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How Facebook Can Beat Groupon: By Making Deals Social

Posted in Board Of Intellectual Capital, Investments, Market research, Social Networks, Strategy, Technology, Venture Capital, tagged , , , , , , , , , on April 17, 2011| Leave a Comment »

Article from GigaOm.

“Facebook is planning to roll out a new version of its Groupon-style Deals feature over the next few weeks, starting with a number of cities such as Atlanta, Dallas and San Diego, according to the company’s director of local. Not surprisingly, the new version of these digital coupons plays on the social nature of Facebook and its ability to influence a user’s social graph. While the social network may be late to this particular party, doing that is going to focus attention on one big hole in the Groupon model: namely, the fact that it isn’t really social.

Emily White, a former Google ad exec in charge of the effort, describes in an interview with Internet Retailer how the site will highlight in a user’s news feed if they have indicated interest in a particular deal, and also if they have actually purchased one. Presumably, users will also be able to opt out of this feature, given Facebook’s experiences in the past with ventures such as Beacon — which publicized purchases users made at other websites and was eventually shut down after a firestorm of criticism from privacy advocates. According to White:

The fact that every step of the process — from interacting with the deal, booking the deal and experiencing the deal — is tied to friends makes it more likely that you’ll have a positive experience.

Obviously, a lot of that is Facebook’s spin on why its new service is going to be competitive with Groupon, which has become the 800-pound gorilla of email marketing by expanding rapidly over the past two years into more than 500 markets. The company’s revenues are estimated to be in the $2-billion range on an annualized basis, and it’s said to be planning a public share offering that could value the company at more than $25 billion. What Facebook is to social networking, Groupon has become to email discounting.

That clearly poses some challenges for Facebook, as my colleague Ryan noted recently. But Facebook’s view of its strengths compared to Groupon isn’t just spin. It reinforces that deals from Groupon — and even from competitors such as LivingSocial, which is also valued in the billions of dollars on the private market — aren’t that social. I wrote about one of the drivers behind Google’s reported $6-billion offer for Groupon being the fact that advertising is becoming social, and that is true. And when it comes to being social, Facebook is light years ahead of Groupon or LivingSocial.

It’s true that you can see how many other people have signed up for a deal when you go to the website from the email Groupon sends you, and there are some standard web-sharing buttons that let you post to Twitter or say that you “liked” the deal on Facebook. But that’s still not terribly social. What if you could see these deals — and which of your friends signed up for them — right in your Facebook news feed? The immediacy of that, mixed in with the other social signals and activity you are already looking at, could make you more likely to click on a deal, or even to be aware that one is available. Add the ability to comment on a deal, and it becomes something much more social that anything Groupon offers.

The news feed — the same thing that made Beacon so appealing, but at the same time so disturbing to some — is Facebook’s not-so-secret weapon, and the new version of Deals is clearly going to take advantage of that in a way it hasn’t before. Competing with a $2-billion monster is not going to be easy, even for Facebook, and signing deals with retailers is one area where the size and scale of Groupon represents a fairly compelling competitive advantage. But Facebook has the news feed and the social graph, and if advertising really is becoming social, that is a very powerful force indeed.”

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The End: Cisco Shuts Down Flip, a $590 Million Mistake

Posted in Board Of Intellectual Capital, Business models, Distressed IP, Economy, Gerbsman Partners, Investments, Market research, Strategy, tagged , , , , , , , , , , , , on April 14, 2011| Leave a Comment »

Article from GigaOm.

“Cisco is giving up on its barely two-year-old $590 million purchase of Pure Digital Technologies, announcing today that it is closing its Flip business unit and cutting 550 employees as part of a larger restructuring. The move comes after clear signs that the outsized deal was not paying off for the technology giant, which is in the midst of refocusing its business on its core networking business.

Cisco said it will close the Flip business, but will continue to support current Flipshare customers who upload and share media to the web. Cisco said it will also refocus its Home Networking business to make it more profitable and connected to the company’s networking infrastructure. It will also move Umi, its consumer Telepresence, into the business Telepresence line and sell it through an enterprise and service provider go-to-market model.

