VCinJerusalem

Twitter Humor: Twittelah for Your Jewish Mother

During this holiday season, when we repent, then jump back into family tension, then repent again, enjoy this twitter humor (thanks to Barry Pasikov for sharing):

Is Twitter Worth Billions? Jeff Thinks So. I'm still not convinced.

See this interview with my good friend Jeff Pulver on the "State of Now" and the "Real Time Internet." Oh, and by the way, Jeff thinks Twitter is worth billions. Now. Well, good thing Jeff is public that he is a shareholder, we wouldn't want him to be objective about this company...

19 Comments And Counting: the "power" of Facebook

I have writing a blog now for almost 2 years. From time to time get comments, sometimes an email (or even an old fashioned phone call, usually from Elie Wurtman) complimenting me on a blog posting. The feedback is nice, reminds me that I am not only writing for myself (which I am) but also for others.

While I am not the world's greatest fan of Facebook, or its bloated valuation, it definitely has created a public commons, a place where people feel free to express their opinions. Perhaps, like Wikipedia, it should be turned into a massive non-profit. Throw a search box in there, share the ad revenues with Google et al, will definitely be enough to cover costs of operation (like the Mozilla browser).

What prompts my thoughts on this? Well, was on a super boring conference call a few days ago, and was fiddling around with Facebook and decided to write something in the "status" box. I wrote that I was waiting for President Obama's speech to start, and that I hoped he would "say the right thing." That launched a debate (on my rather vague status update) which currently has more than 19 comments. More than any blog posting I have written, and the comments are well thought out, whole paragraphs, not just a few words here and there.

Incredible. As always, proves that people have way too much free time, but also that a simple to use interface, which will guarantee "exposure" will be enough for many to write and write. And it is somewhat unmoderated. As long as you are a "friend" of mine you could comment to anything I throw up on my facebook page. and yet for the most part the self moderation works...not too much abuse, language is kept in check, little outright digital vandalism.

Facebook has developed as a powerful medium, and I am not sure if it is yet at the peak of its power (we will have to see how its kissing cousin, Twitter, develops), but it certainly is no closer to developing a real business than a year ago. And perhaps that's OK, if Marc Zuckerberg gives up on dreams of billions of dollars, and instead decides to donate facebook to the people. He is young, I am sure he will figure something else out to make sure he gets his riches. And/or he could donate it with the caveat that he gets a $X million a year salary for 10 years, enough to feel that he has real money, but far short of Sergei like riches.

If any of you know Marc, pass this thought on to him. From an ego point of view, he did it. Now he needs to decide where to go from here. Meanwhile I am thinking up my next creative status update....

Twitter for $1 Billion: Good for the Jews?

Ok, you ask, what possibly could be the connection between the suggestion of Henry Blodgett that Google purchase Twitter for $1 billion and the Jews?[see Henry's full posting below] Well, besides the fact that there are a nice number of members of the tribe at both companies, I really am using the "Good for the Jews?" question as a way of asking two parts:
-Is this good for the world in general?
-Is this good for Israeli start-up scene?

On both counts, answer I come up with is NO!!

Regarding the world in general, or more specifically the start-up world, wacky prices paid to one-off "success" stories are never a good thing.  I am not going to start arguiing right now if Twitter has or has not brought about a real paradigm shift (as I believe Google did, not so much with search technology itself but how it was applied). (I do not believe Twitter has yet accomplished that). But paradigm shifts do not a business make (sometimes they could, a la Google).

Twitter has yet to show any clear business direction, and until they do their value is somewhere between zero and the amount of money invested in building the product and attaining the user base.

For the Israeli start-up scene, we need to be building businesses. The more entreprenaurs are fooled by Twitter-like companies that building a no-revenue company is a good idea we will sink deeper into a real depression of the tech sector here in Israel. We do not have the capital allocation in Israel that allows for silly investments (just think how many companies will get funded to be the next Twitter...if Google buys them for $1 billion).

Google Should Offer To Buy Twitter For $1 Billion (GOOG)

Henry Blodget|Apr. 3, 2009, 9:37 AM|54

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Tags: Online, Twitter, Google

GOOG Apr 6 2009, 09:41 AM EDT

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If Google isn't in talks to buy Twitter, it should be.

Specifically, it should offer the company $1 billion, cash. 

Why?

Five reasons:

Google needs a huge new growth engine and Twitter might just fit the bill.  The current search product cycle is coming to an end.  Google needs an "Office" to go with its "Windows."  It hasn't found one yet.  Twitter--and real-time search--could end up being a monster.  If Google waits around to see whether it really WILL be a monster, Twitter will be a hell of a lot more expensive.  Remember when Yahoo's Terry Semel whiffed on buying Google?

Twitter is a hell of a lot more relevant to Google's business than other big Google ideas, such as YouTube or Larry Page's plan to have Google solve the world's energy crisis (see his crazy talk of two years ago).  Twitter is also about communications, which is the one part of the content-communications-and-commerce Internet tripod that Google is still weak in.

