Wanted: 5 Startups To Change the World - ReadWriteWeb

Interesting post - how will they know?

Google took 4 years and $20m in funding to find it's niche. During that time almost everyone in the Valley thought it was a bust except for just a few.

Tom Foremski of ZDNet agrees with Nolan, adding:

"Incremental innovation just won’t cut it...innovation has to be disruptive otherwise it won’t succeed, because there is little incentive to change."

When someone does come up with something it will be ridiculed and then violently opposed. After that it will be accepted as self evident. All of this will take years.

So apply now and lets check back in around 2013

Wanted: 5 Startups To Change the World - ReadWriteWeb

End Of Speculation: The Real Twitter Usage Numbers

Here are some "unconfirmed" numbers...

March 2008
Total Users: 1+ million
Total Active Users: 200,000 per week
Total Twitter Messages: 3 million/day

If this is correct and they got their $15m round at a pre money of $50m then the post money would be $$65m which would equate to $65 dollars per person.

Right now it's hard to understand the value that is worth paying $65 dollars per person.

If we use the 200,000 number then the dollar numbers goes up to $325 per person which is astronomical.

1% of of the active user base is 2,000 users which is somewhere close to the conversion number from free to paying. That changes the number to $32,500 per person.

Lets say that somewhere in there is the "right" number - it ranges between $65 per customer all the way to $32,500 per customer.

My guess is that Twitter still has to figure out how to monetize their user base - even so I still doubt that they are worth more than $30 per customer.

I bet the VC's are glad the liquidation preference is in the term sheet. Only one problem left to solve - whose the buyer?

End Of Speculation: The Real Twitter Usage Numbers

How Much Is Twitter Worth?

So how much is it worth?

Everyone is talking about it - however no one is actually saying anything.

What is it that is worth so much or so little? At some point in time a percentage of the user base has to convert into something that pays the bills.

Heck I would be interested in understanding the business model. I've had to make enough presentations now that by about slide 5 or 6 you had better be showing someone how you are going to make money. If not it's a swing and a miss.

So back to the question - what is it worth and more importantly where's the detailed financial analysis that supports the answer?

How Much Is Twitter Worth?

Twitter, Value and the Liquidation preference

Just had a thought about Twitter and Value (Satisfying a customer need or want).

There are lots of posts in the blogsphere about people using twitter as a networking/marketing tool. Comcast and Read Write Web come to mind.

By all accounts people are find that twitter offers them value - even if they laughed at it in the beginning.

So here's the simple question - if it solves peoples problems and offers them value would they be willing to pay for that service?

Is this one of those freemium plays where you give it away and then convert 1% of your user base to fare paying customers?

If it is then the VC's will/might put more money in. Is Twitter really worth a $160m dollar exit? I seriously doubt it, however the VC liquidation preference will take care of the downside risk.

It's probably a $75m dollar exit.(Assumes you can find a buyer) - the VC's will have put in $20m and change - the liquidation preference assures them that they get at least a 1x preference in the event of a sale. After that they can choose to convert if the exit price is high enough.

So just think of it as parking the cash and earning a few bob on it while we wait for Twitter to figure out how to capture the value that everyone is talking about.

Twitter Reportedly Putting More Gas In The Tank

Another interesting post about Twitter out looking for money. Again I refer to my post on Build Value - i.e. satisfy a customer want AND then build measurable, sustainable, profitable revenue from volume.

Here's what fascinates me - Twitter is free and has no discernable revenue stream. It has raised $5.4 million in two rounds and is now out looking for $15m at a $60m valuation.

Ignoring cap tables and dilution for a moment, what's the exit? It's not an IPO which leaves merger or Zombie on the table. Let's ignore Zombie and focus on M&A. How do you value something that doesn't have measurable, sustainable, profitable revenue from volume? I don't know. But lets say you can - just doing a simple 3x return on a $60m valuation puts Twitter at $180m exit.

That's really hard to figure out - simply because if you can't monetize the customers there is little value for someone.

On a side not I was told yesterday that for VC's to get interested in a Series A round you need to have a $1m a year revenue run rate. Twitter is going for a C round with no revenue run rate and having already burned through probably a reasonable chunk of the $5.4m

I guess beauty is all in the eye of the beholder - I just can't see Warren Buffet taking their phone call though.

