Did Facebook miss the boat?

Post ImageThat’s the question that Robert Young asks over at GigaOM today. Facebook apparently turned down many potential suitors last year, deciding to go it alone. Was that a good decision or a bad one? Robert does a good job of explaining that if you ignore the financial side of things, it looks like it was a good decision:

So given such positives, one might conclude that Facebook did in fact make the right decision not to sell. as momentum and value creation certainly seems to be in their favor.

Overall traffic is up, loyalty and usage stats are high, things look good. The problem is that advertising on Facebook appears to be a win-lose situation – good for Facebook, bad for the advertisers. Which means Facebook is going to have trouble earning revenue.

My personal opinion is that Facebook missed the boat, but that they’ll likely get another shot. The product has incredible value – they are just doing a really shoddy job of extracting it. It’s only a matter of time before they need to be rescued, by Yahoo! or another big player. Whether the rescuer will fare better at extracting value from Facebook is another story.

I’d be quite happy if Yahoo! purchased Facebook, and added support for del.icio.us and Flickr. I don’t upload photos to Facebook because I use Flickr, and I don’t use the share feature at Facebook, because I use del.icio.us. I’d still like to be able to share this stuff with my friends though.

(Another thing: all three products – del.icio.us, Facebook, and Flickr – have a clean and efficient design. That alone should be reason enough to make them play nicely together!)

Read: GigaOM

Amazon Web Services Growth

Post ImageAmazon.com released their fourth quarter and year end (2006) financials today, and tucked away inside the press release was a little information on how their relatively new Web Services division is doing:

Over 220,000 developers have registered to use Amazon Web Services, up greater than 55% year-over-year.

Unfortunately – and this is often the case with these kinds of numbers – the release says nothing about how many of those 220,000 developer accounts are active.

The poster boy for Amazon S3, SmugMug CEO Don MacAskill, recently wrote yet another blog post on the service. The entire post is worth a read, but in particular he says:

Finally, S3 is a new service and yet remarkably reliable. Since April 2006, they’ve been more reliable than our own internal systems, which I consider to be quite reliable. Nothing’s perfect, but they’re doing quite well so far for a brand-new service.

I suspect their growth isn’t going to slow down anytime soon, so let’s hope their reliability and performance both scale with the continued influx of new developers.

Read: Amazon.com

What Comes Next for Jim Allchin

Post ImageI just read Jim Allchin’s final post over at the Windows Vista blog, and I have to admit, it’s kind of sad. He has been in charge of Windows development at Microsoft for so long, I’m sure he won’t know what to do with himself now. I mean, it must be pretty hard to go from running the Windows team to just relaxing, right? Running the Windows team has to be one of the hardest jobs around. They are always behind, always getting dumped on by the press, always fighting the bad guys, etc.

Jim’s post conveys this very well, with a funny overview of what a “typical day” might look like now that he’s retired. I guess he knows it’ll be hard to transition. This one is my favorite entry:

9:30 AM: Spent 45 minutes looking around the house for the big refrigerator with the free soda just like Microsoft – was unable to find it.

When I visited the Microsoft campus a couple years ago that was easily one of the coolest things. Big refrigerators all over the place with all the Coke you could ever want. It was wonderful!

Anyway, here’s my “thanks Mr. Allchin”. My fellow Windows fans and I appreciate all that you’ve done. And hey, no need to stop blogging! Start a personal blog!

Read: Vista Team Blog

Make the music free and sell the show

Post ImageChris Anderson’s post today at The Long Tail is about the music industry and provides a really good analysis of what should be happening with music. Essentially, bands should give the music away for free and make their money on live shows. He explains:

Music as a digital product enjoys near-zero costs of production and distribution–classic abundance economics. When costs are near zero, you might as well make the price zero, too, something thousands of bands have figured out.

He points out that the average price for a ticket increased 8% last year, reflecting demand. Indeed the fastest growing part of the music industry is live performances, up 16% in 2006 in North America.

And don’t think that live shows are not profitable. They are extremely profitable for the artists, just not for the record labels. Chris includes a list of the top ten grossing touring bands of 2006 – and their numbers total a truly astounding $970.3 million.

I say – goodbye record labels, hello free music and awesome not-free shows!

Read: The Long Tail

An Exit Strategy is a Good Thing!