$1 billion is couch change for Google.  Google generates $1 billion of cash every two months.  If Twitter ends up being worth $0, as some people persist in thinking, Google can just say "oops" and take a minor write-off.  If Twitter ends up being worth a lot more than $1 billion, however, as we and others think is likely, Google will make money.  If it ends up being a monster, Google will make a lot of money.

Twitter could conceivably threaten Google's cash cow--search.  This "real-time search" meme is actually a compelling story-line. If you want to know what people are talking about right now, you go to Twitter, not Google.  Twitter hasn't figured out how to make bank off that yet, but it may well do so.  Remember how much ridicule was heaped on Google's worthless "search engine" in the early days?

Like Google, Twitter is already a verb.  What company do you know of that owns two verbs?

Would $1 billion be enough to get the Twitter boys to part with their baby?  It might, actually.  $1 billion is still a lot of money, especially for a company with no revenue.  And Google's global distribution and technology infrastructure would be a help to Twitter.  So they'd be silly not to take the offer seriousy.

Twitter: Making Fools of All of Us

Yes, I continue to be stalked in Twitter land. I have not "twitted" (or is it "tweeted") in over a year, yet almost daily get messages that someone new has signed up to follow me on Twitter. Must be boring to follow me, as I have been standing in place in Twitter land. Yet the guys at Twitter continue to "succeed," by certain metrics. The media love them, elites all over the US have adopted it as a platform of "communication" (how much can you really say in 140 characters, perfect for the ultimate soundbite). And they continue to raise money from "serious" VCs.

Keep in mind, while they do theoretically have 6 million users (how many are like me?), as of today they have generated ZERO revenues. Nada. Nothing.

Now I think Twitter is inane enough that even as a non-profit it should be shut down -- I posit that their value proposition is negative. But that's another discussion. Now I want to limit myself to the question of value creation...why is Twitter worth anything in this environment, shouldn't the VCs wait to invest more until after some business model emerges (and has traction)? How much does it cost to run Twitter after all??

Twitter is succeeding at making fools of all of us that are calling for sanity in start-up culture, and has a negative influence on entrepreneurs (everyone wants to be Twitter).

Anyway, I think Jon Stewart best sums up my personal frustration on the service and its contribution to the world...see here:

The Daily Show With Jon StewartM - Th 11p / 10c

Twitter Frenzy

Daily Show Full Episodes
Important Things With Demetri Martin

Political Humor
Joke of the Day

They Keep Following Me! What is the True Twitter Value?

So Twitter still hasn't figured out a business model, but from my personal experience these last few months they have continued to grow. I, however, question the value of that growth.

You see, I have used Twitter a handful of times, mainly to get the feel for it when it first started. I quickly lost interest, as I did not really feel the need to broadcast my location or thoughts on an instant basis throughout the day (and night...). And for a few minutes "followed" the Twitter output of a few friends (and some folks I thought looked interesting). I stopped following because I felt the information I was receiving was beyond boring, or made me feel like I was eavesdropping.

Then over the past few months I started to receive "________ is following you" notifications from Twitter. Over the past few weeks its at least 1-2 a day. Shows the power of ongoing viral spread. Most of it is of very low value, as shown in my case. People are not choosing to follow me, but rather are signing up for Twitter, and then simply pressing "next, next, next," and automatically Twitter signs them up to follow anyone found in their contacts that has a Twitter account...in other words, they become stalkers without even knowing it. While this is growth of the Twitter "network," it is very low (to zero) value). It is one step away from spam.

On the other hand, had a different experience with Twitter last week, which was high value and quite positive. As you know, I spend less than zero time promoting my blog, but here and there it still gets out. I recently wrote a posting about managing a start-up during these difficult financial market conditions, called Running on Empty, which got picked up by  Guy Kawasaki in one of his twitter broadcasts (not even in his blog !).  I saw an immediate surge in readership, hundreds of people came to my blog simply because Guy had included reference to it in a "twit" (or is it "tweat?").

Now here I think i start to see the real value of Twitter. Not as a way to know when my long lost cousin is crossing the street, but rather to get up to date suggestions from Gurus as to what I should be looking at. That sounds like something I would even pay for...and I'm a cheap guy!

In the old days there was a thriving newsletter business, where smart people published newsletters, and sold very high-end subscriptions -- because there was recognized value in the content, based on the author.

Twitter is poised to transform from a Spam machine into a nex-gen broadcasting service, but they need to stop with the annoying (and devoid of value) network creation, and go back to the old model, of targeted audience paying to hear what their oracle[s] have to say. 

Kara Swisher Gets Personal at Demo

For me, anything associated with the Wall Street Journal takes on an air of seriousness, woodcuts instead of photos, distinctive typeface, the whole package commanding authority. Now I know that perception is often far from reality, but the highlight of attending Demo conference last week was a fireside chat (well, without an actual fire) between Walt Mossberg and Kara Swisher, the producers of D conference, and columnists for the Wall Street Journal. And let me tell you, the conversation was nothing like I expected, especially from Kara Swisher.

