October 27, 2005

Baidu gets “spanked” by the market…what can we learn from this?

Filed under: Start-up First Aid — Administrator @ 8:15 pm

Everyone knows Baidu reported a 29% drop Q0Q in earnings yesterday largely due to a 47% leap in infrastructure related expenses. Everyone knows Baidu didn’t warn investors this might be a problem. And, everyone is now dumping the stock which is down 16% in pre-market trade (as of 8am)…

Sage from Pacificepoch.com talks about this in his blog “Baidu Blunder: Failure to Communicate, Part II” and so I won’t repeat what he says…

..however, I just want to point out that moving forward, investors are going to be pay a premium for well managed Chinese companies. My gut feel is that a lot of investors (including VC/PE funds) are going to get “spanked” because they didn’t do their homework…and/or pulled the trigger too quickly before truly getting to know the capabilities of the management team they’ve just invested in…

…in all fairness this is really hard to do…in fact, I am in the process of dealing with my own “situation” at the moment. So what can we learn from Baidu’s SNAFU:

(1) if you are an investor on the ground in China, make sure you do your homework (e.g. spend time getting to know the mgmt team and employees); if you have to stress test them do it (e.g. call them at 4am and tell them you need a information in one hour see how they respond);
(2) if you are an investor outside of China investing locally be sure to have someone on the ground you trust…and I am not talking about someone inside the company…I’m talking about a third party;
(3) if you are a start-up looking for funding or just received funding, make sure your house is in order (e.g. clear lines of communications, operational procedures in place, etc) so your investors don’t feel obligated to stress test you — be open and forthright (e.g. proactive)

October 26, 2005

Brand building through independent blogs…

Filed under: Marketing,Web 2.0 — Administrator @ 8:36 am

The New York Times published an article by Tania Ralli entitled, “Brand Blogs Capture…” that talks to the growing number of bloggers developing blogs dedicated exclusively to their favorite brands.

Tania writes, “according to a survey released this spring by Yankelovich, a marketing firm based in Chapel Hill, N.C., a third of all consumers would prefer to receive product information from friends and specialists rather than from advertising.” This makes a lot of sense, in fact there are a number of new search engines embracing this “peer ratings” such as wink.com and Kaboogle.com

One popular “brand blog” is Starbucks Gossip, maintained by Jim Romenesko, an independent blogger…

Jim Romenesko's Starbuck blog

Some other popular blogs are:

Barq root beer
Trader Joe’s
Walt Disney

Of course, there are some fake branding sites, such as Wrigley’s Juicy Fruit Gum Blog (a Flash-based site that has nothing to do with blogging other than the word appears on the site)…but all in all…(and given the lack of branding in China)…I think there is a potential business model here for a blogging community to build on…

Whereas blog communities such as Weblogs Inc focus on developing a variety of general topic blogs, perhaps the model in China should be to focus on building a community of brand blogs…

In fact, this is something we would be interested in co-developing with the right team…so if you want to be a “brand ambassador” contact us at yvc at our website’s name.

October 25, 2005

SAFE relaxes controls on residents and firms

Filed under: Regulatory — Administrator @ 6:24 pm

Last week, we blogged that SAFE would release new rules governing Chinese residents and foreign capital in early Novemeber…well, they jumped the gun…

Shanghai Daily reports on Circular No. 75’s new guidelines:

CHINA’S foreign exchange regulator has relaxed controls on Chinese residents and companies seeking funds from overseas as it hopes to boost the development of high-tech entities and venture capital firms. Residents and companies will be allowed to set up companies abroad, which the regulator called as special-purpose entities, to access the overseas capital markets. The new rule, to take effect from the beginning of November, requires the overseas firms to transfer income back to China within 180 days of them making a profit.

So why is Circular No. 75 an improvement? Well, a couple things: (1) It drops all references to “approval” as per Circulars 11 and 29; Circular No. 75 only refers to “registration” and (2) No valuation required of domestic assets (other than for State-owned
assets, which has long been the position)…

My invite to FilmLoop finally arrived today…nice to have…not critical to everyday life…

Filed under: Video/Film,Web 2.0 — Administrator @ 3:32 pm

filmloop, originally uploaded by japaninsider.


