Slate Cartoon on texting while driving

This is funny and may become true.

http://www.slate.com/id/2112318/fr/nl/

Ning Raises $15M for a Total Valuation of $750- What Does it Mean?

Sorry but I can’t resist harping on this one.

Venture Beat and Boomtown reported that Ning Raised $15M for total valuation of $750M.  This kind of news seems to make everyone all twittery (sorry, could not resist again) especially in the Valley.   What does it mean?  Only that Marc Andreesen is the master at pumping up valuations and finding some sucker to buy them.

Even if you believe Ning’s numbers and that 200,000 private social networks are active, how many are actually willing to shell out for premium service?  I would venture a guess of 1-5%. Even if we assume 10% that is 20,000 willing customers at $25 pop (this price is from their blog), that is 500K per month.  Let’s not forget that they also make money selling ads. Assuming they can make $.20 per user* on 6 million users (again their number), they would take in another 1.2M /month, for a total of 1.7M/ month or approximately $20 M per year.

As for expenses, I am not privy to their numbers but I can guess that between employees and servers, they are probably losing money at least as much as the revenue stream.

So to recap the math, $750M for a company that makes $20M a year (using generous assumptions) with little prospects of turning a profit.  Do I hear “Bubble 2.0” popping?

*Raj Kapoor (Managing Director at Sillicon Valley’s Mayfield Fund) estimates that  social network sites make $.20 month per user on ad sales (source: http://www.undertheradarblog.com/blog/social-networks-will-make-more-money-off-site-vs-on/).

A Conversation with Dan Bricklin

I spent an afternoon at the Enterprise 2.0 conference in Boston yesterday and had a conversation with Dan Bricklin about SocialCalc a social spreadsheet which was released to public beta yesterday (see http://danbricklin.com/log/ or http://ross.typepad.com for more info).

I worte a year ago here about the advent and benefits of social spreadsheets and this is the culmination of effort between Dan and SocialText.

I liked what they were demo-ing and can see that it will be a great productivity enhancer anytime more than 1 person needs to collaborate on a spreadsheet.

Knowing that Dan is one of the industry’s original visionaries (for those of you who are younger than me, he invented VisiCalc, the first spreadsheet to run on a PC and became the killer app that allowed PCs to move from a hobbyist’s toy to a real business tool).  I asked him what would be the key innovations he saw happening in 5 years.  He did not hesitate to mention vastly the next generation of human computer interfaces.  He says that there will be devices under $100 that will be able to read 3-D gestures and that prototypes will be available in about a year. He will publish his ideas next week, so check his Blog in about a week to see what he says.

It will be very interesting.  I am looking forward to being able to use 3-D gestures with 3-D displays, now that will awesome.

Very Funny Post You Should See

Venture Beat published this very funny fictitious conversation between Steve Ballmer and Paul Otellini.

You should not miss it, it has some priceless lines in it.

Let’s Give Mark Zuckerberg a Break Already!

The press seems to be ganging up on Mark Zuckerberg for his apparent inability to articulate how he is going to monetize his phenomenal asset (see the WSJ Article: Facebook Tries to Woo Marketers

We all know that Facebook has tried several ad models and none have worked and it seems that they do not have any greater chance of finding the holy grail than you and I. But I think that the expectations for him have been set too high (granted he helped fuel them with his sale to Microsoft at an inflated valuation). First, he is only a kid and this has probably grown to be much bigger than his wildest dreams. Since he really does not know what to do, focusing on expanding the user base is probably the right thing to do at this time, especially as he has sufficient cash to last a while. The risk of moving too fast in opening the platform to marketers is alienating the users. Remember Beacon? It would not be a good idea to make that mistake again. Let’s look at the exisiting situation, According to the WSJ, they will earn an estimated $300-350M in revenue with $50M EBITA. This would be would be a home run for most startups at this stage in the game. They will go cash negative by spending $200M on servers. This is not necessarily a bad thing (plus they could conserve cash via a co-lo deal, lease or other financing option).

The fundamental problem with trying to monetize social networks (and why he and everyone else is having trouble with ad revenue) is that people are not interested in being “sold” while they are in their social environment (both in person and online). Therefore, marketers have to change their mindset in order to be successful, instead of trying to push messages and measure everything by sales, they have to engage the audience in a conversation, adapt the method and medium and offer something of value. (This is not a new idea, it has been written about in great depth – and I could digress into the whole behavioral targeting issue, but at another time).

It is easy to dump on him, and I am not one of his fans, but we should cut him some slack for not having a business model yet (I would give him another few months) and give him credit for bringing in adult supervision.

