To all those Web 2.0 companies looking to get acquired by Microsoft, Google, Yahoo! or eBay, Don Dodge has handily compiled a list of tips. Don works on the Microsoft Emerging Business Team.
In his latest post he starts by noting Microsoft's "rich tradition of acquisitions". He points to a list of Microsoft investments and acquisitions over the past 10 years, dating back to the purchase of SOFTIMAGE on June 28, 1994.
Here's some background information:
"Microsoft has acquired an average of 10 companies per year over the past 10 years. Many of them are smaller (less than $50M) acquisitions that go unnoticed by the press. These smaller acquisitions usually provide a great team of people, and a few key features in a much larger existing Microsoft product."
Some of the things that Microsoft looks for in an acquisition include:
- People, "the most important factor in any acquisition"
- Technology and IP that can add value to an existing Microsoft product
- Stand alone products for existing customers - e.g. Visio, Hotmail, Vermeer
- Entering whole new markets - e.g. Great Plains, PlaceWare
Don's also got some great information on why Microsoft may choose to acquire rather than build internally: "Technology is not the issue here. It is all about marketing channels, sales expertise, and market leadership in segments where Microsoft is not strong."
Very interesting post and I'm sure similar principles apply at the other big Internet companies.
The necessary components of a mash-up according to the panelists are AJAX or a similar client-side technology, APIs in the backend (or RSS and/or scraping if need be - although some people argue scraping isn't truly Web 2.0), and a lot of work on the UI and data sets by the developer(s). Paul Rademacher mentioned there is still a lot of work to be done with the technologies - e.g. authentication. So it's early days yet for mash-ups on the Web.
As for mash-up business models, some of the suggestions were: advertising, lead generation and/or affiliates, transactional, subscription. [Full story at ZDNet]
I wrote up some notes I took at last week's Web 2.0 Conference, on the workshop Mash-ups 2.0: Where's the Business Model?. It was an enjoyable workshop, although I hope in a year's time we're able to look at business models for mash-ups that don't include maps ;-)
btw this post on R/WW is a blatent copy of Jon Udell's strategy in dealing with writing at two separate places online. I've been wrestling with this over the past month - how not to confuse people by having two blogs on the same general topic. R/WW is my hub of online activity, my online avatar in a lot of ways, but ZDNet helps pay my bills. So let's try this and see how it goes.
Yahoo! announced two major products this week: a podcasting service and then blog search integrated with Yahoo! News Search. Both of these products are outputs of Yahoo!'s strategy to introduce more user-generated content to their media offerings, as outlined by their CEO Terry Semel at the Web 2.0 Conference.
Some people have criticised the design of the blog search results - it's a right-hand vertical pane off to the side of the main 'professional' news content. For example, check out this search for "web 2.0".
I think the design is an appropriate way to begin the mixing of mainstream media and user-generated content together. There may be some short-term pain, in the form of criticism about the layout, but the reality is most mainstream 'consumers' of news content still don't accept blogs. There are millions of Barry Dillers in this world who think blogs are just diaries written by teenagers in their rooms.
So it's too soon to mix blog content with mainstream news content. Having it on the side is the right way to go, for now. Maybe it needs some further design work, but remember it is a beta. For example SEW suggests that a memeorandum-like clustering of news and blog results would work better. And Dave Winer makes the fair point: "There's so much confusion about what is and isn't a blog, why bother even trying to make a distinction."
This is one reason memeorandum is so good - it literally makes the user forget who the source is. The important thing is the story and how relevant it is. Of course, memeorandum's relevancy algorithms have a lot to do with that - and that's not an easy thing to scale to a news service used by millions of people, like Yahoo! News is. But in time they will solve that problem and then we'll get mainstream and user-generated content mixed together.
A final word on The podcast network. It's a beautiful and user-friendly design and I'm sure it will entice many mainstream people to try out and subscribe to podcasts - which are essentially user-generated audio content. And that's what it's all about, isn't it? Opening media up.
During my time in Silicon Valley I've been staying in the TechCrunch house with Michael Arrington and Frederico Oliveira (Gabe Rivera of memeorandum fame is also here currently). Mike, Fred and I all blog on the topic of Web 2.0 - so we thought why not create a Web 2.0 network. As you do. It's called Web 2.0 Workgroup.
Our blogs are all complementary - Mike blogs on new products; Fred blogs on usability, design and dev; I blog about Web 2.0 trends and developments. It's likely that a subscriber to any one of our feeds would also be interested in reading the other 2 feeds. So we thought why not promote that. We'll probably expand this and invite other bloggers to join too, because there are many other quality Web 2.0 blogs out there.
If you look on the right-hand side of my site, you'll see a Web 2.0 Workgroup logo. This links through to a landing page.
