011| Leave a Comment »

Article from GigaOm.

“As rumors of a pending Facebook/Spotify deal swirled, Mark Zuckerberg took the stage at the e-G8 Forum in Paris Wednesday and reasserted that he has no plans to become the CEO of an entertainment company.

“We don’t have the DNA to be a music company or a movie company,” Zuckerberg said in an onstage one-on-one with Publicis CEO Maurice Lévy.

The comments come just as Facebook is reported to have deepened its partnership with Sweden-based startup Spotify to roll out a more fully integrated music-streaming service within the social networking site, according to a Forbes report published Wednesday citing anonymous sources. The report claims the feature will be called either “Facebook Music” or “Spotify on Facebook.” The new service will reportedly not be available in the United States, as Spotify has not yet cleared regulations to be used in the US.

However, a source familiar with Spotify denied the deeper integration when reached by GigaOM. The company already has a “Spotify on Facebook” feature that allows Facebook users to share links to Spotify songs on their profile pages. A Facebook spokesperson responded similarly, telling me “there’s nothing new to announce” and pointing to the existing integration between the two companies. “Many of the most popular music services around the world are integrated with Facebook and we’re constantly talking to our partners about ways to improve these integrations,” the spokesperson said. Both Facebook and Spotify have separately raised funding from telecom mogul, Li Ka-Shing.

Whether the Spotify/Facebook rumor du jour is true or not, Facebook is clearly keen to get more immersed in the media and entertainment industries. At e-G8, Zuckerberg noted that while Facebook had no ambitions to move the company from Silicon Valley to Hollywood, entertainment companies could do well to take advantage of all that social networking has to offer. “I hope that we can play a part in enabling… the companies that are out there producing this great content to become more social,” he said. “We’re going to see a lot of the transformation in these industries over the next three, five years.””

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LinkedIn raises IPO price – now $42 to $45 per share

Posted in Board Of Intellectual Capital, Economy, Investments, IPO news, tagged , , , , , on May 18, 2011| Leave a Comment »

Article from SFGate.

“LinkedIn Corp. raised the expected price of its initial public offering by $10, to a new range of $42 to $45 per share, making it even more overvalued by any conventional metric.

In my Sunday column (sfg.ly/k0PpDv), I pointed out that LinkedIn was going public at valuations that far exceed established tech companies such as Google, Apple and Amazon – and that was based on its previous expected IPO range of $32 to $35.

At $45 per share, LinkedIn would trade at roughly 17 times its 2010 revenues and 100 times its earnings before interest, taxes, depreciation and amortization, according to Morningstar analyst Rick Summer. That metric, dubbed EBITDA, is seen as a proxy for cash flow. With just $15.4 million in 2010 profit, LinkedIn’s price-to-earnings ratio is meaningless.

By comparison, Google is trading at just under six times revenue and about 14 times EBITDA, Summer says.

LinkedIn still plans to sell between 7.8 million and 9 million shares, which would raise up to $406 million and give it a market value of up to $4.3 billion.

The Mountain View company, which operates an online network for professionals, is expected to set a final IPO price tonight and begin trading Thursday under the ticker LNKD.

Investors are often willing to pay inflated price-to-sales or price-to-cash-flow multiples for fast-growing companies like LinkedIn, Summer says. However, for a higher-risk situation such as LinkedIn, you could argue that investors should be paying a lower multiple.

Less than 10 percent of the company’s shares will trade publicly, which could keep the price up in the short term if demand runs high. But eventually, the venture capitalists and insiders who own the rest of the shares will want to unload some and that could send the price down.

As the first major U.S. social-networking company to go public, LinkedIn could become a favorite of investors who like “pure-play investable themes,” Summer says.

But that also makes it hard to come up with an appropriate value for the company. “This is not an industry we understand incredibly well,” he adds.

Unlike the dot-com companies of yore, some investors argue that social-networking companies deserve lofty valuations because they have “real businesses and real business models,” Summer says. He agrees that LinkedIn has a strong business model and a competitive advantage. “But that’s like looking at a house and saying, ‘It’s livable, it has four bedrooms and two bathrooms. It’s worth any price because it’s a real house.’ ”

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Connecting The Dots On eBay’s Local Shopping Strategy

Posted in Board Of Intellectual Capital, Business models, Economy, Gerbsman Partners, Investments, Market research, Strategy, tagged , , , , , , , , , on May 16, 2011| Leave a Comment »

Article from TechCrunch.

It’s no secret that eBay has been heavily investing in a local commerce strategy.

The central core of this is trying to capitalize on the $917 million online-to-offline buying market, which Forrester estimates will eventually reach $1.3 trillion (although this number seems low) and account for nearly 50% of total retail sales by 2013. Virtually every acquisition in the past year (besides the company’s $2.4 billionpurchase of GSI Commerce) has been of a company that is dabbling in local payments or linking to merchants (Milo, RedLaser, Where, FigCard). If you look closely, a clear strategy is emerging that positions eBay at the center of mobile shopping, local commerce, and payments (through PayPal). Let’s connect the dots.