Post ImageAs I mentioned in a previous post, I learned a lot in 2006. One of the things I learned is that having an exit strategy for your business is a good thing. Ben Yoskovitz has a great post about this at startupspark.com:

To some an exit strategy sounds negative. Or, you might think you’ll never exit because that’s not the point of the business. That’s fine, you don’t have to give up the business (although eventually we all give it up) but thinking in terms of an exit strategy will help crystallize that goal nonetheless.

One thing I’d like to add to Ben’s post is that once you’ve spent the time and effort to come up with an exit strategy, you’ll find you feel much better about yourself and your business. Like Ben says, an exit strategy is a goal. Once you’ve defined it, you can stop worrying about it, and start working to achieve it.

Another benefit: having an exit strategy in mind will help you as you make business decisions along the way.

Read: startupspark.com

A Lesson From 2006

Post ImageLooking back I’d say I learned a lot in the last year. I guess that’s not surprising, as the saying “you learn something new every day” is usually pretty accurate. With business plan competitions, conferences, and of course school, I had lots of opportunities to learn new things this year. Instead of making a big list of the things I learned however, I’m going to share with you just one lesson:

I learned that running a business requires balance.

Of course you have to balance the business with friends, family, etc. That’s not what I am talking about though. When you are starting a business, you wear a lot of different hats. Sometimes you wear the programmer hat, sometimes the accountant hat, and other times the salesman hat. What I learned this year is that you need to find a balance between all the different hats! It sounds like common sense, but when you’re in the middle of things, it doesn’t come naturally.

I don’t know why, but for the longest time I figured that if we got the code for Podcast Spot done, everything else would fall into place. I focused only on the programmer hat, and ignored the rest. VenturePrize was the turning point for me. Before the competition, I pretty much focused on the programmer hat. During the competition, I ignored the programmer hat altogether. And now, I am doing my best to find balance.

It was an important lesson for me to learn, that’s for sure. To see what other people learned this year, check out Ben Yoskovitz’s excellent group writing project.

Read: Instigator Blog

Starbucks: 87,000 Drink Combinations

Post ImageAnd you thought deciding between a Grande and a Venti was hard! In the December 18th issue of Time there is a really great article about Starbucks and the challenges it faces as it grows. Currently there are around 12,440 locations worldwide and the goal is to expand to 40,000 – more than even McDonald’s. Also included in accompanying graphics are some interesting stats, such as the number of drink combinations:

Historically, Starbucks has done a great job at balancing new ideas with efficiency, says Frances Frei, a professor at Harvard business school who has studied the company. A classic example: the way it trains us to order in Starbucks jargon, grande this and half-caff that. Serving tens of thousands of possible drink combinations would be an operational nightmare were it not for a regimented logic to ordering, a marketing flourish that helps establish the atmosphere of an Italian cafe.

I always chuckle when people walk into Starbucks and order a non-fat, extra-hot, double-shot, no-whip, blah blah blah kind of drink. Why do they even bother drinking the coffee? I had never really thought about these combinations from the perspective of Starbucks, however. When you consider the 87,000 possible combinations, it’s amazing that half of Starbucks locations average 3 minutes per customer (less than 60% do according to the article).

I’ll probably still chuckle when someone orders what sounds to me like an incredibly complex drink, but at least now I’ll know this: it could have been worse!

Read: Time

BitTorrent acquires uTorrent

Post ImageSome potentially bad news today for uTorrent fans such as myself. Bram Cohen, the creator of BitTorrent, announced that his company has aquired the popular client app. TechCrunch has the scoop:

The move will bring quite a few torrent users over to BitTorrent. News site TorrentFreak estimates that buying uTorrent, will bring BitTorrent nearly 50 percent of torrent users.

The acquisition price has not yet been disclosed.

You can read more comment on the deal here. You can also checkout the special uTorrent forum. And here is the BitTorrent press release.

I say potentially bad because BitTorrent has made massive efforts to go completely legit, and has inked deals with many content providers such as MTV and 20th Century Fox. There is some concern that they would add content filtering to uTorrent or backtrack on the protocol encryption work.

Most importantly, I hope that BitTorrent doesn’t add bloat to the wonderfully small and efficient uTorrent.

