Author Archives: Pat Mccarthy

What It Feels Like To Be Acqhired

AppNexus Razzle Dazzle Spaceacq·hire [uhkwa-hahyr]
verb (used with object), acq·hired, acq·hir·ing.
1. to buy a company primarily because you want its employees.

Acqhire is a term that has popped up often on tech blogs over the past few years to explain the type of transaction where a larger company buys a startup primarily for the team instead of a normal acquisition where they are buying the entire company and their products.

Facebook has been notorious for acqhiring companies such as FriendFeed, Gowalla, Beluga, Nexstop, Drop.io, and others. Other tech companies like Zynga, Groupon, Foursquare, Google, AOL, and Yahoo! have done these types of transactions.

Acqhire transactions often leave outsiders wondering things like:

  • Was this a good or bad thing for the startup?
  • Did anyone get rich?
  • Is the startup team happy?
  • Are the investors happy?
  • How does it feel to start a company, get acqhired, and shut down your product?

Well, I can now answer these questions since the company I left Yahoo! to start exactly two years ago today just got “acqhired” by ad technology powerhouse AppNexus. I thought it would be helpful to share my insights on the above questions and detail more about how/why this transaction has happened.

The Background

Right Media Eugene OfficeMy early career was a combination of startups and one steady job until Right Media CTO Brian O’Kelley hired me to work building out the publisher business there.

While at Right Media, Joe Garstka and I got the amazing opportunity to be a “startup within a startup” as we built an office and hired an incredible team in Oregon, while Brian was helping us across the country from New York. I’m very thankful that Brian and Right Media CEO Mike Walrath took the chance on us when the company was still young with 30 employees.

We built a very successful publisher product in Oregon called Direct Media Exchange, and we now know how that story ends — with Right Media being acquired by Yahoo!. I wrote a previous blog post that detailed being acquired and working at Yahoo! for three years which you can read here.

AppNexus Starts Its Rapid Rise

After Right Media was acquired, Brian started AppNexus with fellow Right Media alum Mike Nolet. At the time I already knew they were a strong duo, and when Brian offered me the chance to invest in their angel round, I really wanted to do so. Unfortunately, the legal team at Yahoo! had other ideas, so I never went down that path.

Brian also brought up the opportunity to be an early team member a couple of times over the next year, but I was enjoying the experience of learning at Yahoo! and staying seemed like the safest financial decision. In retrospect, it would have made more sense to have invested and joined the early team, but hindsight is always 20/20.

Starting GuideMe

GuideMe screenshotAfter the great ride at Right Media and then working my way up to being a VP at Yahoo!, it felt like it was time again to take a serious run at my own startup.

Former Right Media CEO Mike Walrath had started to do startup investing, along with Right Media angel investors Noah and Jonah Goodhart. Mike had become a mentor to me, so I was thrilled when they were interested in investing in whatever company I planned to start as well as take a very active role in the business.

Brian also invested, I put some of my own money in, and we ended up with enough total capital to pay myself and a cofounder living wages as well as hire a couple of other people. I now see it was a bit of a mistake to create a company and raise capital without really knowing what specific problem we had a huge desire to go solve.

When former Right Media and Yahoo! colleague Mike McNeeley joined me as a cofounder, he and Mike Walrath and I began trying to solve some basic problems we identified on the Web, such as what we felt were sub-par Yelp reviews that dominated the consumer reviews space. Even though starting a company in advertising technology was tempting, we decided to build a smarter local recommendation engine and our product GuideMe was born.

We went through various common startup problems and our first prototype didn’t gain much traction. We learned what we could from it and determined some other ways to solve the same problem, and I also finally successfully recruited Joe into joining the team to lead development for our next version. Besides improving our tech skills with Joe, we began contracting with a great designer named Jack Bingham out of the UK that did a great job improving our design.

Even though we built a much better product, we still weren’t generating the success we needed. Foursquare then added most of our product functionality to their mobile app with 10 million users, so we decided to keep the company alive but try building a product in new industry.

For the second time, getting back into ad technology was an option we discussed heavily, but we chose to focus on my passion of sports to create a social prediction game that would serve as a more casual version of fantasy sports called Fantuition.

During this transition phase, Mike McNeeley was living in New York while Joe and I were in Oregon, and Mike decided to return to advertising due to his passion for publishers and took a job as a product manager at AppNexus.

