Monthly Archives: May 2011

Linkedin IPOs: the floodgates for Internet 2.0 bubble?

So that other social networking site, the one for adults…I jest. The other networking site that is more geared towards professionals – Linkedin – went public this morning making many share holders wealthy. Unfortunately I am not on of them even thought I am one of the first 150,000 users, I was hoping when I got the nice email thanking me for being a long time LinkedIn user that it would accompanied with some equity. Wishful thinking. No surprise but Linkedin did very well the first day on the open market: opening at $81, hitting a high over $120 and closing at $93.10. Not a bad first day. Chart below:

With the like of Facebook and Groupon preparing for IPOs next year, does this indicate another tech run? A run that gave us the irrational exuberance of the late 1990s? I do not think so. The original Internet bubble was the wild west. Companies were getting ridiculous valuations for basically have a .com name. We all chased and thinking they were the next GE or USSteel. While there were some companies that emerged from that time – Amazon anyone – there was also a lot of burned investors and liquidation parties. So what is different this time? Well the fact we went through this during the first bubble. Companies such as Linkedin, Facebook and Groupon are under greater scrutiny. Yes we like seeing lots of eyeballs, but now we need to understand and more importantly SEE how you will make money. Having taken time to build their businesses, gaining visitors/clients and focused on the financial statements has placed firms like Linkedin, in a much better position than Webvan. I am sure that when Facebook and Groupon IPO there will be a wave of excitement, but there will not follow up with irrational investments in “dot coms” who are not grounded in business.

I think that is also why the likes of Twitter are not talking about going public. While Twitter speaks about being profitable and while the usage of Twitter continues to grow, there remains questions such as “what is Twitter really for?” Back in 1999 that would have been a good question for a tech company looking to go public. Today, you better have some cash flow  and real income statements if you want to IPO. That is better for both the companies and the investors. Irrational exuberance was fun, but do not need another ride on that merry go round.


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Now that Skype is off the market who is next?

I have been thinking about the Microsoft – Skype deal and started thinking, who else could be a target for the tech elephants? Obviously Google was rebuffed in its attempts to acquire Groupon. First the ground rules, the big elephants: Microsoft, Google, Facebook, Amazon and Apple, everyone else is a “target.” So here are some thoughts:

  • Apple will go after Netflix and will integrate the asset into iTunes as well as look to revitalize Apple TV. Amazon is rumored to be starting a streaming video service and with the Kindle and the rumor of Amazon pushing out a new tablet, Apple will want to stay ahead of that curve. Apple will also be able to hardwire NetFlix into the iPhone or iPad…maybe even come out with a dumb down version of the iPad which is a streaming device for iTunes and Netflix.
  • Facebook will purchase Yahoo! The one time tech elephant has seen itself be downgraded to a “has been” in the tech world – by the way of AOL. I know that Facebook has announced that it will have an email service, but why not just acquire it via Yahoo! For all their issues, Yahoo still has very strong email service. Add to this the assets such as Yahoo Finance and Yahoo Messenger, and Facebook would have a valuable asset to partner with their existing assets to continue to challenge Google.
  • Amazon will look to acquire a location based service such as 4square. The location based service has added some specials to their check ins allowing them to sneak into the Groupon space. But why would they be a good fit for Amazon? Because Amazon is the world’s biggest online retailer. Since we, well some of us, go to Amazon to purchase a whole host of products why not combine your online shopping trends with where you are going in the real world. This might sound like a privacy nightmare, but for Amazon the ability to match the two trends would be  a gold mine when it comes to advertising and promotions. Amazon also provides the eCommerce engine for many smaller vendors, what about this idea: you check in via 4square to a location, there is a special for a product, if you purchase and show your check in you get a discount or if you want you can jump to the Amazon site to see if you can have it shipped…or even price shop. Retailers might not like that but they will like the ability to target clients.
  • Google will look to acquire Hulu to add the network streaming service to YouTube. They will create a Hulu landing page on YouTube, add that regular content to YouTube giving it some structure on top of it self created content. Google should look to create more formal channels on YouTube while not taking away from the power of YouTube’s self created content. Google might also think about acquiring AOL, why? AOL has bee quietly reinventing itself and acquiring social marketing assets as well. Google would get a portfolio of social assets in one simple purchase.

Just some thoughts on which dominos could fall next. Who do you think is the next target?

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Microsoft bolsters consumer play with acquisition of Skype

Well well well, look who out bid Google and Facebook and acquired the VOIP provider Skype. Financially it is not surprising, soon we forget that Microsoft also sits on a pile of cash and they needed to get back into the game when it comes to B2C and more social type offerings. So now another social asset falls into a traditional vendor’s sphere.

So what does this mean for Skype and Microsoft? I am not sure much, in the short term. It does give Microsoft an app that they can integrate into mobile players other than windows phones, aka Apple and Android. A space that a few years back Microsoft was owning – windows mobile phones were the 800 lb gorilla – they are now a distant 3rd relegated to hanging out with other past big player RIM.  Microsoft might be looking to get back into the mobile and apps game via acquisitions such as Skype. Might not be a bad tact since they would have an un-winnable battle if they tried to compete with Google and Apple for the OS space on the phone.

I just hope that Balmer does not try to replicate the Netscape v IE battle and make Skype “buggy” when not on a MSFT platform.

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