“We are making key, targeted moves as we align operations in support of our network-centric platform strategy,” CEO John Chambers said in a statement. “As we move forward, our consumer efforts will focus on how we help our enterprise and service provider customers optimize and expand their offerings for consumers, and help ensure the network’s ability to deliver on those offerings.”

The closure of the Flip unit comes a couple months after former Pure Digital CEO Jonathan Kaplan left Cisco, prompting questions about the direction of the Flip line of video cameras. Cisco bought Pure in March of 2009, saying the purchase was about extending its presence into the consumer electronics business. The company was also looking to use Pure’s smarts in simple consumer electronics design to rework its home networking business. While the deal has helped Cisco create a new line of more consumer friendly home routers, it didn’t really change the company much, a task that Om mentioned recently is incredibly hard for large companies. And it hasn’t resulted in a big revenue driver in video cam sales.

That’s because while Flip grew fast with its single purpose design, which managed to move millions of units, its continued growth was checked by the rise of smartphones that can increasingly shoot HD video while offering more wireless sharing options, something Flip’s camera’s never included, an irony for a networking company. Another new consumer business, Umi, a home video conferencing product, has also failed to capture a lot of buzz, in part because of its high price. With Kaplan headed toward the door, we speculated that the deal for Pure had turned into a flop.

Now it appears that Cisco is making that conclusion official. CEO John Chambers earlier this month laid out a major reorganization for the company in a memo to employees outlining how the company would refocus on five areas: core routing, switching and services; collaboration; architectures; and video. While Chambers said Cisco would still focus on video, it appears he was not referring to Flip. This deals a major blow to the idea of a single-purpose simple video cam, which may still have a niche place in the market. But while Cisco jettisons Flip, and admits defeat, the move shows the company is clearly serious about retrenching and getting back to basics.”

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Internet/Digital Media and Software Industries Silicon Valley and Seattle 2010

Posted in Board Of Intellectual Capital, Investments, Strategy, Technology, Venture Capital, tagged , , , , , , on April 8, 2011| Leave a Comment »

Article from Fenwick and West.

“In 2002, Fenwick & West began publishing its Silicon Valley Venture Capital Survey. The survey was published in response to dramatic changes in the venture capital financing environment resulting from the bursting of the “dot-com bubble”, and our belief that there was a need for an objective analysis of how the venture capital environment had changed. The survey was well received and we have continued to publish it – a copy of the most recent survey is available here.
We believe that in recent years there has been a significant change in the angel/seed financing environment primarily in the internet/digital media and software industries. We believe these changes are due to the following factors:

The nature of these industries is such that products can be developed and introduced to the market quicker and with less resources than other industries. The development of new technologies has further accelerated the speed, and reduced the resources needed, to introduce new products in these industries.

These industries have now been around for at least a decade, if not longer, and as such a generation of successful entrepreneurs having the expertise, financial resources and interest is now available to assist and finance the current generation of entrepreneurs.
Venture capital has become harder to obtain, with venture capital investment in the U.S. overall declining from $29.9 billion in 2007 to $26.2 billion in 2010, and with investment in venture funds by limited partners declining even more precipitously, with $11.6 billion invested in 2010, the lowest amount since 2003, according to Dow Jones VentureSource.

As a result of these factors we believe that there have been the following changes in the angel/seed financing environment:

  • There has been a shift in the composition of investors, from largely friends and family, wealthy individuals and a few organized groups, to a larger percentage of professional angels, seed funds and venture capital funds willing to invest smaller amounts of capital.
  • The amounts raised in angel/seed financings have increased, and can exceed $1 million. Investors in these financings also have deeper pockets with the ability to participate in later rounds.
  • The terms of these financings have become more sophisticated and arms length, as investors are more likely to be true third parties investing larger sums, with an interest in being more active in the oversight of their investment.

In light of the increasing importance of angel/seed financings, and a desire to make objective information about such financings available to the community at large, we undertook a survey of 52 internet/digital media and software industry companies that obtained angel/seed financing[1] in 2010 in the Silicon Valley and Seattle markets.”