Following a Passion to Fantuition

FantuitionJoe and I built a mobile web prototype for Fantuition focused on Oregon Ducks Football that worked well. It wasn’t yet viral, but it was getting great feedback from users and had promise. That promise led us to quickly build a web version to go along with it and raise an additional round of financing from the ever-supportive WGI Group (Walrath and Goodharts), David Lee at SV Angel, Marker LLC’s Richard Scanlon, and Yext CEO Howard Lerman.

We also hired UI designer Shane Foster and engineers Brandon Lerner and Johan Mulyono to speed up our pace of development. Both Shane and Brandon previously worked at Right Media and Yahoo! with Joe and I as well.

AppNexus Enters the Picture

Over all this time I’d kept up with Brian and the progress that he and his team were making at AppNexus. I was proud of them, excited for them, and happily jealous that Brian’s more mature startup was doing fantastic while I was on my second idea and hadn’t gotten serious traction yet.

Our momentum eventually stalled a bit with Fantuition, but we had enough cash left to consider a bunch of options. We could commit to building an iPhone version of Fantuition, we could go for a major product tweak to try and find more viral traction, or we could have started from scratch again to try an entirely new idea.

In discussing these options with Brian, he mentioned that it’d be interesting to discuss the opportunity of having our team join AppNexus. He said AppNexus was growing like crazy, they could use more great people, our team has really good ad technology experience, and AppNexus needed to grow their geographical hiring base to get more top talent. If anything, he thought it’d be great to have Joe and I come to New York and visit the offices and talk to some of the team about the company and where they were headed.

From Skeptic to Convert

I initially felt like Brian’s idea was intriguing, but that I didn’t want to give up on building our startup. I was committed to our vision and team we had built, and I expected to enjoy the visit and then return home to figure out what to do next with Fantuition.

AppNexus officeHowever, visiting the AppNexus offices and meeting for a few days with some of the team combined with thinking a lot about the opportunity and the market changed me from a skeptic to a convert. AppNexus blew Joe and me away. The executive team is fantastic, the office is an amazing space, the employee energy level is high, the company’s numbers are headed in the right direction, and the opportunities seem endless. As I look to the next few years of how the ad technology market will play out, there’s no company that seems better suited to become a powerhouse.

I wanted to be a part of something bigger. I wanted to change the game like we did with Right Media, but to do it on a bigger scale and in new ways.

After Joe and I talked with Shane, Brandon, Johan, and our investors, we decided we wanted to pursue negotiating a deal with AppNexus. That deal closed today.

I’m extremely excited to start this next chapter and work with Brian, Mike McNeeley, Mike Nolet, and the rest of the former Right Media employees at AppNexus, as well as all the other talented people there I’ve met and have yet to meet. The company is on to something big, and it’s going to be a great to be a part of it.

Answering the Acqhire Questions

After that long-winded backstory, it’s time to answer the questions that people ask about acqhires.

Was this a good or bad thing for the startup?

In our case, it’s hard to predict if we would have ever reached sustained profitability or had a larger successful exit. But even with a lot of things working in your favor, making a startup work is hard. I learned that lesson, and even with cash on hand, the opportunity at AppNexus became greater than the current opportunity at an independent Fantuition.

Did anyone get rich?

The terms of the deal aren’t being disclosed, but the answer for almost every acqhire deal we’ve seen in the tech space over the last few years is “No, at least not yet.”

Since most deals or employment agreements involve equity grants from the acquiring company, it is possible for the larger company to improve its equity value enough that someone joining through an acqhire makes some good money out of it. For example, look at some of the first acqhires Facebook made when their valuation was much lower like FriendFeed or Nextstop.

Is the team happy?

Definitely. It is a bittersweet experience though to shut down the product you’ve been building and to stop thinking about the future for your startup. Across the board, our team has nostalgic feelings that our mission is coming to an end, but everyone is really excited about the bigger opportunity that is now in front of us.

Are the investors happy?

I believe the general sense is a bittersweet feeling. Taking investor’s money is a commitment that I took very seriously and I wanted to do everything in my power to make sure that I didn’t lose the money that had been invested in our company. That investor support means a lot, and I really didn’t want to let our investors down.

How does it feel to start a company, get acqhired, and shut down your product?

All the startup stuff you read about the emotional rollercoaster that founders go through is definitely true. It was emotionally tough to personally raise capital and have employees with families whose jobs are riding on the decisions I made.