This morning, I was greeted with a pleasant surprise in my mailbox…after 3 months of waiting I finally received my FilmLoop.com invitation. I downloaded the app with great anticipation…started playing around with it…and now I’m thinking…is it a glorified screen saver, more gear on my desktop, or are there real business applications for this syndication tool…

So what is Filmloop? Good question…here’s how the company describes it:

FilmLoop is free software that gives you the power to create new loops or join existing ones. Loops are strings of images that move across your desktop. A loop can contain photos of your family’s latest vacation, images of the latest happenings around the world, or pictures that link to the latest properties in your local real estate market. And, changes to a loop automatically update on the desktops of everyone in your loop, whether it’s two, ten, or a million people.

Here is an example of what a loop looks like — the loop can either sit on top of your bottom navigation bar or can be resized/repositioned anywhere else on the desktop:


First, this is thing to note FilmLoop is in beta (aka, “hey we are finished, but in case of SNAFUs…not our fault!”); Seond, the app is really slow and crashed on me seven times; Third, there are some nice photos, and I’m definitely looking forward to seeing what combination members come up with; Fourth, I’m too busy to watch photos shuffle along my monitor so I don’t think I’ll be using it for pleasure; and Finally, I do think there are business applications for this, specifically building off real-time updates (via RSS, etc infrastructure) that can be pushed to both mobile and pc platforms. Some ideas are:

a) e-commerce applications that are time sensitive, such as coupons, flier, shopping offers, ebay; these can change based on the day, time, or prior activity of consumer (e.g. you just bought dog food, her is a coupon for a pooper scooper);

b) collaboration between businesses, such as documents, presentation, product samples (e.g. manufacturing), or bios

c) event planning, such as, venue changes, driving instructions, etc

d) news and weather reports

e) computer and software vendors pushing drivers and updated product information

and the list goes on…so the question is…is this application simply enough to make all these changes on the fly and/or are there alternative channels to the above…I’m sure there are…

and so…maybe FilmLoop is just entertainment after all…

October 23, 2005

Podcast 1: Start-up First Aid & Disfunctional Bplan Award

Filed under: Ymer Podcasts — Administrator @ 6:50 pm

Click here to listen to the podcast

Topics include:

1. Four start-up laws:

(a) Managing a start-up;
(b) Surviving when your industry collapses;
(c) Corporate cultures of successful companies; and
(d) How to lead employees through a crisis.

2. Award for most disfunctional business plan of the week:

Cloning women to promote peace!

October 22, 2005

Flock browser just released…sort of cool but is there a need for yet another borwser, even a Web2.0 browser?

Filed under: Web 2.0 — Administrator @ 4:17 pm

Web2.0 now has its own browser called Flock. One neat feature is Flock allows users to blog from the browser. In fact, I’m writing this post from Flock. Here is the “official” description of Flock:

Flock is based on the open source Mozilla code base. All of our modifications to Mozilla code are released under the MPL, GPL and LGPL licenses. 100% of the Flock-created code to date is released under the GPL license. Going forward, we may incorporate some proprietary code from partners, or even created in-house, but our plan is for the vast majority if not all of our code to be open source for the foreseeable future.

I’ll play around with it a bit more before I pass judgement, but so far Flock seems a bit slower than Firefox…and speed is the most important thing for me…it is nice to be able to sync to del.icio.us and blog on the fly…but I don’t know if I’m going to switch from Firefox and IE.

