Category: Business

Another $0.02 on the Microsoft Offer to Buy Yahoo!

A few initial thoughts on the proposed Microsoft acquisition of Yahoo that was announced today:

Microsoft is a software company whose track record in content and advertising is not so hot. Yahoo still has some fantastic content, both internal and user-created, and they’ve by and large been able to monetize well, but Yahoo is too big, too slow, and lacks a clear vision of their path forward. Their stock is way down and they’re an acquisition target. Microsoft has the resources to make the acquisition and on paper, it looks like a good matchup (although neither of them has done well in the search area). Still, I don’t think it’s going to turn out well for them in the end.

Why? Simple. Yahoo’s problems will not be solved by the people who took five years to bring us that POS that is Vista.

I expect that the deal will go through sooner or later, and then the integration will be long and ugly. The Yahoo! brand may or may not survive; Microsoft has managed to keep their branding off of XBox but I wonder whether they’ll be able to resist rebranding Yahoo. And certainly some core Yahoo properties will get Borged into Microsoft; I don’t expect YIM, Yahoo Mail, and maybe even My Yahoo itself to survive intact. Some of the spin I’m seeing is that Microsoft is looking to Yahoo to add some social expertise to their current mix; which would imply that Flickr will probably make the cut, as well as del.icio.us and hopefully some of the the other acquisitions like MyBlogLog or Upcoming as well. No matter how you slice it, though, this is going to cost a lot of Yahoos their jobs.

Eventually, you’ll have one homogenized behemoth that still won’t be able to beat Google at search. Whether it will still be able to provide quality (and monetized) content that people find useful — we’ll see.

Superbowl Sunday update: Google weighs in, and they’re not happy.

They Buried The Lede

Deep in the news reports about the government economic stimulus package today was this nugget of information:

To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac’s loan purchases.

For those of us living in high cost of living areas, that has the potential for a much bigger and more long-term boost to the economy than a quick cash infusion, becasue now many more people will be able to avoid some of the ‘jumbo’ loan penalties put on loans that are bigger than FHA guidelines.

Google Knols – This Is Going To Be Ugly

Of all the feedback that’s hit the Internet today about the new Google ‘knols’, I haven’t seen much comment about this aspect yet, but to me it’s one of the most problematic parts of the whole idea:

Anyone will be free to write. For many topics, there will likely be competing knols on the same subject. Competition of ideas is a good thing.

Unless Google puts some sort of gate-keeping into the process, they just opened the door to a cacophony of competing knols on high-value search phrases and highly contentious topics. Imagine the chaos when every pill-pusher on the Internet creates their own knol on various medical terms and conditions, for example, or when there are competing knols on highly-charged topics like abortion or the state of Israel. And as Jeremiah pointed out, I expect that SEO/SEM companies are already thinking about how they could sell knol creation services to their customers.

Even without the massive can of worms that is the conflict of interest issue here (although I think Tony is spot-on in his take in that aspect), I think this has the potential to be very, very ugly.

Once Bubbled, Twice Shy

I wasn’t going to link to the Richter Scales’ awesome “We’re In Another Bubble” video, but after reading Mike Arrington’s thoughtful big-picture post today, I thought it would be an appropriate counterpoint. Together, his article and that video define the yin and yang of the whole crazy technology startup game.

Here’s an excerpt of Arrington’s post on the shadow of the dot-com crash and how the impact still affects people today:

Entrepreneurs who didn’t go through the crash don’t carry that burden. They don’t have memories of looking their employees in the eye as the laid them off. They were never trashed on F*ckedCompany for making ridiculously stupid decisions. Basically, they’re optimists, as any entrepreneur should be. They have no baggage.

And as a result they do exactly what they should do – they take big risks and hope for a big payoff. For the venture capitalists it’s even more important. They need one or two big wins in every fund to generate enough profits to keep their limited partners happy. A gun shy entrepreneur may not take appropriate risks at appropriate times, and the chances for success plummet.

I’m definitely a bit tainted myself. What I saw happen to startups in the first bubble makes me hesitant to raise money (we never have), hire too many people, or generally spend money (our offices are still in my house). I think less about growing the business sometimes than I do about losing what we’ve built so far. That’s part of the reason why I hired Heather as CEO to take over the business side of things. She’s conservative, but knows when its time to take risk and grow the business.

My interactions with Edgeio, a company I co-founded and which went into the deadpool last week, were similar. It seemed like every board meeting I was saying the same thing – stop spending money, stop hiring, stop. I was out voted, and the company followed its own path. The fact that they ultimately failed, though, doesn’t mean I was right. The investors felt that the time to spend and try to grow was now. It doesn’t matter that Edgeio failed, what matters is that it is the right approach if you are trying to make something big. If you want to be conservative, don’t be a silicon valley entrepreneur.

I don’t blame Arrington one bit, because I completely understand that mindset. Fear of failure is poisonous. You can tell yourself any kind of lies you want in an effort to justify your choices to yourself, but if you can’t remember the last time you swung for the bleachers and took a big risk on something, then you’re probably a victim too.

Which is not to say that this video isn’t also true. Some excess and stupid choices are a necessary part of the process. Remember the normal distribution curve? Outliers in both directions are inevitable.

If you live and work in the Valley, this is the life you chose — the excess and the fear, the hits and the misses. You need to be able to take it all in stride, because sooner or later it’s going to be your turn to be the hero, and the goat.

I like to think I can handle it all, but I know I still have work to do in not letting fear shut me down. What about you?

UPDATE 12/15: Sadly, the video’s not on YouTube anymore. Here’s some background on why.

Six Apart's Judo Move

I’ve migrated off of Movable Type, but it’s hard to stop paying attention to a company whose products I used for four years. Today, Six Apart launched what they’re calling the Movable Type Community Solution — a set of white-box social media tools built onto the Movable Type blogging platform.

It’s an interesting move that should help solidify their place as a provider of enterprise-class tools. And given the realities of the marketplace, it’s a smart one. The window of opportunity for unseating WordPress as the principal provider of blogging tools on the consumer end is very firmly shut right now. Rather than trying to fight a losing battle in WordPress’s face, they are instead choosing to go where WordPress is not and get firmly entrenched there.

A very judo-like move — flow to where the antagonist is not. Let’s see if the execution matches the strategy.

Nitpicking "The Big Picture"

It’s a rare day that I get to say something like this, but I think Barry Ritholtz missed the point a little in his smackdown of the WSJ Doctor the Dollar? article today:

When a currency falls as precipitously as ours has, it is, in no small part, a referendum by foreign governments (and their private investors/traders) on a country and its government. We know that the current administration is not particularly popular overseas. Its no coincidence that since they took office on January 20, 2001, the dollar has fallen ~35%.

The dollar has not fallen because foreign governments don’t like George W Bush (although he’s undoubtedly unpopular). It’s the policies this administration has implemented that have caused the dollar to weaken.