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Color Looks To Reinvent Social Interaction With Its Mobile Photo App (And $41 Million In Funding)

Posted in Board Of Intellectual Capital, Business models, Economy, Investments, Market research, Social Networks, Strategy, Technology, Web 2.0, web 3.0, Wireless 2.0, tagged , , , , , , , , , , on March 26, 2011| Leave a Comment »

Article from TechCrunch.

“$41 million. From Sequoia Capital, Bain Capital, and Silicon Valley Bank. Pre-launch.

That’s how much a brand new startup called Color has to work with. Your eyebrows should already be raised, and here’s something to keep them fixed there: this is the most money Sequoia has ever invested in a pre-launch startup. Or, as the Color team put it, “That’s more than they gave Google.”

But the founding team goes a long way toward explaining it. Headed by Bill Nguyen — who sold Lala to Apple in late 2009 — the company has attracted a wealth of talent. It has seven founders including Nguyen and company president Peter Pham, who previously founded BillShrink. And its chief of product is DJ Patil, who was previously LinkedIn’s chief scientist.

So what exactly is Color?

Update: The application is now available for the iPhone at Color.com. Android is coming.

At first glance, it looks like another mobile photo app, like Path, Instagram, or PicPlz. You take snapshots with your mobile phone (the app supports both Android and iOS at launch) and they appear in a stream of photos. And there aren’t even any of those trendy lenses to spruce up your images. Sounds pretty basic, right?

But the beauty of Color stems from what it’s doing differently. Unlike Instagram and Path, there isn’t an explicit friend or following system — you don’t browse through lists of contacts and start following their photo stream. Instead, all social connections in the application are dynamic and established on-the-fly depending on whom you’re hanging out with. And your photos are shared with everyone in the vicinity. In some senses this is the Twitter of photo apps — it’s all public, all the time (I’m ignoring Twitter’s protected tweets, since most people don’t use them). Another way to look at it: it’s almost the complete opposite of Path, which is built around sharing photos with an intimate group of friends.

It’s difficult to explain what Color does with a bullet list of features, so I’ll try painting an example that hopefully demonstrates how it works.

Say you walk into a restaurant with twenty people in it. You sit down at a table with four friends, and start chatting. Then one of your friends pulls out their phone, fires up Color, and takes a snapshot of you and your buddies.

That photo is now public to anyone within around 100 feet of the place it was taken. So if anyone else in the restaurant fires up Color, they’ll see the photograph listed in a stream alongside other photos that have recently been taken in the vicinity.

In a crowded area these streams of photos will get noisy, so Color also has some grouping features. Tell it which four people you’re eating with, and Color will create a temporal group with a stream of just the photos you and your buddies have taken. But here’s the twist: because everything on the service is public, you can also swipe to view other groups, to see what the tables next to you are snapping photos of. And you can always jump to the main stream, which shows a mishmash of photos taken by everyone.

It takes some time to wrap your head around, and my time with the app was limited, so I can’t really vouch for how well it works. But there’s some very interesting technology that’s working behind the scenes to make Color more than just a simple group photo app.

First are the social connections, called your Elastic Network. All of your contacts are presented in a list of thumbnails ordered by how strong your connection is to that user. Whenever Color detects that you’re physically near another user (in other words, that you’re hanging out), your bond on the app gets a little stronger. So when you fire up the app and jump to your list of contacts, you’ll probably see your close friends and family members listed first. But if you don’t see a friend for a long time, they’ll gradually flow down the list, and eventually their photos will fade from color to black-and-white.

These social connections are important because they’re the only way to view a stream of photos beyond those have been taken near you. If you fired up Color in that restaurant example from earlier, you’d only be able to see photos that had been taken by friends and strangers within 100 feet of that restaurant. That is, unless you jump to your social connections. Tap on your best friend’s profile photo, and you’ll then be able to see all of the photos that have recently been taken within 100 feet of them. In other words, Color is trying to give you a way to see everything that’s going on around you, and everything that’s going on around the people you care about.

The Groups feature also makes use of this elastic network. In the restaurant example above, the application would likely already know who your friends were based on your previous interactions and would automatically place them in the same group — you wouldn’t have to manually do it yourself.