October 21, 2005

SMALL is back in the US…and “potatoes” are hot in China

Filed under: Start-up First Aid,Video/Film,Web 2.0 — Administrator @ 2:58 pm

I was working for a hedge fund in New York City in 1998 when the theGlobe.com (TGLO) listed on NASDAQ and posted a record-setting 600 per cent first-day-gain…

…I also remember watching CNBC interview the two teenage co-founders and laughing my ass off with the reset of the world…as everyone tried to figure out what the hell the company’s business model was…

…later that week, after theGlobe’s listing, I understood that theGlobe’s value proposition was not a 360 degree business but rather it was a feature, a single service, a revenue stream…at the period in history it was apparent the Street was willing to pay a premium for a feature…not business…and so, in a word, the trend was to invest in “SMALL”

We all know what happened next…by 2001/2002 SMALL was out and BIG was back…so why talk about it now? Is SMALL back?

Funny enough…I think it is…and this time around, at least in the US, I think we are starting to see that SMALL has a bit of bite to it…that SMALL has substance beyond the first day bounce…for example, Flickr and Weblogs Inc have shown that a rich community, relevant technology (no bells and whistles), and a clean UI = BANK!

Jeff Jarvis coined the phrase, “Small is the new big” back on June 6, 2005. Jeff writes:

I wondered whether small was just a trend or a new organizing principle for the business world. I now think it could be the latter. Small won’t replace big, of course, but small will add up to considerable new competition. And that is because small can now succeed. The economies of scale must compete with the economies of small.

Based on the number of business plans I receive each week…the trend is definitely favoring SMALL…the problem is China-based entrepreneurs are not getting it…they are making the same mistakes as their pals in the late 1990s and early 2000s did in the United States and Europe. I’m seeing feature after feature after feature but what I want to see are features backstopped not only by a sustainable business model, but a vision and a technology/business road map.

For example, there is a company that has developed “the next generation” mobile browser targeted at local handset manufacturers. The game plan is to preload the browser at the manufacturer level (i.e. sell software license to OEMs) and then…

…but very few can give you an answer for the “and then…”

The theme “SMALL is the new big” is definitely the predominant trend in Web2.0 companies…in China, I’m seeing a lot of “one hit wonders” looking to cash in on “community” and “digital sharing”…but what these guys are overlooking is a defensible business model…

…for example, it might be nice to have the ability to resize your photo online and perhaps print it out…but I could do this five-years ago…what I really want answers to are questions like:

1. Why are people going to make your site their home, their one destination? Howare you going to maintain your competitive edge?
2. How are you going to make money beyond printing photos?
3. What does your technology platform look like? How does it improve upon what is out there already? What do your customers think of the UI? How are you going to evolve the UI over time as you add new features? What does your roadmap look like? How do you plan on getting creative with RSS feeds, tagging, etc?
4. What demographics are you targetting and how does your customer acquistion strategy play into this? Does anyone on your team have interactive marketing experience?
5. How do you plan on spending my money? Why are you spending money on these things?

There is at least one China based company attempting to live up to its SMALL pedigree and it is called Toodou.com (which means “potato” in Chinese). Tooduo is China’s leading podcasting site founded by Gary Wang. Today, the New York Times ran an Op-Ed piece by columnist Thomas Friedman about Tooduo…we can’t show the whole article but here is a peek:

“We already have 13,000 channels on our site and about 5,000 of them are updated regularly,” said Gary Wang, 32, the Fuzhou-born and U.S.- and French-educated Chinese engineer who founded Toodou. Any Chinese can create his or her own channel of video or audio content on Toodou (which means “potato”), and other individuals sign up to get that channel’s new uploads. Eventually Toodou will charge a monthly subscription fee. “I want to create hundreds of thousands of different channels, maintained by just average people, where other people can access them and download the material,” Mr. Wang added. There are almost no barriers to entry.

Toodou’s goal, Mr. Wang said, “will be to connect [Chinese] people to their tastes and to their potential collaborators. We will have a huge content database, and we will share the revenue with content providers.” Mr. Wang first heard of podcasting only 13 months ago. Today he has the most popular podcasting site in China, with 100,000 registered users, 8 employees, 40 volunteers and a U.S. venture-capital backer.

As one reader noted, there are a host of regulatory issues that Toodou will face if it decides to experiment beyond entertainment…it will certainly be interesting to not only watch Wang navigate those implied landmines but also watch Toodou’s investors position the company for an exit.