I learned more than I ever thought was possible and I know I’m much better professionally from it. Even though it is painful to shut down our product, I’m extremely pleased to be joining one of the best technology companies in the world while also managing to continue to work with our team and live up to our investors’ expectations.

Consider this a story to be continued…

How Facebook Will Become The Biggest Ad Network

Facebook’s stock has been taking a beating since their IPO. I’m not an expert on stock trading and I don’t own any Facebook stock, but I think the media and investing world are thinking too much about the short term and what Facebook is today opposed to what it likely is to become in the future.

Primary Revenue Concerns

One of the primary concerns is how Facebook will monetize it’s growing mobile audience. Everyone seems to be really freaked out about the fact that mobile is growing and Facebook hasn’t monetized it well yet. On one hand, people have a point even though Facebook made $180M in revenue from mobile sponsored stories on their first try. On the other hand, isn’t it a pretty good situation that Facebook is the most downloaded application on EVERY mobile platform and is far and away the leader in mobile time spent? That’s a pretty good starting place to figure out how to be a dominant player in mobile.

Another big question on everyone’s mind is if Facebook will be able to build any significant businesses beyond advertising. Since their payments revenue has been primarily gaming-related and that growth has slowed, people are wondering where the growth comes from. Payments could be a solution in areas beyond gaming, and some people are also pointing to their acquisition of Karma as a way to get into mobile/social commerce. Techcrunch also has a run down of revenue-generating ideas, but I wanted to go deeper in an area that I think people are underestimating: A Facebook Ad Network.

The Birth of an Ad Network

The concept of a Facebook Ad Network is not a new one. People have been bringing up that idea since they launched their developer platform in 2008, and they’ve even recently started testing running ads purchased through Facebook’s ad interface on Zynga.com.

Running socially-powered rectangle ads on the right rail of Zynga.com is just scratching the surface, and is only part of what Facebook could do as an ad network.

First, Facebook can offer what they are doing on Zynga.com to every other web publisher easily since almost every quality publisher uses Facebook’s platform already for authentication. Since that user data is already there, Facebook can do the same targeting they do on Facebook itself.

Why would publishers take their ads you ask? They are visually more pleasing than Google’s Adsense text ads, since they are not standard IAB shapes they probably get better click-through rates, and as social ad targeting continues to improve it’s possible that the CPM they can earn would be higher than other alternatives.

Taking it to Mobile

Even though launching the full web ad network of Facebook’s standard ads would be huge by itself, Facebook also has the majority of quality mobile applications using Facebook for authentication as well. Additionally, Facebook’s new mobile sponsored stories ad unit is showing great results so far in Facebook’s mobile app.

Since most quality mobile apps contain some kind of newsfeed similar to Facebook’s, Facebook could extend their mobile sponsored stories to the feeds of other mobile applications. They also have a new non-social ad unit that allows for “appvertising” where other application developers can offer their app for download. It makes perfect sense for Facebook to extend this to the other mobile applications using Facebook’s authentication.

Mobile is exploding, and as it continues to grow Facebook can easily become the largest mobile ad network very quickly.

Bigger Than Adsense?

Facebook is still a young company. They’ve also only been serious about monetization for a couple of years. Many people have pointed to the fact that Google at the same age was ahead of Facebook in these efforts. That’s fine, and it really doesn’t have any impact on how big Facebook’s ad network can become. Google needed to acquire Applied Semantics to create Adsense, and it’s possible that Facebook could make an acquisition that also jumpstart their ad network efforts in powerful ways.

Even if they don’t acquire anyone and do it on their own, the combination of Facebook’s massive web ad network potential with the possibility of a huge mobile ad network even without a ton of innovation leads me to believe they could challenge Adsense for the largest ad network.

The one thing they have working against them is that Adsense really benefits from having advertisers who are really primarily interested in advertising on Google search results also extending their ads into the Adsense network. Is advertising on Facebook’s owned and operated site itself going to bring in the same type of demand?

Probably not. However, Adsense is not a very effective form of advertising on mobile devices. If Facebook is the one to crack mobile feed advertising and bring other innovations to advertising on mobile, they’ve got a shot at overtaking Google’s network.

What’s your take? Can Facebook become the biggest ad network on the web and mobile?

Should Yahoo!’s Strategy Be To Focus On Women?

Yahoo! Shine for Women
In a previous post I said that despite all the possible strategic options out there, Marissa Mayer needs to fix Yahoo!’s culture or nothing will work.