Color is also making use of every phone sensor it can access. The application was demoed to me in the basement of Color’s office — where there was no cell signal or GPS reception. But the app still managed to work normally, automatically placing the people who were sitting around me in the same group. It does this using a variety of tricks: it uses the camera to check for lighting conditions, and even uses the phone’s microphone to ‘listen’ to the ambient surroundings. If two phones are capturing similar audio, then they’re probably close to each other.

So far I’ve described a compelling and unique photo app with some neat tricks. But how exactly is Color going to make “wheelbarrows of cash”, as Nguyen says?

At this point the company is still very early on, but it eventually plans to offer businesses a self-serve platform for running deals and ads as part of the Color experience (you fire up the app to see the photos being taken around you, and you also see the special of the day, for example).

But that’s just the start. Nguyen has visions of fundamentally changing some aspects of social interaction and local discovery with the app, which he considers part of the so-called Post-PC movement. Using all of the data being collected (remember, the app is taking advantage of all of your phone’s sensors), Color hopes to eventually start recommending nearby points of interest, and maybe even interesting people.

There are still plenty of questions, even about the existing service. This kind of voyeurism — you’re sharing photos with the world and looking at photos from strangers — could take a while to get used to. People may reject it entirely. Or it may be completely addictive. There’s really no way to tell until people start using the app in the wild.

The future is unclear, but promising. And with this much money in the bank and a staff of 27, Color has plenty of time to hone in on what works.”

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AT&T deal with T-Mobile – pros and cons

Posted in Board Of Intellectual Capital, boic, Business models, Investments, Market research, Strategy, Technology, Wireless, tagged , , , , on March 22, 2011| Leave a Comment »

Article from SFGate.

“AT&T Inc.’s $39 billion deal for T-Mobile USA could improve the company’s cell service in San Francisco, but it may also mean the end to low-cost phone and data plans.

Acquiring T-Mobile’s infrastructure will increase the number of AT&T cell towers in San Francisco by 30 percent, according to spokesman John Britton.

That’s a significant increase to a network known for its dropped calls.

“We’ve got the same network, so they’re very compatible,” Britton said. “They can easily come together and be integrated. It’s going to be good news for customers.”

Both companies’ networks use a technology known as GSM. AT&T said customers of T-Mobile, which is owned by Deutsche Telekom, would be able to continue using their existing handsets if the merger is approved.

The company would not say how many cell towers it now has, or how many T-Mobile has in the Bay Area. But it said the acquisition would be crucial in helping it meet the exploding consumer demand for wireless spectrum.

In the past four years, AT&T’s mobile data traffic grew 8,000 percent, the company said. By 2015, it is expected to increase by up to 10 times more.

But AT&T’s expanded network will come at a cost to consumers, advocacy groups warned. T-Mobile’s disappearance from the marketplace would mean that three companies – AT&T, Verizon and Sprint – would own roughly three-quarters of the U.S. mobile market.

And the low-cost plans for which T-Mobile is known will probably disappear if the merger is completed, advocates said.

“This transaction would create a vastly more concentrated market,” said Andrew Jay Schwartzman, policy director at Media Access Project. “What that translates to is higher prices, less consumer choice and less innovation.”

The proposed acquisition, which would bring AT&T’s U.S. subscriber base to 130 million, is likely to take a year to complete. In a conference call with investors Monday, AT&T executives said they expected the deal would win approval from the Federal Communications Commission and the Department of Justice.

U.S. Rep. Anna Eshoo of Palo Alto, the ranking Democrat on the Energy and Commerce Committee’s Communications and Technology Subcommittee, called for oversight hearings on the proposal.

“Competition is essential to promoting a vibrant wireless market, where consumers have a choice in the innovative services and devices available to them,” Eshoo said in a statement.

Customers will not notice any changes in their service until after the merger is completed, AT&T said.

A combined AT&T and T-Mobile would also make the next-generation communication standard, known as LTE, available to 95 percent of American households, or 46.5 million more than were eligible to receive it otherwise, the company said.”

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