Throughout it all, one thing we must keep in mind is that Web 2.0 is simply the collaboration and synchronization of open source platforms offering various services and functionalities; the very nature of these platforms allow users to hack, mash, customize and expand their utility in directions that might not have been the intentions of the developers of these applications. In a sense we are talking about a paradigm shift…this is an opportunity to reboot the way companies, users and developers interact and communicate…maybe this is the fourth dimension?

October 19, 2005

Reality Check: the Ferrari vs the plastic bag

Filed under: Uncategorized — Administrator @ 7:10 pm

Shanghai’s F1 Grand Prix was this past weekend which also meant Shanghai was swamped in a sea of Ferrari red…

Wow! I thought, Shanghai has come a long way in the past 10 years…or has it? Here is what I mean…

Sunday night I’m walk home from the gym and ripping down the street comes a cherry red Ferrari…screeetchh! The “machine” comes to a stop at the lights on the corner of Julu Lu and Shangxi Lu. I try not to look at it but I can’t help myself…

SMACK! While focusing on the Ferrari I run into a lady standing next to the Ferrari…but she isn’t looking at the Ferrari rather she has her hands in a public trash can tugging at the plastic bag…

…next thing I know she pulls the entire plastic bag out of the trash can and empties its contents on the ground…I’m thinking she is going fishing for food…

…but NO! The lady takes the plastic bag and puts it into her cart and starts walking away…I stopped her and asked her why she did this and she said, “…I can get 3 jiao for this bag…”

…that is less than four cents US$…

…I looked at the Ferrari and at the lady and at the trash on the ground…shook my head and realized how far we still have to go…but hey at least we get to watch Grand Prix once a year…

October 17, 2005

Why Flickr makes sense…

Filed under: Social Networks,Video/Film,Web 2.0 — Administrator @ 6:27 pm

I’m late to the party, but I just started messing around with digital photo sharing site, Flickr.com, a month ago. Shame on me, I know! For those of us isolated in China who missed Flickr here is an overview of the company:

Launched in 2002, Flickr has grown along with digital camera sales and has helped popularize tagging. Named “Breakout of the Year” at the 2005 Webby Awards, the community now numbers 37 million photos and 1.2 million members, many of whom are considered to be among the web’s most creative image makers.

In March 2005, Yahoo purchased Flickr for US$25 – 30 million. Obviously, this is old news, so why dredge it up from the depths of Internet past? Good question!

The answer can be summed up in one word: DEMAND

Until very recently, there was no demand for Flickr in China, however, Bokee’s US$10 million funding changed all of that; and now, blogging, Web2.0, RSS, tagging, Wiki, etc are terms even Central Party officials recognize. Soon to follow will be hundreds of ventures claiming to be Flickr with Chinese characteristics – I already have a dedicated Flickr Thunderbird folder.

In anticipation for this event I thought it worthwhile to chat with some of Silicon Valley’s top venture capital funds and bloggers and ask them to share with us the reason Yahoo purchased Flickr. Thanks to everyone who replied.

Brad Feld from Mobius Ventures:

Why did Yahoo purchase Flickr?

1. The technology – while not hugely complex – was implemented really well and had a lot of very happy users.
2. The user adoption was incredible and growing very quickly.
3. The price was relatively inexpensive (around $25m – $30m) for something Yahoo felt it needed.

Basically, it is all about the community, technology player a very minor role, yes?

Yup – there are loads of [companies developing similar photo sharing technology] out there. The thing Flickr did was create a huge and rapidly growing community

Rob Scobles, Technical Evangelist, Microsoft

Why did Yahoo purchase Flickr?

For me, Flickr’s interface (tagging) and RSS integration were way ahead of anyone else, but really it was the community that made it impressive. Community is important. It’s why eBay is a huge business today

Takeaway: Scale that community, or bail!

October 16, 2005

TiddlyWiki…ditch your old school notebooks the future is now!