On a personal note, I've become good friends with Mike, Fred and Gabe while I've been staying here. Mike has been very generous in giving us all a place to stay. I'll stop being sappy now. Check out the Web 2.0 Workgroup and let us know what you think.
This week: Web 2.0 Conference Special
The past week has been an amazing one for me. My first trip to America and I've met so many people that I'd previously only known via the Web (blogs, email, etc). The Web 2.0 Conference was held in San Francisco from Wednesday 5th to Friday 7th October. It was a hive of energy and enthusiasm. I spent the entire 3 days soaking up all the information and atmosphere - and putting names to faces. I was exhausted but buzzing by the end of the week.
In this special edition of the Web 2.0 Weekly Wrap-up, I've decided to do a top 10 list of things that I remember most about the conference. Here goes...
10. The jam-packed rooms. The conference was sold out and as a result most of the workshop rooms - and every other place where people congregated - were full to the brim. At times it was uncomfortable, but it did prove how much interest there is in Web 2.0 from techies, VCs, business people and lots of others.
9. Best and worst conversations or workshops. All of the workshops I attended were very worthwhile, but for me the highlight of the formal part of the conference was John Battelle's conversation with Yahoo! CEO Terry Semel. I really dug his vision for Yahoo! as a technology/media company that is paving the way for 21st century media and entertainment. By contrast the worst conversation in terms of content was Barry Diller, whose 20th century media mogul views were hard to take. Diller was entertaining though, I'll give him that.
8. Google stealing the show on Friday. They did this with two things - Google Reader was announced and then Sergey Brin made a surprise appearance for a conversation with Battelle. Google Reader turned out to be a bit disappointing, but it was cunning PR to announce it at the conference on Friday after months of conjecture about when they'd release an RSS Reader. I enjoyed Brin's performance and I thought he effectively answered criticisms from competitors about Google's business model - he basically said Google is about being the #1 technology company and innovation will flow from the bottom-up. Whether or not that pans out is another matter, but the fact that Brin turned up to say it was noteworthy.
7. The acquisitions - Yahoo! bought upcoming.org, Newsgator bought Netnewswire, AOL bought weblogsinc, Verisign acquired weblogs.com. Of those, the weblogsinc deal generated the most buzz - perhaps because it gave a much-needed boost to the time-honoured Content is King theory.
6. The business models - or lack thereof. The conversation in the halls was about the over-reliance on acquisitions and advertising, in particular, from the many start-ups that have Web 2.0 products or services on the market. This is understandably making a lot of people nervous, although the general consensus seems to be to go with the flow and enjoy the ride.
5. Big Internet companies taking digs at each other in the conversations. Google was the natural target at this year's conference. Terry Semel from Yahoo! in particular took some well-aimed swipes at Google. Microsoft wasn't mentioned that much, except for MSN's Dare Obasanjo asking at least 1 question in every session he was present at (and good questions too). Amazon was hardly mentioned at all. Of the bigco's, I think Yahoo! came out the best from this conference. But Google and eBay did OK too.
4. Lots of small start-ups announcing cool new social software apps - zimbra, zvents, Orb, Flock, etc. TechCrunch coverage here and here. The workshop where they announced 12 of them was probably one I should've attended, in retrospect, but the mash-ups workshop was on at the same time and it was pretty good too.
3. Conference keywords (i.e. terms heard repeatedly): user-generated content, engagement, 2.0, 2.1, 1.0, platforms, mash-ups.
2. Bubble talk. There was a lot of chatter about whether we're in a bubble. Much of it is excitement at the present opportunities, mixed with a little caution and cynicism based on lessons from the dotcom era. Some would say there's too much Web 2.0 hype currently, but I think it's an exciting time to be doing things. Let's not get too cynical - or preachy about what Web 2.0 is or isn't. There are a lot of opportunities out there (I'll refrain from singing the Pet Shop Boys song).
1. The thrill of being among my peers and in the middle of all this Web 2.0 activity. I've spent the past 3 years exploring the Two-Way Web and then Web 2.0 on Read/WriteWeb - documenting the transition to the Web as platform era. The interest in Web 2.0 over the past year has almost directly matched the upsurge of interest in my blog, which is very gratifying. I'm currently busy working out how I can make a difference in Web 2.0 over the next year, as are many other people I'm sure.
That's a wrap for another week! My next Weekly Wrap-up will be written back in New Zealand, but I have a feeling I'll be back in Silicon Valley before too long ;-) I love this place.
Tristan Louis did the numbers on the AOL-WeblogsInc deal. My blog Read/WriteWeb has 1,938 inbound links on Technorati as of today, so according to Tristan's calculations Read/WriteWeb is worth over $1 million.
