I just paid $38 to Facebook to promote a post I wrote in Spanish about the iPad Mini and Surface. I did it because I find the business model kind of absurd but want to understand what the rationale behind this is. I also did it because I was surprised the price was $38, like the failed IPO price. You would imagine that Facebook would have given up on charging $38 for anything and I wanted to see what I would get for $38.
I still think that Facebook should offer a $5 per month no ads version of its service. I dislike the fact that Facebook gives me the service for free and is always trying to think how to milk me as a user an activity for which it has an incentive to invade my privacy in all sorts of way. Especially in trying to make me as public as possible to sell me as a product to others. Facebook’s ads are so irrelevant, so much worse than those of Google, so irritating.
And there is the language issue as well. I hope FB realizes that my post is in Spanish and does not spam everyone who reads in English with it. I know this sounds absurd and it is so easy to recognize languages. SpotRadio and RadioMe, apps that I developed for Android do this very well on the fly and for many languages at the same time. But Facebook frequently shows me ads that encourage me to learn Spanish. So how aware is Facebook of who I am? It also frequently shows me great looking women with no friends in common with me to befriend and ads for all sorts of ways of meet women even though I am happily married and said I found those ads offensive.
10 years ago all of us on the Internet were licking our wounds. We had been taken for a crazy ride in which we went from a point in whatever we touch was champagne to whatever we did was shit.
As an entrepreneur that lived through 1998 to 2002 I emerged reasonably well, I sold my shares in Viatel when it was worth $1.2bn, I sold Ya.com for $700 million but did not sell Jazztel when it was worth $5bn because I was its CEO and saw it go down to $700M (now it`s worth $1.4bn). Then I lost $50M in Einsteinet one of the best cloud computing start ups in Europe that was killed by the post bubble era in which financing completely dried out. So as you read this post you will see no bitterness.
But looking back at 2001/2002 I see this time, not as a period in which Internet companies destroyed the financial markets, but as a time in which the financial markets almost destroyed the Internet. It was financiers/analysts who drove those insane valuations up and then down. What should have been a smooth ride on the internet, an era of taking more and more global citizens in its midst, became a crazy ride in which the internet itself gained enormous prestige and was later, for a while, seen as a useless gimmick. Only around 2007 people again realized that the Internet was simply transforming the world economy and was here to stay.
And then came 2008, when the financial industry practically destroyed the world economy. That was when the same financial firms did to the world what they had done to the Internet, inflate it and let it fall like dead weight.
Having been a happy customer of Goldman Sachs, Morgan Stanley and others I don’t want people to read this post as a rant against financial firms. We need financial firms. But what we don’t need is financial firms to do what they did first to the Internet and then to the overall economy, namely to hype them out of value and sink them hard for no reason. In simple terms what I am advocating has been done before and that is to separate trading from advising. The Chinese Walls in these firms never worked and never will.
In 2007, Loic Le Meur and I came up with the concept of La Fatera. It is described here. The idea was a scale that would share your weight over the internet and help you lose weight socially. At that time the plan was that Fon makes the Fonera and the Fatera. But while at Fon we stuck with the Fonera, a successful strategy (this year alone we sold close to 2 million), others picked up on the concept of the Fatera. The most successful implementation is Withings the WiFi scale. And new social sites to lose weight keep appearing. Fatdrop is a good example.
The obvious reason for the success of the scale and the weight losing sites is the obesity epidemics. 20% to one third of the population of developed countries obese or overweight. Interestingly obesity is so global and popular that in the world now there are as many obese people as hungry people, an estimated billion of each. But other than obesity the psychology of overeating lends itself more to sharing the activity socially to stop it than other addictions. Drug addictions, alcoholism are generally treated in secret in places like AA because taking drugs alters your behavior and there is a shame factor associated with it. Few people tweet something like “I have gone 134 days without shooting heroin”. Yet many people are tweeting their weight with Bob Metcalfe the creator of ethernet is a good example. Over eating is an activity that can be done in public, without shame and that other than the occasional barfing it does not produce any obvious social problems (it’s legal to drive after you overeat for example). But in this case, the shamelessness nature of over eating is a big plus for society to get you to stop. And sharing your weight over the internet is the objective measure of your eating. I see tremendous potential in weight sharing as a way to socially lose weight.