Online-To-Offline and Comparison Shopping

eBay’s first foray into the local commerce arena was though the acquisition of barcode scanning mobile app RedLaser last June. RedLaser’s barcode scanning technology allows users to comparison shop on the go. Anyone can scan a barcode on an item at a store and then automatically access any eBay listings of the product on the marketplace. Sellers can also use the scanning technology to scan an item and list the product in very little time. RedLaser’s technology was quickly integrated into eBay’s dedicated iPhone and Android apps.

The company then bought Milo for $75 million, which aggregates and lists real-time in-store product inventory for over 50,000 stores across the country; featuring over 3 million products from Target, Macy’s, Best Buy, Crate & Barrel and more.

Most recently eBay integrated Milo into a few of its core products, including RedLaser. So with a single scan of a product in a store, users can see which nearby retailers have a product in store, and at what price. eBay also integrated Milo’s results into its own marketplace, allowing users to include local shopping tab in search results to check a product’s local, or in-store, availability directly from the eBay search results page.

But surfacing local product results and integrating barcode scanning only scratches the surface of local and mobile commerce and its potential. There’s no doubt that eBay is reaping the benefits of mobile commerce (the company expects to do $4 billion in mobile gross merchandise volume in 2011).

Local Payments

And eBay realizes that in order to really capitalize on local and mobile in the ecommerce experience, the company also has to be a part of the point of sale for local merchants. And eBay has a player in this race—payments giant PayPal. PayPal has been making its own small forays into local commerce and late last year launched a new version of its popular iPhone app that allows users to find businesses near their immediate location that accept PayPal as a form of payment. The feature rolled out in San Francisco initially, but we haven’t heard much about the initiative since last November.

Why? Well, scaling this feature broadly to other cities is a challenge for even a large company like PayPal. Not only do they have to find the local businesses, but PayPal has to teach them how to use their mobile apps as a payment mechanism. Wouldn’t it be much easier to acquire a company that could help PayPal and eBay do this?

Enter Where, a geo-location service and mobile advertising company that already has millions of active users across many mobile platforms. The apps show local listings for restaurants, bars, merchants, and events, and also suggests places and deals for you based on your location and past behavior. Where also offers a location-based ad network, which allows advertisers to show their mobile ads only to people near their store, or perhaps near a competitor’s store (after the user opts in to see these types of ads). Currently, more than 120,000 retailers, brands and small merchants use Where’s network daily to reach new audiences and deliver real-time foot traffic to their doorstep.

eBay of course acquired Where a few weeks ago, and housed the company within PayPal. Not only does this give PayPal much more of a reach with its payments service, but it gives eBay a platform to to enter into the the local deals market. As Where’s CEO Walt Doyle told us after the acquisition, “eBay is about connecting buyers and sellers and Where is about connecting people with places.” Ebay can now tap into connecting consumers with local businesses and can be a part of the transaction with PayPal.

PayPal also just bought mobile payments startup FigCard, a Boston-based startup that allows merchants to accept mobile payments in stores by using a simple USB device that plugs into the cash register or point-of-sale terminal. All the consumer needs is the Fig app on his or her smart phone. The connection with PayPal is that when consumers setup their payment information, they could add PayPal as a payments option and pay for goods via their mobile phone.

Eliminating the need for an actual wallet has always been a goal for PayPal, and if the company can scale FigCard’s technology (perhaps to many of those merchants using Where?); PayPal could have a stake in the mobile wallet race.

The ‘Pivot’

In the past year, it’s fair to say that eBay and PayPal have spent over $200 million on the acquisitions I mentioned above. That’s a fair chunk of change even for a company that is making billions each year.

There’s no doubt that eBay is invested heavily in this strategy and believes that the future of the company is based on both online to offline purchases, local and mobile commerce. eBay VP of engineering Dane Glasgow recently told us that one of the challenges for eBay in this strategy is being on the pulse of technology, which is constantly evolving.

But as retail evolves, eBay is shifting its business as well, and it will undoubtedly be interesting to see if the company can connect the dots with all these acquisitions and technologies to create a powerhouse in mobile and local commerce. The challenge is that some of these initiatives aren’t really that complimentary to eBay’s core marketplace and auction business.

While eBay won’t be quitting the auction business anytimesoon, the marketplace business itself isn’t growing as fast as PayPal. PayPal now represents 39 percent of eBay’s total revenue, and nearly made $1 billion in revenue for the company in the first quarter of 2011, up 23 percent from the same quarter in the previous year. Marketplaces brought in $1.5 billion, up 12 percent from the same quarter in 2010.

Pivot is a word that tends to be over-used in the tech world, but in eBay’s case that is exactly what we are witnessing—a major pivot in the company’s business model to local commerce. It’s certainly not easy for any company to “pivot,” especially one as massive as eBay. If it manages to pull this off so late in the game, it could herald a whole new era of growth for the company.

As Glasgow tells us, “it’s a new retail environment, where the convergence of online and offline are coming to life through mobile and local experiences.” Can eBay position itself fast enough to flourish in that environment?”

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