The Economy Loses 240,000 Jobs – What’s Next?

The jobs report came out today showing 240,000 jobs were lost last month, the unemployment rate is now 6.5%, its highest level in 14 years. This is very serious and the news will likely get worse before it gets better.

My criticism of the government and pundits is that they are out of touch with real people and are looking in the rearview mirror on economic data. Those of us in the real world have seen the faltering economy for over a year and have seen the effect of the credit crisis, loss of jobs and the fear of a job loss.

Rick Santelli of CNBC is one of the few pundits that seems to understand the problem and the real solution he said that “any money injected into the system has to be about jobs”. I agree whole heartedly, all the problems with credit and liquidity will pale in comparison to the issues we will face if unemployment continues its steep climb.

The good news is that I believe that Barack Obama understands this and will make smart choices. I only hope that the lame duck administration lets the incoming administration to influence policy immediately because waiting or doing nothing is not a viable option.

(As a side note, I find it interesting that the current administration was very quick to bail out the financial institutions but slow or non-responsive towards other industries – specifically autos. If GM goes bankrupt, the impact on the economy will be devastating – and I would predict far worse than the credit crunch. It is not like we have never bailed out private companies and industries before: airlines, Chrysler and recently the wall street titans. History has shown that providing loan guarantees will not transform us into a socialist economy.)

Developments to Watch for the ESN Market in 2009

I just finished a 7 page write up on my thoughts what 2009 will bring for the ESN market.

Here is an outline and some excerpts. If you would like to get a full copy, email me at david at dinesconsulting.com and I will send you a PDF.

Current Market Landscape
Vendor Landscape
Venture Capital and Investments
Emerging Technologies (Micro-blogging, mobile, geo, and social spreadsheets)
Conclusions

Excerpt:

CURRENT MARKET LANDSCAPE
There will be a major sales and marketing battle among all the vendors for marquee accounts in the Global 1000. The next 12 months will be important for more than just bragging rights – vendors that cannot obtain prominent reference accounts and reach a certain critical mass may be left behind.
Until recently, the ESN market has been growing rapidly (our research shows high growth, approximately 100%) and we expect healthy (30-40%) long-term growth. However, we have been seeing signs that the overall economic malaise is starting to affect the ESN market. Many companies are delaying new initiatives as they determine the impact of the global slowdown. As a result, we expect enterprise decision makers will require stronger business cases / higher ROI before approving ESN projects.

Analyst Relations and How to Talk to an Analyst

I just ran across a blog / website by Sage Circle, an analyst relations consulting house. I have put it in my blogroll as well. It is a useful site with good information on how to deal with analysts. There are lots of good tips, including a link to this article here.

I would add some of my own advice / amplify what others have said (in no particular order):

- There is a difference between AR and PR and pitching to VCs. Learn the difference.
- If your company tag line starts with: “The Leading supplier of . . ” Rewrite it.
- You should be able to tell me very succinctly your key value proposition and differentiation.
- VCs love: “We are just like XYZ, only different / better”. I personally find it lame.
- Tell me something that is not in the press release or in the brochure.
- Don’t try to spin me and l dislike talking to a “cheerleader”.
- If you make a claim, be ready to back it up.
- I want to know what else you are seeing in the market place.
- PowerPoint is OK, make sure to include specific facts, points you want me to know, but skip the fancy stuff like animations.
- I like to get my hands dirty with using the system, so give me access to a demo site or test bed.
- I expect you to do some research on me and have read my blog. If you want to impress me, pick one thing to discuss in a little more detail (you do not have to flatter me or agree with what I have wrote, but I would like to understand your viewpoint).

There are probably more items to add, but will leave it at that. I look forward to your comments.

Latest News – I am joining Synergy Research

I am very pleased to announce that I am joining Synergy Research. Synergy is a well respected group of people and does very high quality research in networking and telecommunications. I will continue to cover Enterprise Social Networking (ESN) and also be the lead analyst on Managed Services.

The Managed Serivces Market is growing substantially as economic and competitive pressures will drive more enterprises to
outsource greater portions of their telecommunication, IT, and network operations. Managed services can include data network, voice network or converged network services, as well as conferencing, real time streaming video and playback.

New Look and Location for my Blog

Sorry if I confused people with my new location and look.

My previous blogs on blogspot were “Social Networking Meets the Enterprise” and “Insights on the Future of Technology” and they are consolidated here as one blog.

I was hoping to keep them separate, but I am still figuring out how to work WordPress and the website authoring tool that I have.

Look for the web site beta to be up this week.