A few years ago, Yahoo had an opportunity to buy Google for less than one percent of its present value and passed. After that, the company went from being poorly managed by Terry Semel to being poorly managed by Jerry Yang. Its shares went down to $19. At that point, Steve Ballmer and the Microsoft management team saw an opportunity to buy Yahoo for a reasonable price and gave it a try.
At the same time, Yang and the board members thought they could take advantage of a “rich buyer” and achieve through tough negotiations what they could not achieve via able managing, namely a high share price. They not only rejected the offer of $31, but asked for $37 or nearly twice as much as the share price was worth before Microsoft had first mentioned the word Yahoo.
Ballmer´s reply was simple “we may be rich, but we ain´t stupid” and ditched them. Those shareholders that had bought shares thinking the sale was a done deal were left holding the bag.
Icahn, an expert in takeover battles in the 80’s, threw himself into the battle without having experience with the Internet and started buying cheap shares with the objective of having Microsoft buy Yahoo! at $31 per share and go back home with $1 billion.
The rules of the board of Yahoo were favorable for Icahn. While most of the companies elect their directors and board members at different times, Yahoo elected them all at once and this makes it extremely vulnerable for a takeover. Icahn saw this opportunity to chose an alternative slate of directors and sent an aggressive letter to the board that is well commented by Kara Swisher, one of the best technology journalists so I link to her for this part of the blog post.
The guys at Yahoo replied with this letter saying that they did not want to give Yahoo away to Microsoft and other weak arguments, as it is hard to explain to shareholders why $25 is higher than $31.
Now Yahoo shareholders have only bad choices left. They can vote for a management team who had a chance to buy Google and passed, who had a chance to sell to Microsoft and passed and who had a chance to dominate the internet a la Google and failed. Or alternatively they have the opportunity to vote for a corporate raider who knows nothing about the internet and who´s only strategy is to sell to Microsoft. Will there be another unexpected buyer such as large global telco in the meantime? Will Yahoo find a way to divest of its Japanese and Chinese properties and raise $20bn + in cash? Will the current Yahoo board bring a stellar CEO and win the election? All these are possibilities that do not escape Icahn, who is convinced that one way or another he will make money with his Yahoo shares.
Last night I was having dinner with C.J. Cherng, the very able CEO of Taiwanese ISP Seednet, a Fon partner. During dinner we were talking about how global the Internet is and yet how different local rules are for ISPs around the world. On one side, there´s the US, who invented liberalization and, after being successfully copied by the whole world, retreated into a duopoly situation that is hurting the US consumer. On the other, there´s Europe, which implemented unbundling to such an extent that now European ISPs are the most competitive in the world. ISPs, like another Fon partner Neuf in France, have a menu of choices that would make any American forget about French rudeness and want to move there. For around $40 you get free national and international long distance, up to 20meg download speeds, a TIVO like service, cable TV channels, storage, mail, etc. And if you are an Internet fan and you happen to live in Sweden, then Labs2 offers you 100MB both ways for 89 euros a month.
Because American education stimulates creativity and self reliance.
Because Americans have a huge homogenous home market in which to test their product.
Because American culture is the only global culture.
Here´s an idea for my friends at Google. It´s called RANDOM GOOGLE. We all love the google ranking algorythm… but sometimes it is useless. For example, let´s say Al Gore, tired of seeing hurricane after hurricane hit the States as a result of global warming, wants to run again as the “environmental president”. The people who run his campaign would like to have a way of “polling” google. They would like to search for “Al Gore”, but this time they want to do away with Larry´s famous algorithm. Voting is not a ranked activity (and there are many who aren´t). Voting is one person one vote. So what the pollers want to know is how popular Al Gore is in Google, posting by posting. What the campaign manager wants is what I call the RANDOM GOOGLE button. What would RANDOM GOOGLE do? Basically give you a random string of say 100 results. Pollers could then read them and classify them as pro Gore or anti Gore. In other words, they would poll Google provided that they have a Google without the ranking. They could search random strings by quantity and time periods. From Google´s point of view, the Random Google button would greatly increase ad servings. People would search a term and then random Google it. Maybe more than once. And they would randomly learn about their search term being more frequently exposed to google ads.