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Archive for the ‘Strategy’ Category

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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Android Passes iPhone as Most Desired Smartphone. Barely

Posted in Board Of Intellectual Capital, Economy, Market research, Strategy, Uncategorized, tagged , , , , , , , , , , , on April 26, 2011| Leave a Comment »

Article from GigaOM.

Android has been outselling the iPhone recently but Apple’s iPhone was still the most desired smartphone in the U.S., according to the Nielsen Co. Not anymore. Nielsen said 31.1 percent of respondents in March said they want their next smartphone to be an Android device, while 30 percent said they wanted an iPhone. Nielsen said consumers planning on buying an Android in the next year increased from 25.5 percent in July to September while people planning on buying an iPhone slipped from 32.7 percent during the same period. That’s not terribly surprising considering the growing momentum behind Android. But it shows that Android’s appeal is continuing to grow even despite the broader availability of the iPhone on Verizon .

Before, Android’s rise could have been chalked up to the fact that iPhone was limited to just one carrier. But it’s increasingly showing that it is attractive by itself, not just as a more accessible alternative to the iPhone. The iPhone is still limited in distribution and opening up availability to Sprint and T-Mobile could shift things somewhat. But at this point, it seems like Android appeal is rock solid while the iPhone is cooling off somewhat with consumers. The smartphone race looks more and more like a two-horse competition, according to Nielsen. Only 10.5 percent of consumers said they planned on buying a BlackBerry device, down from 12.6 percent in July through September. Interest in Windows devices also slipped from 6.8 percent last year to 6.4 percent this year, even with the launch of Windows Phone 7 in November. Android continues to rule the smartphone marketshare battle with 37 percent, compared to 27 percent for the iPhone and 22 percent for BlackBerry.

Recent statistics show how much momentum is behind Android. Fifty percent of people who purchased a smartphone in the past six months said they had chosen an Android device while 25 percent said they had bought an iPhone and 15 percent said they got a BlackBerry device. Now Apple is still sucking down the biggest profits, and has become the largest phone vendor by revenue. And it still has a lead when you consider all iOS devices compared to Android. But Android’s momentum, especially in smartphones, is just getting stronger. If it can replicate that success in tablets, it won’t be long before it has a greater overall ecosystem reach soon.

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Gerbsman Partners announces a strategic alliance with Foundation Ventures

Posted in Board Of Intellectual Capital, Gerbsman Partners, Intellectual capital, Marketing, Strategy, tagged , , on April 19, 2011| Leave a Comment »

Gerbsman Partners, a crisis management and private investment banking firm, announces a strategic alliance with Foundation Ventures, a New York City based life science boutique investment bank focused on biotechnology, medical device, and healthcare services companies seeking to raise institutional venture capital or growth capital. Foundation Ventures also provides M&A, strategic partnering and fairness opinion advisory services. Through its affiliate, Prelude Ventures, Foundation Ventures also invests in biotechnology and medical device companies; including bridge financing and syndicate participation opportunities.

Steven R. Gerbsman, Managing Principal of Gerbsman Partners, “This strategic alliance with Foundation Ventures will provide Gerbsman Partners life science and medical device clients with access to early stage and expansion capital. It will also provide the capability for Foundation Ventures to assist potential clients that are in the restructuring and/or distressed stages.”

Philip Taub, Managing Partner of Foundation Ventures, “We see the restructuring and distressed company market as an additional business opportunity in 2011. With our current focus on early stage and expansion capital funding for life science, medical device, and healthcare services companies, this alliance will allow us to concentrate on our core business, while providing us access to the expertise of Gerbsman Partners in maximizing value for companies that are restructuring or distressed.”

About Gerbsman Partners

Gerbsman Partners focuses on maximizing enterprise value for stakeholders and shareholders in under-performing, under-capitalized and under-valued companies and their Intellectual Property. Since 2001, Gerbsman Partners has been involved in maximizing value for 68 technology, life science and medical device companies and their Intellectual Property and has restructured/terminated over $795 million of real estate executory contracts and equipment lease/sub-debt obligations. Since inception in 1980, Gerbsman Partners has been involved in over $2.3 billion of financings, restructurings and M&A Transactions.

Gerbsman Partners has offices and strategic alliances in San Francisco, Boston, New York, Washington, DC, Alexandria, VA, Europe and Israel.

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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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