Twitter Reportedly Putting More Gas In The Tank

Trust In Ads Correlates To Control (Hence Mobile Banner Ads Not Trusted)

Something else I've been talking about for a long time. Customers want three things on Mobile:

1. Convenience
2. Privacy
3. Control

Control leads to Trust and pull wins over push. Mobile is where the market will rotate too in the coming months, however like I mentioned in my last post (Build Value) you have to satisfy the customer want/need. You start that process by enabling trust to happen. Once customers trust you it's amazing the value that can be realized.

The article below has some more data points, and it's right on the money. (pun intended).

Trust In Ads Correlates To Control (Hence Mobile Banner Ads Not Trusted): Report | mocoNews.net

Build Value

I've never forgotten that message that I learned from an Attorney (strange that it came from an Attorney).

Customers don't buy products - they buy the satisfaction of a want or need... in other words they are buying value.

The key to creating value is clearly understanding the customer problem (want) and then satisfying that.

You shouldn't confuse value with quality. It is possible to build a "quality" product that no one will buy because it doesn't solve the customers satisfaction problem or need...

Management should never define the product themselves - they will invariably get it wrong. Go and talk to the customer first and then you will be on the right path. (Make sure you talk to a lot of them)

Nokia - Internet services extend beyond desktop experiences with context aware and personal Widgets

Amazing... Nokia does what we've been able to do for 2 years now.

I really like this quote...

The user experience from such services goes beyond what the desktop based environments can provide." - No kidding.

Anyone reading this who is a member of the Oxford Forum will surely smile.

Only one tiny little issue - only works on Symbian phones - where's the Blackberry, and Windows Mobile versions?

You would think that they would design a portable cross platform run time widget so they could sell more services.

The good news is that the market is validating the need for a better user experience - and that others will complete the job and deliver a solution that is "across all the platforms".

 

Nokia - Show Press Release

Why There Aren't More Googles

Great essay and he's right on the money.

 

Why There Aren't More Googles

'Windows is too monolithic,' declares Gartner, opening the door for Linux | or Much Ado about Nothing

The latest headlines hitting the wires about the demise of Windows. They must be written by the same people that predicted the demise of the mainframe.

They are proposing that answer is to switch to Linux. Why? What does Linux do that Vista doesn't. What is that MUST have differentiator that Linux brings to the desktop that Windows doesn't. I have Vista running here and also Ubuntu Linux for desktops. There is no comparison.

Try this - download and install a few simple app's on Linux - then do the same on Vista - You'll be a believer.

Here's why these predictions are wrong - they require a behavioral change and those are very slow to happen and only do so in the case of a compelling need.

I switched to Vista just before it was released to the Public - I still run XP in a virtual machine however that's merely for testing - I would never go back. Once the change over occurs and the drivers become more stable XP will be forgotten - just the 486 chip.

As for this nonsense about how everyone is going to compute in the cloud with nothing more than a browser try this simple exercise - try formatting a document including tabs in HTML - let me know how that works out for you.

'Windows is too monolithic,'

Wish I Could Bring Myself to Giggle (or at Least Smile) in Public

Simply a brilliant post by the expert (Tom Peters). Reminds me of a quote I heard during the last bubble... all the fools are dancing while the bigger fools are watching. The reason for today's rescission is simple... GREED.

Wall Street just went crazy and is now getting called on the carpet for it.

What were they thinking, well as it turns out not very much. Just more crazy schemes which basically amounted to nothing more than a Ponzi scheme, built on giving credit to people who never should have had it in the first place.

Tom Peter's (link)

"Free" is Killing Us--Blame The VCs - Silicon Alley Insider

Frank William's gets it. There is no such thing as free. Just the illusion that one day it might turn into earnings, but for 99% of the startups all it means is dilution and a chance to get a failure or two under your belt.

"Free" is Killing Us--Blame The VCs - Silicon Alley Insider

Mercenaries vs. Missionaries

This slide from John Doerr sums it all up for the Entrepreneur... I try and follow this everyday in everything we do at 5o9 Inc

Mercenaries	Missionaries
Drive. Paranoia	Passion
Opportunistic	Strategic
"The pitch, the deal"	The Big Idea, Partnership
Sprint, short run	Marathon, Long run
Obsess on competition	Obsess on Customers
Aristocracy of Founders	Meritocracy, best idea wins
Financial statements	Mission, values statement
Bosses of wolf packs	Mentors, Coaches of teams
Entitlement	Contribution
The Deferred Life Plan	A Whole Life (that works)
Lust for Making Money	Lust to Make Meaning (& money)
Success	Significance