Read: TechCrunch

Edmonton Technology Startups

Post ImageWhen it comes to technology startups, it seems as though Edmonton can’t hold a candle to Toronto, Vancouver, or even Ottawa. Very rarely in my travels, physical or virtual, do I hear about really interesting tech things happening in Alberta’s capital city. Yet I know there must be. I mean, surely we aren’t the only ones, right? Nah, there’s others…we just need to help each other become more visible.

So the first step is to identify all the interesting tech startups (or established but relatively small companies) based in Edmonton. I’ve started tagging some, such as Zigtag, Nexopia, and ProExams, at del.icio.us using the tag edmontontech. I encourage you to do the same! Or, if you’re not into the social bookmarking/tagging thing, leave me a comment or email me with your Edmonton-based tech companies.

I suppose step two would be getting together with some of the companies to see what kind of interest there is in making our neck of the woods more visible to the rest of the world. I’d like to start changing Edmonton’s image with respect to tech startups. We have a great economy, relatively low living expenses, and lots of smart people. We’re just not regarded as all that great a place to start a tech company.

But first, step one. What Edmonton-based tech startups do you know about?

What's a Yahoo! to do?

Post ImageAlmost every day now I read something about Yahoo! and its “problems” and/or “options”. Those are in quotes because it seems people are very divided on Yahoo! – some think it’s in trouble, others don’t. I’ve been a Yahoo! user since the days of the grey page-background, and if you count sites like Flickr and del.icio.us, I’m still a pretty active user. Allow me to put on my Yahoo! pundit hat for a moment.

I guess Yahoo!’s main problem is Google. Now that there’s a search-media company consistently outperforming Yahoo!, it makes them look old and stagnant. It’s actually pretty unfair, because let’s be honest, no one has the kind of growth that Google does. Yahoo! actually does pretty well in terms of search traffic, advertising dollars, and all that other stuff, but where they seem to be lacking is in respect.

So what’s a Yahoo! to do? Here are the most commonly suggested strategies I have come across:

Replace CEO Terry Semel
This suggestion is actually fairly new, and if you read Eric Jackson’s open letter to Yahoo!’s founders, it starts to make sense. Seems to me this is a relatively short-term fix though.

Apparently Yahoo! has approached Time Warner about purchasing AOL. I think this would be a good deal for Time Warner, and a not so good one for Yahoo!. It would bring the failed AOL Time Warner merger to a complete end, but it would only provide a minor increase in Yahoo’s traffic and advertising, all things considered.

Buy Facebook
This rumor has been floating around for months actually. It might bring some more eyeballs to Yahoo!, but it would do nothing to help transform or improve the company. And besides, from everything I’ve read, Mark Zuckerberg (Facebook founder) is no Caterina Fake (Flickr founder).

Merge with eBay
The two companies might seem complimentary because of their completely different focuses, but that might present a problem rather than a solution. I agree with Fortune: I think this one is unlikely, because I think integrating eBay and Yahoo! would prove extremely difficult.

Sell to Microsoft
This one is my favorite, and it has a long history too, first appearing in June. Microsoft certainly has the cash, and it turns out that the two companies are fairly well-aligned – Yahoo! has made heavy investments into IE7, is a PlaysForSure supporter, and has hooked up with Microsoft on a number of initiatives ranging from Sitemaps to Instant Messaging. According to the latest comScore data (released today), a combined Microsoft-Yahoo would have around 40% of the search market compared with Google’s 45%. Of course, there are some easy to spot problems with this deal – mainly that Microsoft has invested heavily in Live Search and adCenter already. That’s not a total deal-breaker though.

Stay the course
The people that don’t view Yahoo! as floundering like this suggestion. Sure Google is #1 for now, but it can’t stay that way forever, right? Seems like this is Yahoo!’s currently preferred course of action. If they could somehow turn around their disappointing sales and profit numbers, this one might be the best option after all.

The Microsoft option is especially appealing to me, because it would have extremely broad ramifications for the industry. It also seems somewhat unlikely, given Microsoft’s huge investments in their online properties (MSN, Live.com, etc). That said, purchasing Yahoo! would instantly make them the leader on the web, a position they have long sought after. I wouldn’t be surprised if Yahoo! ended up staying the course though, and in the end, maybe that’s better for everyone – Yahoo! included.

Update: Here is more excellent commentary on Yahoo’s current situation.