Filed under: Web 2.0 — Administrator @ 5:17 pm

TiddlyWiki?! Well, that is what I thought too after Ed Sim, Dawntreader, noted this solution on his website…for the past week I have been hacking around with this open source dynamic notebook and its so much fun…

…TiddlyWiki, in simple terms…er…imagine if you were to write down all your ideas, notes, etc on flash cards…making sure to color code all related information and ideas…once you’ve got all your data on the cards…you wave your magic wand over the deck of cards, and thus enchanting them so each card referencing similar information (and/or ideas) would be linked…therefore when you read any card for the deck all the associated cards would magically move to the top of the stack…

TiddlyWiki’s founder, Jeremy Ruston, explains the technology:

It’s written in HTML, CSS and JavaScript to run on any modern browser without needing any ServerSide logic. It allows anyone to create personal SelfContained hypertext documents that can be posted to any WebServer, sent by email or kept on a USB thumb drive to make a WikiOnAStick.

There are a couple English language versions of TiddlyWiki, I’m using Jonny LeRoy’s version, but there is also a Chinese language version

TiddlyWiki is confusing at first, but give yourself thirty minutes to go through the tutorial and you’ll quickly unerstand how powerful this very simple, protable and flexible solution truly is…

Euicho.com lists some of the things you can do with the platfrom:

* It works great as a documentation manager
* It can store little bits of information, reminders, and notes
* It makes a great FAQ page.
* Turn it into a todo list, with items as tiddlers.
* Some use it as a blog.
* Some use it as a website.
* Make it your own personal dictionary/encyclopedia.

Schwarzenegger’s first podcast…

Filed under: Podcasting — Administrator @ 3:44 pm

Before there were podcast, there was VHS…

Found Footage Festival tours the USA treating festival goers to “the good, the bad and the ugly of forgotten film” reports National Public Radio’s Joel Rose.

Click to NPR’s website and if you look half-way down the page you see three video links on the left hand side, click on the following two:

Arnold Schwarzenegger’s travel-cast from Rio de Janerio

McDonald’s training tape, “how to clean your grill”

October 15, 2005

New “Draft SAFE Circular” released…a quick fix?

Filed under: Regulatory — Administrator @ 2:33 pm

SAFE and MOFCOM delivered drafts of new proposed SAFE Circulars (Notice 11 and Notice 29) regulating offshore restructurings and mergers and acquisitions involving PRC residents. Rumors suggest that the Draft SAFE Circular will become law as early as November 1, 2005.

I was talking to Rob McCormak, Mustang Ventures, about the New Draft Circular and how it might impact the future of venture investing in China. Rob’s general assumption is that the ambiguity and increasingly complexity of Chinese tax and legal system, including SAFE, increases the importance of using “good, high priced lawyers and auditors” for the best possible legal & tax advice.

I tend to agree with Rob that China will become the most litigious society in the world but I think as more local companies organize offshore there will be more resources and alternatives to the “high priced lawyers” currently operating in China…at least I truly hope so…

The Draft SAFE Circular key points (from law firm Lovells Beijing):

– offers no clear application scope: “PRC resident” still open to regulatory interpretation;

– requires registration with SAFE prior to the establishment or acquisition of control of an offshore special purpose company (“SPC”) by PRC residents;

– offers no clear standard of review by SAFE or indications as to the level of difficulty and the time required in obtaining approval;

– requires retrospective compliance by Chinese holders of interests in pre-existing offshore SPCs before December 31, 2005;

– regulates interests held through trusts, nominee arrangements, voting rights, convertible bonds or other such similar methods;

– requires a third party appraisal for share or asset purchases at the PRC level – without clear indication as to the qualification of the appraiser or the cost involved;

– does not allow parking of funds offshore for PRC residents – must repatriate to China;

– requires PRC residents receiving offshore dividends or income to repatriate forex to China within 180 days; and

– requires the reporting of material changes in capital structure of the SPC to SAFE within 30 days of occurrence.

October 14, 2005

Bubble 2.0 or Web 2.0?

Filed under: Web 2.0 — Administrator @ 9:38 am

More on Web 2.0 from USAToday’s Kevin Maney – Web 2.0 conference/hype reminds me of the “IandI conferences” in Hong Kong from 1999 to 2001.