OK, so there were other factors that contributed to the weblogsinc deal - the value of network effects etc. But I certainly believe there is value in a quality weblog. I have some other ideas on this too, in regards to networks. But I just wanted to put it out there that I'm open to offers of $1 million or over :-)
UPDATE: Scott Kidder, who works at weblogsinc competitor Gawker Media, has published some data he compiled on weblogsinc. Out of 75 WIN sites he studied, only 31 are what he classifies as "active".
To be honest, the figures don't really interest me. As I commented below, I'm kind of half joking in this post and I don't fully correlate my blog with any in the WIN network. But there is a serious point to my post: I think there is value in a quality topic-focused blog that has a reasonable readership. The value may be increased by belonging to a network of similarly focused and quality blogs. I think the market for quality networks is under-served. Arguably John Battelle's FM Publishing will serve this market and 9rules network is on the right track too. But there's more work to be done.
Also I like to think that it's not just network owners, like weblogsinc and Gawker, which have something of value. This is perhaps being recognized now that we're hearing of VC interest in certain blogs. In a network of quality topic-focused blogs, the real value is with the writers - they're creating the quality. So it's a different model to the one Jason Calacanis and Nick Denton have been running. Well... Peter Rojas, who is WIN's main blogger with Engadget, got a pretty good deal. He was mainly responsible for the quality product that is Engadget - and turns out he had equity so he got justly rewarded. But what I'm thinking of is more like small groups of topic-focused blog networks, composed of high quality blogs. This will help each blog get a larger audience, which will lead to better advertising rates, etc. This isn't a new idea of course (ref FM Publishing, 9rules), but there is much more to be done.
Marc Andreessen popped into Alex Barnett's comments to confirm the business goals of Ning. In response to Alex's well-written analysis of what Ning is trying to accomplish, Marc commented:
"Alex -- your description of what we are trying to do is very well said. It's an experiment, but those are the goals.
We are going to see if we can generate enough revenue through a blend of advertising (like Google, Yahoo, etc.) and premium services to be able to support what we are doing, including the free developer accounts."
So advertising and premium services are the main business models, at this point. I also wonder whether Ning will in future arrange to get a slice of any revenue that services built with Ning make. For example, if someone creates a mash-up that brings in advertising revenue, maybe Ning should get a cut? I'm not sure if that's viable or not.
I noticed that Alex did the good Microsoft employee bit at the end of his post when he said:
"I'm not privy to discussions taking place at higher echelons of Microsoft but the trend is clear. Microsoft has been banging on about web as a platform for a while now. Microsoft is running with it, indeed driving much of it, and plenty more to come...we're not the only ones though."
Well, I'll accept the "running with it" bit ;-) Although I do think Microsoft is doing interesting things in the Web 2.0 space.
But anyway, back to Ning. I checked out their blog tonight to see what new services have been created using Ning (I haven't had time to dive into the development area). The Bay Area Hiking Trails is nicely done - I think by Jonathan Aquino, but I couldn't find any mention of it on his blog. The other services didn't look that exciting: a bookshelf, a Storyteller app, something called Confess!. It's early days though and Ning is an intriguing development in the web services mash-ups era, so let's see what develops.
The conference is over now and so here's a summary of my blog output from it. I was pumping out the real-time notes over the last 3 days! I didn't have much time for analysis - my brain was full to the brim just absorbing everything. I intend to dive into the details over the next week or two. Here are the posts I wrote during the conference:
07: Cautious Optimism and Cynical Buzz (also published on ZDNet)
07: Discussion: Prosumer Media Mena Trott, Mark Fletcher, Rich Skrenta
07: Conversation: Sergey Brin of Google
07: Search engine stats: Jim Lanzone from Ask.com
07: Zimbra UI Minute
07: 3D Web Services
07: The Alumni Report Joe Kraus , Kim Polese
07: Google RSS Reader announced at Web 2.0
06: A Conversation with AOL CEO Jonathan Miller
06: Discussion: Open vs. Closed Models
06: Bubble or Bubble-let?
06: Mary Meeker talk
06: Yahoo CEO Terry Semel conversation
06: ZDNet post on the Terry Semel conversation
06: Flurry of Web 2.0 Business Activity
05: Web 2.0 Conference, first day impressions - ZDNet
05: Web 2.0 Conference coverage notes - Wed afternoon
05: Barry Diller conversation
05: Web 2.0 Conference Introduction
05: Web 2.0 Conference: Yahoo - What's New in the Search Ecosystem: Users, Publishers, and Advertisers
05: Web 2.0 Conference: Ad Models: A New Approach to Marketing?