Yahoo Sunnyvale OfficeIt looks like Mayer is actually thinking about culture as she’s making some moves that previous Yahoo! CEOs didn’t like offering free food, getting cooler swag, and redesigning the workspaces. (Yahoo!’s Sunnyvale campus is all purple cubicles…)

While fixing the culture is a huge problem, it’s true that Mayer does have to figure out a strategy for Yahoo! that makes sense. Personally, I haven’t been sold yet on the notion that Mayer can focus Yahoo! on being a “products” company that competes straight up with Google, Facebook, Microsoft, and countless other companies and startups. Even from the company’s earliest days, Yahoo! has always been a hybrid of tech and media. Becoming more of a pure product company will not be playing to the company’s strengths and it puts Yahoo! head to head with extremely powerful competitors with huge piles of cash that have been already executing on that vison for years.

So what should Yahoo! do? Dave McClure of 500 Startups posted an interesting idea on his blog that Mayer should shift Yahoo! from purple to pink.

McClure’s thesis is that Yahoo! should focus on women. He states that Yahoo! already is strong in many verticals that appeal to women, is led by a female CEO, could brand itself as the best tech company in the world at hiring females in leadership positions, and that by partnering or acquiring sites and apps aimed at women that Yahoo! could really do some damage.

My hat is off to McClure for coming up with an idea I hadn’t heard before, and I’ve talked to a lot of people about Yahoo!’s strategic options and spent a lot of time thinking about it. Focusing on women has some pros and cons:

Pros

  • It would give Yahoo! an answer to the question “What is Yahoo?!” and give the company a purpose and direction.
  • It defines Yahoo!’s target market in a way that everyone understands, and gives a focus to what products should be built and how they should be built.
  • It gives Yahoo! a hiring differentiation and in some ways an advantage over other valley competitors like Facebook and Google. Not only would women want to work there, but there are a lot of intelligent men who would want to work in a female-empowered environment as well.
  • It’s a direction that fits with having a female CEO who has been a role model for women in engineering and technology.
  • Yahoo! already has a lot of great female employees.
  • Yahoo! does have a nice foothold for the female market already, and through a couple of strategic acquisitions they could have a dominant stake. Think Pinterest, Sugar, Glam…

Cons

  • While there are huge advantages to focusing just on women, Yahoo! would be screening out the other half of the population, of which they have a lot of users today/
  • Some of Yahoo!’s biggest strengths are in verticals like Yahoo! Sports and Yahoo! Finance. Which skew heavier towards a male audience. Do you change those properties to focus more on women? Do you sell them off?
  • While they might not be the people Yahoo! wants, there would be talented employees who wouldn’t want to work for a female-focused company and work environment. My sense is that the hiring advantages would outweigh this con, it is something to consider.
  • Making an acquisition of one of the larger innovative companies that appeal to the female demographic to really make a big move like Pinterest or Zynga would be very expensive. Would it be enough to acquire a bunch of female-focused startups who don’t have major traction?
  • The “Is Yahoo! a tech or media company” debate could live on even though the target market would be much more defined.

Should Yahoo! Focus On Women?

I don’t know, this is why Mayer gets paid the big bucks. It’d be interesting to know if that is a strategy she could get past the mostly new Yahoo! board. I will say though that it’s the best strategy suggestion I’ve seen yet.

An Open Letter to Marissa Mayer: Fix the Yahoo! Culture

New Yahoo CEO Marissa MayerDear Marissa,

Congratulations on your role as the new CEO of Yahoo!. I’m sure you have no shortage of advice when it comes to determining what Yahoo! will be moving forward.

All of that is well and good, but the argument on tech vs. media, how many employees to layoff, what areas to invest in, what to do with ad technology, and every other issue you face don’t matter if you can’t fix the biggest issue at Yahoo! – culture.

Having worked at Yahoo! from 2007-2010 in the ad technology business, I worked with a lot of different organizations across many physical office locations. While the people at Yahoo! were generally really smart and good people, there were cultural issues that plagued efforts across the board and will continue to keep the company from succeeding no matter what the overall strategy turns out to be.

Since I’m rooting for Yahoo! to succeed, allow me to point out some of those issues along with some real examples with names removed. Even though I left in 2010, I have many friends at Yahoo! who tell me the problems still exist.

Penalizing the Smart People

The people inside Yahoo! tend to know that they aren’t putting out products at an impressive pace. This results in everyone knowing that decisions need to be made quickly, and there’s a pressure to get everyone on the same page and bought in. This can lead to group think, which is also dangerous when the group think is wrong.