“Kind of like Nixon in ’68. Or an REO Speedwagon reunion tour. Gives you a bit of an uneasy feeling. The industry is still tingling from the loud and sweaty Bubble 2.0 — whoops, excuse me, Web 2.0 — conference here late last week.”

Kevin makes the point that Chinese companies are still stuck in Web 1.0 and thus are measured against a different yard stick…

“China, which is still in Web 1.0, it can play by Web 1.0 financial rules and have a huge IPO despite shaky business logic.”

I hate to agree with Kevin but I have to agree with Kevin…

October 13, 2005

Yahoo and MS announce IMs compatable…what does this mean for AOL, Google and Tencent?

Filed under: IM,Tencent — Administrator @ 9:59 am

Microsoft and Yahoo! announced they would make their IMs compatible, allowing users to seamlessly communicate between platforms regardless of which IM you’re on. Market analysts estimate that Yahoo! has 25m users and MS has 25m user; the leading IM in the US is AOL with 50m users.

Now consider that Tencent’s QQ IM has over 180m active users…

There are a couple real interesting things from this:

(1) MS has been speaking with AOL about merging operations, if this does in fact transpire that would increase MS/YAHOO/AOL/ICQ user base to 75m, positioning the group as the largest IM platform outside of Tencent;

(2) Google’s IM offering, Google Talk, will become irrelevant in near to medium term, perhaps forcing Google to move aggressively in a different direction; we think this might be to expand their already existing relationship with Tencent; it is clear Google’s traction in China is weak at best (as is MS), however a bolder relationship with Tencent would propel Google in a market leader position.

(3) Google-Comcast just announced they want to invest in AOL’s web business…is this more to block MSN or does Google-Comcast truly want to be investors in AOL…does this open the door for Google Talk to hook into AOL’s IM universe?

We think Tencent is one of the best positioned Internet companies in China, if not the world; we don’t buy into the fact that Microsoft’s MSN is a threat to any of the incumbents, especially in China, however if Google and Tencent want to strike hard and fast at any possible MS/YAHOO (AOL?) joint IM force…a deal whereby Google becomes a shareholder in Tencent would do it…

And then again…you could alway just go here to meebo.com

New policy recommends pacifiers to cut SIDS

Filed under: Uncategorized — Administrator @ 9:16 am

My sister Sara is a doctor in New York City…NBC Nightly News just aired an episode on SIDS staring Sara, my brother-in-law, Mason, and their new baby, Samuel…MSNBC has the 2 min video clip on it web site and can be viewed by clicking here.

October 11, 2005

Gada.be: mobile search will never be the same again…

Filed under: Social Networks,Web 2.0,Wireless — Administrator @ 3:56 pm

We’ve been supporting a company called YDC Tech for the past year — the group has developed a search engine specifically targeting quarries in Chinese — the technology incorporates algorithms used in genome sequencing. So when a new search technology hits the air waves it peaks our interest

This morning, a new tag meta-search engine called gada.be was launched in Seattle; the two guys behind it are Chris Pirillo and Shayne Sweeney. The technology allows you to search for stuff by either going to gada.be or typing in your search quarry into that white address box in browser; for example, want to find “Chinese dog food” — simply enter the following http://chinese-dog-food.gada.be

The way gada works is by cruising lots of different sites such as Google, Flickr, Yahoo!, etc and collecting all relevant information in a permanent URL; and so becomes a comprehensive result set for a tag link. Gada also outputs search results in RSS and OPML, allowing users to easily subscribe to and organize searches. Founder, Chris Pirillo, talks below about how this is perfect for mobile search:

“It was borne out of several frustrations. If you’ve ever tried to visit a Web site over a mobile device, you know it’s a pain in the knuckle. The domain had to be simple to key-in from anywhere. gada.be is 4232.2233 on most cell phones and PSPs. Normally, when you want to find something online, you have to choose a Web site (wait for the page to load) enter the query (wait for the second page to load) then see results from that provider. With “gada.be,” you insert the query *AS* the subdomain!”