Plus I took paper notes for the following, which I will turn into blog posts at some point:
05: Open Source Infrastructure workshop
05: Mash-ups 2.0: Where's the Business Model? workshop
For me the Web 2.0 conference has been really exciting and the air has been full of energy. But I'm new in the Silicon Valley, so I've been curious to listen to what other conference attendees have been saying. A lot of them share my enthusiasm, but there's also a fair amount of what could be termed 'cynical buzz'. People who perhaps lived through Dotcom Boom and Bust I and are now more cautious in the sequel: Dotcom 2.0.
John Battelle just asked (as I type this) eBay founder Pierre Omidyar if we're "getting to another bubble". Pierre says there are so many creative people inventing innovative things - and the barriers are much lower. Fundamentally that's a good thing, he says, but there'll be much more competition. So he sounds positive (but then that's his job, because he's investing in this stuff). So...grain of salt and all that.
Fred Wilson is taking a careful approach to investing in 2.0. He wrote today of "seeing second derivatives" in Web 2.0. For example Fred heard a business described as "Google Maps meets delicious, and another described as Skype meets MySpace." He concludes:
"When the first derivative hasn't fully figured its long term business model (other than getting bought), the second derivatives are pretty scary. I am a contrarian at heart. This situation bothers me."
Fair comment. In all the conversations I've had, the main business models I've heard are getting acquired or contextual advertising. There are other business models though - e.g. subscriptions, premium content. Some of the successes so far of Web 2.0 - e.g. topix.net and Bloglines (I met and chatted with the founders of both today) - have profited greatly from those business models. But how many others can/will? Are we too reliant on Google, Yahoo and the other bigco's for acquisitions or advertising revenue?
Henry Blodget, (in)famous former Wall Street Internet analyst, has just started blogging. He had this to say on the first dotcom era, what he learned and how it could be applied in the current era:
"One reason for my success in the boom years is that I was optimistic about the prospects for a handful of Internet companies at the right time [...] The first stage of my own personal dotcom bust came when, along with many others, I stayed optimistic too long."
So that's why we're seeing cautious optimism - and cynical buzz. We don't want to be optimistic for too long, but we certainly want to enjoy the sun while we can. I certainly do, being a fresh face in the Valley and wanting to take the opportunities before me while the time is right. And the time is right/ripe, no question. Actually I think there may be another bubble when mobile technologies take off in the western world, but I'm talking for now about Web 2.0 and social software stuff.
I'm wrapping up this post now, just as Tim and John are wrapping up the conference. It's been a fantastic 3 days, very very busy and bustling, and hugely enjoyable. I'm buzzing - but trying my best to be just a little cynical ;-)
John: this idea of prosumer media, define more. prosumer media is big business
Mark: started bloglines to scratch my own itch. other people must have this problem too, that was genesis.
Rich: folks in newspaper companies surprisingly savvy about the Web. more and more content every day - our job direct people to that.
Mena: the day we took funding, wanted to be more than lifestyle business.
John: google weather, feed reader
Mark: google joining long list of companies doing feed reader - "one more data point that validates our original vision". bloglines changes the way people use the internet, so will be very important in future (ref: google feed reader, but framing it in bloglines terms]
Rich: doesn't have to be all or nothing, win-win, etc.
Mena: competing with all the big players...
John: re creating content - do you have populist vision, celebrity culture.
Mena: project comet... it's about communication more than publishing for her Mum, but are limited numbers of publishing. communications first and foremost for sixapart.
John: all have built platform on top of roiling conversations
Rich: we're really early. like web in 93-94. over next 2-5 years, going from bloggers writing "real content" to much more about discoverability for people on topics they're interested in.
Mena: it's about privacy, writing to specific audiences. no scale expectations.
John: video, audio in bloglines etc.
Mark: video, audio not as easy to consume. search technology isn't there. text will be king for forseeable future. use internet as it matures for different types of communication - more nuanced forms of communications. different mediums, more segmentation.
Mena: should be counting how active people are, how are they engaged, what are they doing.
John: spam, what do you do about it? threat or will we manage?
Mark: we have natural barrier - we only crawl sites our users subscribe to.
Rich: created opportunity for google, relevancy.
Q1: bloglines hasn't changed much recently [that sounds familiar!]
Mark: challenge for us is one of scaling, keeping up with huge recent growth. #1 priority is to keep the trains running on time and keep decent user experience. has most of that solved, so soon will see more innovation.
Q from Jason Calacanis: monetize for RSS for bloglines.
Mark: we haven't settled on a business model yet. couple of diff ways we could go - e.g. one option is we never monetize it. if we monetize, you the content owners are partners. so if we go down that route, we'll talk with publishers.
Rich: has to be publisher tie-in.
Q: only business model among entrepreneurs seem to be to be acquired. are there business models?
Rich: there are business models (they didn't take investment). ad-targetting, ads on sites etc brought in revenue. business model innovation required.
Mena: could've flipped two years ago. it's a long game.