One of the smartest people I’ve met in the ad business worked with me there and he had a tendency to think differently from the prevalent groupthink. This often led to him challenging the status quo in meetings and asking really tough questions, which quickly turned into everyone labeling him as an “argumentative blocker”. People didn’t bother to actually try and answer his questions or think deeply, they just avoided inviting him to meetings as time went on. Even though he was also a great manager and got stuff done, his reputation for “being difficult” also led to him being passed over for a promotion in favor of someone who was essentially just politically neutral and wouldn’t ruffle feathers.

It made no sense to me that people would instantly label him as a blocker when he was saying some of the smartest things anyone had said. Smart people who think differently from the group shouldn’t be punished for asking legitimate questions and also providing answers that might be different from everyone else.

Treasure the smart people, listen to them, give them a platform, and embrace conflict of opinion while also moving decisions along quickly. As you probably know from Google, it is definitely possible.

CYA (Cover Your Ass)

Cover Your AssRelated to the previous issue, people have a hard time operating when decisions aren’t unanimous. It all stems from the desire to cover your ass. Very few people outside of the most senior managers were willing to actually take a stance on anything. In almost every meeting you could ask for an opinion and find that people would turn to everyone else in the room to try and hear the opinions of others first. Or they’d simply repeat the last thing their manager had said publicly about the subject.

Everyone was afraid of being wrong so much that they wouldn’t stick their neck out. The bizarre thing about this behavior was that in three years I never saw anyone get fired for being wrong, making mistakes, or even not being good enough. I only saw employees leave the company by their own choice or get laid off when cuts were made.

Reward people for sticking their neck out and having an opinion they will fight for, and get rid of those that work behind the scenes to gather support or can’t make a decision without buy-in from everyone in the room.

The More the Merrier

A side effect of everyone wanting to CYA, meetings always grew larger and more frequent. This problem was terrible because it came from both directions. First, the meeting organizers often wanted buy-in from as many people as possible so they’d invite anyone who might possibly be involved. Second, anyone who knew even the slightest thing about the subject was offended if they weren’t invited to the meeting.

This often led to more meetings because so many people would be invited you could never get a decision made. It seriously seemed like certain people’s entire role at Yahoo! was to be invited to meetings and then block any progress from happening essentially just by their presence.

Take a lesson from Steve Jobs and kick people out of meetings who aren’t there to present or make a decision.

Throw More People At It

Yahoo CrowdAnytime there was a product being planned or not enough progress being made the solution was always that more “resources” were needed, which invariably meant more headcount.

After Yahoo! purchased Right Media in 2007, instead of building on top of Right Media’s technology the decision was made to build Right Media’s functionality as well as Yahoo!’s existing premium ad serving functionality into a new product called APT. I can’t tell you how many times the fact that 800-1,000 engineers were working on the project was touted by executives and others as if that number made it a guaranty it would be successful.

On the contrary, I’m positive that having that many people involved has been a detriment to the development of APT. There were literally no people who really fully understood how the whole product worked since everyone was in their own silo. There were also huge problems with each release with things breaking because so many teams had their hands in the cookie jar.

Right Media was built with about 50 engineers, and Yahoo!’s premium internal ad server was built initially by a team of about 10 engineers. For some reason duplicating this functionality and adding a bit more into a new product suddenly took 15 times as many people?

Additionally, part of the culture was that managers and executives often were concerned with and touted the size of the number of people they were managing. Isn’t it more impressive to get as much done as you can with as few people as possible?

I think you can help solve this Marissa since Google puts much smaller focused teams on specific products. Yahoo! can get just as much done if not more with fewer people on every project.

Embrace Your Acquired Talent

I joined Yahoo! when Right Media was acquired by Yahoo!. Like most technology acquisitions, a big part of it was to improve Yahoo!’s ad technology talent. While I personally always felt embraced, a lot of my Right Media colleagues felt like they ignored, challenged, or frustrated by bureaucracy so much that they left within a year or two and Yahoo! lost out on a lot of potential impact.

It wasn’t just Right Media, as acquisitions like Flickr, Delicious, Blue Lithium, Upcoming, and others led to the founders and their teams getting frustrated and leaving Yahoo! instead of bringing new value to the company.