I just want highlight this tagging thing…it has been around for a while however it has only caught on over the last couple of years…I think the best hope for a semantic web will come as a function of tagging. In the US, there is a company called del.icio.us that has been around for 2.5 years, Union Square Ventures recently seeded the company, and is at the forefront of tagging.

Back to Mobile Search: …in China we already have a couple, such as start-up Cgogo.com, which offers mobile search to China Unicom and China Mobile. Cgogo claims its technology uses “fuzzy search and concept clusters rank algorithms”, grouping results in “concepts.” I’ve used Cgogo a couple times and, to be honest, it doesn’t work very well…

Another mobile search service is called Guanxi which is based in Shanghai. It is an okay service, however their database is limited to restaurants, clubs and entertainment venues only in Shanghai — sort of narrow. Guanxi is a service provided by a company called Mailman, which is one of several postcard distributors in town. I understand they are looking for angels to help them expand this service nationwide in 2006…

October 10, 2005

Yahoo launches podcast site…Chinesepod.com top site

Filed under: Education,Podcasting,Web 2.0 — Administrator @ 7:22 pm

Yahoo brings podcasting mainstream…and to be honest, it looks quite functional

If you want to listen to podtech’s interview with Yahoo Podcast product director, Geoff Ralston click here…it is worth a quick listen…

Interestingly enough…one of the top three most popular postcasts is ChinesePod.com, which provides free daily podcasts teaching people to speak Chinese…

October 9, 2005

Intel’s Gordon Moore schools entrepreneurs…

Filed under: Start-up First Aid,Technology — Administrator @ 6:06 pm

…This weekend the Financial Times ran an article entitled, “A wealth of influence: they have a combined worth of more than US$320bn…” Essentially, it was a list of the 25 most influential business people in the world.

…A couple things I noticed: (1) everyone was smiling because their personal wealth was x billions of US$ and (2) Gordon Moore, Chairman Intel, had the best quote…

…Moore said, “Failures are not something to be avoided. You want to have them happen as quickly as you can so you can make progress rapidly…” Well, I think that is one of the smartest things I’ve ever read…

…Keeping with this “failure” theme I thought this was a good time to introduce Don Dodge; he doesn’t know I’m writing about him (strange how that can happen, huh?) but Don is part of Microsoft’s Emerging Business Team out of Boston. I read his blog regularly and I think he has a lot of very interesting things to say…

…What makes Don relevant to us is that he was part of the team that rolled out Napster and has been kind enough to write down four simple lessons he learned from his experience at Napster. I think each lesson can be applied to a host of Chinese start-ups…

(1) Never get too far ahead of the market. Creating new markets, new business models, and value propositions is very difficult and takes lots of time and money. Pioneers are usually unsuccessful, the fast followers make most of the money.

(2) Understand who your customer is, what problem you solve, and how much they are willing to pay for it. Sounds simple enough but you would be surprised how many start-ups get excited about their technology innovations and forget about the basic business proposition.

(3) Never start a business focused on solving a big company’s problem. They don’t know they have a problem…and they are probably right. That is how they got to be so big in the first place. The record labels didn’t know they had a digital distribution problem and were not interested in our solution to it.

(4) Test your assumptions before spending lots of money. Interview your potential customers. Understand what their top 10 problems are. Don’t try to convince them that you have a solution to a problem they don’t know they have. Take a survey of 100 potential customers. Ask them to list their top 10 problems, without prompting from you. If you don’t see your problem area listed…move on to another problem.

October 8, 2005

How do we value a blog site?

