Category: Business

Top 10 of Web 2.0

So I was checking out rev2.org’s list of the Top 10 Most Successful Web 2.0 Startups to Date this morning, and noticed something interesting: Not one of them has IPOed or announced plans to do so. All of them have either been acquired by Web 1.0 companies (several of whom did IPO) or are still privately held.

The other interesting thing is that there’s no mention on the list of whether any of the companies is profitable (or was before acquisition). Wikipedia, being a non-profit, is off the hook there, but what about the others?

You’d think that after all the craziness in the last go-round, this time, any real definition of success would include some amount of actual profitability, but maybe I expect too much.

UPDATE 4/15 In comments on his site, rev2’s Sid clarifies:

Since most Web 2.0 companies are private and don’t release any information at all on profitability and revenues (with the exception of perhaps YouTube which we have some data on) I decided to leave that out. While I realize that’s one of the important things in terms of ‘most successful,’ Web 2.0 is really more about ‘who can get acquired for the most money’ than ‘who can make the most money.’ That was Web 1.0, and those companies are now the ones who are buying these.

Having lived through Web 1.0, I seem to recall it was all about the “eyeballs” and about IPOing as fast as possible, not about profitability, but hey, maybe old age has clouded my memory.

I Wouldn’t Do That If I Were You

It’s hardly unusual to read a news item about corporate downsizing. This one caught my eye, though: Circuit City to cut more than 3,500 jobs. Here’s why: The company is downsizing by laying off their highest-paid employees. Not the ones with the worst performance ratings, not the ones who’ve been there the shortest amount of time. They’re firing their best-paid retail employees.

I don’t know the details of Circuit City’s employment practices, but generally speaking, you have to either be good at what you do and/or have been with the company a longer amount of time in order to get better paid. So if that holds true here, then Circuit City is deliberately dumping the cream of their retail workforce in order to save money.

In other words, they are firing the people who actually know where stuff is in the stockroom, or how to get it if it’s not there. Laying off the ones who know how to ring in a return on the register without having to ask for help and take 10 minutes doing it. Getting rid of the people who actually know something about their products and can talk intelligently about them.

That sounds like an incredibly boneheaded move to me.

But what do i know? After all, I only managed a retail store. I wouldn’t know anything about how much more productive a seasoned employee is than someone who’s still learning how to do their job. Nope, I must be completely wrong.

Or maybe not. Even Home Depot seems to know better:

Circuit City’s cuts come at a time when other retailers are trying to put more knowledgeable workers on store floors. Home Depot Inc., whose new chief executive is struggling to re-ignite sales growth at its stores, said it has raised pay to attract skilled tradespeople, such as carpenters and electricians.

Good luck with the layoffs, Circuit City. I think you’re going to need it.

Why Am I Not Surprised?

A tip of the hat to Discourse.net for this bit of news:

Halliburton, the big energy services company, said today that it would open a corporate headquarters in the United Arab Emirates city of Dubai and move its chairman and chief executive, David J. Lesar, there.

[snip]

The announcement about the Dubai move, which Halliburton made at a regional energy conference in Bahrain, comes at a time when the company is being investigated by the Justice Department and the Securities and Exchange Commission for allegations of improper dealings in Iraq, Kuwait and Nigeria. Halliburton has also paid out billions in settlements in asbestos litigation.

Halliburton officials did not elaborate today on what the shift of its top executive might mean. The move seemed to raise questions about whether Halliburton might gain tax advantages or other benefits from shifting into a foreign country with pro-business regulations.

One might also wonder what the extradition treaties with Dubai are like…..

Penny-Stock Spammers Get Rich

One of the things I’ve always wondered about e-mail spam has been — who is actually making money off this stuff, and how much? Well, an article Yahoo! News today shows that there is, in fact, serious money to be made by spamming. I’d always assumed that there had to be some profit in it, or else spammers would not keep on doing it, but this was the first time I’ve actually gotten a window into how much.

In one spam campaign involving Apparel Manufacturing Associates (APPM) the SEC said the company’s stock closed at 6 cents on trading volume of 3,500 shares on Friday, December 15, 2006.

After a weekend spam campaign distributed e-mails proclaiming “Huge news expected out on APPM, get in before the wire, We’re taking it all the way to $1.00,” trading volume on Monday, December 18, 2006, soared to 484,568 shares with the price spiking to over 19 cents a share.

Two days later the APPM price climbed to 45 cents. However, by December 27, 2006, the price had slumped to 10 cents on trading volume of 65,350 shares, the agency said.

There’s no way to know from those numbers exactly who bought and sold when, but it’s easy to see that someone who knew what was happening could easily make a five or six-figure profit in less than two weeks. Lather, rinse, repeat — and you’re doing quite well for yourself.

Fortunately, the SEC is starting to take some steps to try to reign this kind of stock manipulation in, but I suspect as long as spam and penny stocks are around, we won’t be completely free from the practice.

A Change of Course at Starbucks?

When the Starbucks Gossip blog posted this memo a day or so ago, it was roundly rejected as a fake, but apparently a leaked internal e-mail to Starbucks senior managers was the real thing. And it’s fascinating reading. Here’s a snippet:

…we desperately need to look into the mirror and realize it’s time to get back to the core and make the changes necessary to evoke the heritage, the tradition, and the passion that we all have for the true Starbucks experience.

Hopefully, this will mean less of a focus on selling books and DVDs at Starbucks and more of a focus on good coffee.

I’ve always thought that it’s not so much making mistakes, but whether or not you can learn from them, that’s the true sign of a company that’s going to succeed. Howard Schultz has done a tremendous job building Starbucks over the years, and this latest report would suggest that, any missteps notwithstanding, he’s still on the right track.