While acquisitions are tough for any company to integrate properly and many times startup employees are just not suited for larger organizations, companies like Facebook and to some extent Google have done a much better job at keeping the employees for longer or deriving more value from them than Yahoo! ever has.

I’m sure part of your strategy Marissa will be to acquire some hot technology startups. Instead of letting the people get boxed out and end up leaving in a year extremely frustrated, embrace them, give them power, and help them be scrappy startup people who can build amazing products for Yahoo!.

Yahoo! Is a Safe Job

I literally interviewed candidates who said to me that they were applying to Yahoo! because it was a well paid and safe job that didn’t require them to work too hard. Say what? The kicker is that some of these people got hired despite my protest.

Yahoo! shouldn’t be hiring people who view it as a safe and easy place to work. If this is still happening, it needs to die immediately. While there is a lot of A-level talent in the company, a lot of people got hired who are really B- to C- people.

2nd Place Is Good Enough!

Second Place FinishThe scariest cultural problem at Yahoo! is that many employees and managers started to believe that it was okay to be in 2nd place. It wasn’t everyone, but it was a common statement in reference to competitors in various businesses. This attitude most likely grew out of Yahoo! being 2nd to Google in search and having to come to grips with the fact that was never changing. Being in 2nd place was nothing to scoff at from a revenue perspective, however Yahoo! was guaranteed to lose the moment the idea that 2nd was good enough started to pop up in the organization. Once people think that way, they’ll never work as hard as they need to work and think aggressively enough to be successful.

Bring back the competitive desire to win Marissa. Accept nothing less than winning. Give people the confidence that they can win. Anyone who thinks 2nd is okay at Yahoo! should head out the door.

Good luck Marissa. Worry less about the strategy and more about how to fix the culture. If it is still broken, there isn’t any strategy that will work.

Pinterest Removes Itself From Acquisition Pinboards

Pinterest Oregon Ducks boardAs reported a couple of hours ago on AllThingsD, social collection site Pinterest is raising a $100M financing round at a $1.5B valuation with Japanese company Rakuten leading the round.

First of all, good for Pinterest. Even though that kind of investment milestone is so rare it’s almost like winning the lottery, it’s inspiring and amazing to see startups achieve this type of success.

I’m sure we’re about to see a flood of articles and posts about if this is another sign of a tech bubble, if Pinterest is really worth that valuation, how they haven’t established a revenue model, how they infringe on copyright, and other various attempts to knock them down. It should be noted that these days, that’s probably a big sign of success to receive that kind of criticism.

The biggest implication of this though is that an investment at a $1.5B valuation means that Pinterest is virtually taking themselves out of being an acquisition target. For investors to get any sort of positive return on that money, they’re looking at a multibillion dollar deal. The only companies that have the cash and business fit to be interested at that price are Google and Amazon, and until Pinterest is generating a ton of revenue it is tough to justify for those companies.

There are a few more things I find interesting about Pinterest along with this news.

Not an overnight success

Pinterest has been portrayed by many as being an overnight success. In reality, it’s been a four year journey, although it’s quite true that it accelerated exponentially in the last year.
 

Pinterest is not a mobile-first company

A great deal of the “hot startups” lately are mobile-first companies like Instagram, and a lot of the startup advice is that mobile is the future. While mobile is obviously important to Pinterest and their future, the company originally pivoted from being an iPhone app to being a desktop-driven experience where it took off. How many times has that happened successfully?
 

Huge valuation without much technical difficulty

Don’t get me wrong, obviously there are technical challenges involved in scaling to the size of Pinterest, but their initial product was not a challenging technical problem. Like Instagram, they took something that was already being done by many other services but designed it better and made it a great experience. That IS challenging, but not for hardcore technical reasons.
 

Another Valuable Company Built on the back of Facebook

Facebook’s platform and access to the social graph has been a huge boon for many businesses. However, thus far Zynga is really the only company anyone can point to that really grew to a billion dollar company thanks to the Facebook platform. Pinterest may be the second company that can fit into that class now. While it’s not an app that lives inside Facebook, and you can sign up with Twitter or email, it’s clear that Facebook was a major piece of Pinterest getting viral exponential growth.
 

Where’s the revenue?

As I pointed out above, we’ll probably see many upcoming articles about Pinterest’s lack of revenue so far. But to be fair, they have barely tried. The product obviously has a very natural fit with ecommerce, so it will be interesting to see how they can profit from being the source of discovery for so many purchases.