Filed under: blog,Podcasting,Web 2.0 — Administrator @ 11:03 pm

…I was thinking back to 1998 when my friend Frank Yu and I started our very first blog community called AsiaInsider.com…the idea was to build a network of localized news aggregators (e.g., JapanInsider.com, ChinaInsider.com, etc)…the value add being our “personal perspectives and insights”…

…this was just before RSS/XML was common place…and since neither Frank nor I were smart enough to program a solution to aggregate the news stories for us we did this manually…this was a lot of work and in the end an unsustainable and unprofitable model…and so, sadly, we closed down our Insider.com empire in 2000 and melted back into society…

…only to reemerge five-years later…rubbing ours eyes and wondering what is so different today then yesterday? Is there a new revenue model? Did people get smarter? Are more interesting things happening in the world? Did technology make a quantum leap? Maybe the answer is both…”all of the above” and “none of the above”.

…why guess when we have cold hard data to look at…thanks to a recent Technorati and PR firm Edelman blog survey conducted a couple months ago and given to bloggers…

…the results are interesting, here are the highlights: (1) Less than 5% of bloggers are in the game to make money; (2) the main driver for blogging is that these guys want to either record their thoughts or gain “viability as an authority” in their field; and (3) more than 70% would like product sample given to them from companies so that they have the opportunity to evaluate the products and report their findings on their blogs…

…to be honest, this isn’t all that surprising since early adopters of blogs tend to be professionals with full-time jobs, industry knowledge leaders, and/or university students…so I guess the question is, “how the hell is anyone going to make money investing in a blog?” There might be a model is charging companies to offer their products to bloggers for their review (sort of a quasi advertising model); of course, there are drawbacks and limitation (don’t shot me, I was just giving a suggestion)…

…In the past couple days/months we’ve seen high profile acquisitions/investments, such as AOL’s purchase of two-year old Weblogs Inc for somewhere between US$25m and US$40m. Closer to home we saw four venture capital funds (two with limited China exposure), Granite Global, Mobius, SAIF and Bessemer, invest US$10m on a (rumoured) US$20m pre-money valuation in Beijing-based Bokee.com (formerly BlogChina)…

…I bring all this up because I’m looking at this space now and wondering how best to make money and how best to value these companies?

…On the rev side I think Weblogs Inc has an interesting model, but I also think you can look at vertical sites that incorporate vitural communities and “web-ucation” (okay, e-learning)…I don’t know if we are ready for downloading ringtones from RSS feeds, but maybe?

…On the valuation side…well..before I get all Graham and Dodd on you…I want to point to a quick study that Tristan Louis did on the back of theTime Warner/AOL Weblogs deal. Tristan looks at the value of the AOL-Weblogs deal as a function of the number of links to each blog in the network–a proxy for the conversation–as opposed to the raw traffic (a sort of PageRank vs. pageview valuation)…if you work through all the math you get Time Warner paying about US$600 per link…

…Again, an intersting valuation approach, especially if you pair it up with a fundamental look at the companies bits and pieces, such as revenue, earning, pageviews, management and growth…anyhow, I just trying to figure out how not to pay 10x something when I’m trying to exit on 10x something…

October 7, 2005

What does the Greatful Dead and Baidu have in common? Can you believe it is file sharing…

Filed under: Technology — Administrator @ 10:20 pm

…for those who are interested in seeing what happened at Web 2.0 conference this past week, click here to view the “underground video” directed and produced by Alexander Muse, entrepreneur and part-time venture capitalist with M | Ventures. It is actually quite funny…

…also, if you are interested in reading about some of the interesting conversations that went on at the conference click to its blog, such as (thanks by Niall Kennedy) what former Greatful Dead (one of my all time favorite bands) drummer, Mickey Heart, has to say about file sharing…er…I wonder what Baidu would say about this?

Mickey Hart on file sharing

Mickey Hart, former drummer for the Grateful Dead, is on stage at Web 2.0 right now and making a whole lot of sense. Jeff Mallet from SNOCAP, a digital licensing and copyright management company is also part of the discussion panel to represent the paid model. Some choice quotes from Mickey:

“[The fans] didn’t steal it, we gave it away”

“If we ever make a good album, they’ll buy that.”

“I’ve probably been recorded more than anyone else.”

“We played in the park and we always played better when we played free. I think it’s a good thing to share and give people something. Whets their appetite too…if they go to the trouble to bring a machine and tape it, they should have it.”

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