Overall, raising an investment round like this does not mean Pinterest is assured long-term success. They need to keep innovating and pushing forward, but this investment should give them plenty of runway to go for it on their own and become an important independent company.

You can follow me on Pinterest as well.

25 Things Facebook Could Have Bought Instead of Instagram

Instagram LogoWhen the news hit that Facebook had purchased Instagram for $1 billion I was eating lunch with my Fantuition cofounder Joe Garstka.

Joe’s immediate reaction was “Would you rather have 200 $5 million dollar houses, or Instagram?”

A great question. For the record, I think Facebook paying $1 billion to take out their most threatening future competitor was worth it no matter what happens to Instagram within Facebook’s control. Just think about how better positioned Yahoo! would be today had it acquired Facebook for $1 billion back when they almost did a few years ago. Yahoo! could have either leveraged Facebook to massive success, or killed Facebook off and they’d still own more of the consumer and advertising market they’ve lost to Facebook.

Whether you agree or not, that’s still a lot of money. What could Facebook have bought instead of Instagram? Let’s explore…

  1. 200 $5 million houses in Palo Alto
  2. 1,000 $1 million houses
  3. A used B-2 Bomber
  4. The New York Times Company (valued at $967 Million)
  5. All 66 of the most recent YCombinator Startups (gotta be a breakout startup in there right?)
  6. Yahoo!’s Core US Business
  7. AOL’s Patent Portfolio
  8. All the Facebook Mafia Companies: Path, Quora, Asana, Causes, GoodRx
  9. Yelp (when the stock drops a little)
  10. Every other mobile photo or video sharing application
  11. Pinterest (maybe)
  12. Foursquare
  13. AppNexus
  14. Spotify
  15. Rovio (Angry Birds)
  16. Gilt Groupe
  17. Tumblr
  18. 2 million of the New iPads
  19. Myspace, Friendster, Orkut, Bebo, and you’d still have about $990M in cash leftover
  20. The San Francisco 49ers (change name to San Francisco Likes)
  21. A small country (How about the Maldives?)
  22. A $20,000 hotel room every night for 137 years
  23. Ten $100M yachts (one for each of Zuckerberg’s direct reports!)
  24. Pay for 48 hours of the military activity against Afghanistan and Iraq
  25. Send a $20 bill to all 50 million Instagram user bribing them to use Facebook’s mobile app for photo sharing

If you were Facebook, would you buy any of those things instead of Instagram?

Bon Iver Live Session is Just Pure Music

I jumped on the Bon Iver bandwagon a couple of years ago thanks to the Hype Machine helping me discover Justin Vernon and the rest of his band right after their debut album was just beginning to get buzz.

Another album and a couple of years of solid listening later, including an amazing live concert at Edgefield near Portland, and I’m still as excited about Bon Iver as ever.

While it’s not the full band, this live session of Justin Vernon and bandmatte Sean Carey intimately captures how amazing they are. It’s the kind of thing you watch and just wish you had that kind of talent. Enjoy.

The Story of Fantuition

Fantuition Home Page

Post Summary:
We just launched a new web experience for Fantuition. Check it out and play some of our prediction games for topics you love. For the back story on Fantuition, keep reading…

A Change of Course
About a year after starting up a company to take on the problem of local recommendations called GuideMe, it became clear that we hadn’t generated the amount of user traction we had hoped and we didn’t have the path to get there. We made the decision to end our development on GuideMe in September.

Even though GuideMe as a product had failed, the team and our great investors still had a desire to work together and take another crack at a different problem. We took a step back and opened our eyes to look at numerous problems and opportunities that could have been interesting to pursue. However, I couldn’t get past one idea that had been in my mind for a few years.

The Problem
Duck FansEveryone who knows me is aware that I’m a big sports fan, and more specifically an Oregon Ducks fan.

Over the years I’d played fantasy football/basketball/baseball/golf, various pick’em games, March Madness pools, and other assorted games. Like many sports fans, these fantasy games provided me an additional way to engage with the sports I was already watching.

All was not perfect though, as I found that there were two major problems for me with the fantasy sports experience.

  1. Amount of Time Required – In order to succeed at most fantasy games you need to spend a significant amount of time researching players, analyzing matchups, scouting the waiver wire, reading news, and managing your roster. Some players who have a lot of free time actually enjoy this, but there is a large percentage of fantasy players who don’t have the time. Additionally, so many sports fans I know don’t play fantasy sports specifically due to this time commitment.
  2. Caring About All Teams – The other major issue I’ve had with fantasy sports is that while I follow the full league action, I tend to only focus and watch the teams I actually care about. For example, in the NBA I primarily follow the Portland Trailblazers. When I play fantasy basketball I will have 0-1 Blazers on my fantasy team, which really doesn’t tie into my personal fan passion for the team.

The Solution
These two frustrations led me to question why there wasn’t a simpler game to play that could also be focused on specific teams. Why can’t I play a game based on just the Oregon Ducks or the Portland Trailblazers? And why can’t I play with more than just nine other people in my league?

Obviously a simpler game focused on one team wouldn’t work in the traditional “manage a roster” fantasy format, and I wanted something that required less time, so the game itself needed to be totally different.

In thinking deeper about this, it became clear that fans of a specific team talk about and predict a pretty consistent set of questions. Who’s going to win this weekend? What’s the final score going to be? Which player is going to have a great game? Player X had a great game last week, will he keep it up?

Turning these questions into a game seemed to make total sense to me. We’re already talking about these questions with each other, so let’s actually compete around who can predict the upcoming game the best!

This basic idea to create a simple prediction game for specific teams had been rolling around in my head for a few years. I wanted to make it quick, fun, social, and let people feel like they are engaging with their team and fanbase. However, it had never gotten past the concept phase.

When the opportunity to revisit this idea came up after shutting GuideMe down, the changed internet landscape had seen casual game success and monetization, the rise of mobile time killing, and “2nd screen” mobile usage for TV watching. The time seemed ripe to strike, and with the additional ideas from our investors and Joe (the rest of the team) we quickly built a mobile web prototype called Fantuition in late October.

Fantuition GamesIt was clear right away that playing Fantuition in a very basic form for Oregon Ducks Football was a lot of fun for us and our close friends. We cared more about the games we were watching, we could discuss our predictions socially, and we were learning more about our favorite team. It wasn’t long before people we didn’t know were signing up, and users were suggesting that the format would work for other sports and their favorite reality TV shows.

Fast forward a couple of months and we’ve got a lot more users, a third employee, a number of different games going, a full website, and a ton of ideas about where to take the product and games that we need to go execute.

The ability to play casual social games about all the teams we care about, the reality TV shows we watch, and the award shows or other non-scripted special events we attend needs to exist. So we’re building it.

Give the new Fantuition site a try and send us some feedback.

Oregon Ducks: 2012 Rose Bowl Champs!

Oregon Ducks 2012 Rose Bowl Champions
It’s been a long time since I last posted, and yes I still use Batch as a photosharing app, but it seemed like the Oregon Ducks winning their first Rose Bowl in 95 years was a worthwhile occasion.

It was an amazing game against Wisconsin, and the Ducks continued to push the envelope with their explosive offense and style. Great season. Go Ducks!

Batch Is a Very Nice Photo Sharing App

Batch ScreenshotI’ve tried out just about every iPhone photo sharing app, and many of them are quite good. I’ve mostly been attached to Instagram due to the ease of use, design, and the biggest user base means I have more people to follow and to share photos with.

One of the biggest problems with photo sharing apps so far is that they all tend to only allow you to share one photo at a time. While this keeps the quality of photos shared high, it creates some problems.

It’s a painful process if you want to share multiple photos from an event, as part of a theme, or just to get photos off your phone and put them in a place they can be shared without the painful process of downloading them to a computer and then uploading them somewhere.

Tonight Mike Arrington broke the news that the team at self-photo taking startup DailyBooth recently launched a photo sharing app called Batch for the iPhone.

I downloaded Batch and immediately loved it for the following reasons:

  • The design is beautiful. I love the handwritten instructions that overlay the screen in certain areas, and it walks you through how to use the application really well.
  • Uploading photos in a batch is great. The first time I got to touch multiple photos and have them uploaded at once I saw the value in the speed and simplicity of sharing the photos in a batch.
  • Automatic friend connection via Facebook makes it nice to not have to worry about building up my social graph. As friends join Batch, we’ll just get connected. Simple. This has some downsides in that you can’t customize who you follow or don’t follow yet, but I prefer it over having to start from scratch and manually choose everything and hope my friends find me.
  • You can see the future potential if batches from one event or location are grouped automatically and viewable together. It could nicely fulfill the promise of Color that never came to be.

If you have an iPhone and share photos, give Batch a try in the app store.