Before I get to Kara's substantive comments about my favorite over-valuation in the past ten years, I want to dwell for a moment on how personal Kara got in her comments. From her "bite me Comcast" to her reactions to the "other conference" happening up in the BayArea (TechCrunch50), Kara was not at all the reserved Wall Street Journal reporter/columnist I was expecting (Walt stayed more true to pre-conceived notions).

First, in reaction to TechCrunch, Kara said (and this is in front of entire Demo audience, not sure if it was web-cast):
"Getting lectured in journalism ethics by Michael Arrington is like getting parenting tips from Britney Spears."

Kara and Walt then turned to social networks and the grandaddy of them all, Facebook. Again Kara got a little [too] personal, talking about Facebook CEO Mark Zuckerberg as a "twelve year old with stupid clothing choices."

Of course, she did follow that with some somewhat more serious thoughts/questions on Facebook and other social networks like: How do they make money? How do they grow?

Both of those are the key questions, Kara didn't have any answers. Not sure that Mark does either...

Why do I dwell on all of this so much?

For me, a relative outsider, in from Jerusalem to check in on the pulse of technology entrpreneurship, I was reminded how much of an insider game the tech world remains, even in the always on, twittered to death era we live in. What do I mean by that? Well, why do people physically gather in conferences to begin with? Because being there matters, and in the end personalities drive business.

A lot can be accomplished in the virtual world, where things can get personal as well, but in the end physical interaction can't be beat.

Last week TechCrunch passed 1,000,000 subscribers to its RSS feed, which is quite an accomplishment (consider that the Wall Street Journal subscriber base is only about 2 million). Michael Arrington and friends definitely are a force to be reckoned with -- and they know all too well that physical beats virtual hands down. Which is why Techcrunch hosted a competing [physical] conference to Demo.

What does this mean for Jerusalem Capital and our portfolio companies? That we need to get personal as well, we need to be in direct contact with key industry players on a regular basis, and need to show up in order to be counted.

Oh, and regards to the 12 year old with poor clothing choices, well, you all know what I think about Facebook....definitely not worth what Mark and Microsoft think it is/was, but also not going away anytime soon, unless they run out of money. And with Lehman days away from a fire sale, anything is possible.

If a "Tweet" Falls in the Forest....Does a VC hear?

If you have not yet heard of Twitter you are part of the blessed 99% of the population of the Western world that are not "early adapters." For professional reasons and general curiosity of the 1% (I consider myself to be a bemused observer of the early adapters) I signed up for Twitter back in January, although Twitter has been around as a public service since October 2006 (see here for more on history).

OK, so what is Twitter? Its is a messaging service limited to 140 characters...wait, all of you semi-Geeks ask, isn't that the same as SMS? Well, yes. And aren't there dozens of companies that allow you to message blast from/to mobile phones, PCs, etc.? Yes. So what is new about Twitter? Well, nothing and everything. Nothing technically new, that's for sure.

So what is/was new about Twitter? Well, they picked a funky name, that's always important (think Yahoo!, Google, Ebay...). And they specifically marketed their service to US semi-geeks (think self-important VCs and well-known bloggers). And timing was right, when [finally] the 1% crowd in the US felt comfortable messaging from their mobile devices. And of course after the first blogging wave, which already prepared us to be interested in complete nonsense(;-)).

One of the "features" that Twitter added (this feature exists in many blogging platforms) is to sign up to receive the tweets of a certain Twitter. Basically, to get their micro-blog feed. The 1% crowd loves this, all zapping messages to one other all day long.

As I said, I signed up, literally to just see what the sign-up process was like, see how it worked. Sent a few twits to test web/sms interfaces. haven't twitted in quite some time. But slowly slowly people have found me on Twitter and have signed up to "follow" me. So far only 18, but half of those people I don't even recognize their names! And there is nothing to follow.

To understand better how Twitter is being used by the 1% crowd, I popped over to Brad Feld's Twitter home page, and see that he has 1,383 people "followers" and that he is "following" 132 people. Very believable, and reasonable, given that Brad is one of the best living VCs, and prolific blogger. Persusing through his "tweets," I recommend he stick to blogging, and stop tweeting, but whatever makes you happy.

And then I looked at super-uber-blogger Robert Scoble's Twitter page, and see that he is sending tweets every few minutes (while awake, and sometimes while sleeping). He claims to be following 21,209, and to have 22,545 followers. Meaning every time he sends a tweet, goes out to 22,545 people. That's a lot of virtual ink. Does this make sense? Could he really be keeping up with 21,209 people? Doubt it, but maybe he has outsourced himself...

Bottom line: with all this tweeting, does Twitter make any money (you knew I was going to ask)????

Answer: a few weeks ago, on their Japanese version, started running some ads. Other than that, nada. no revenues.

The aptly named Peter Kafka wrote the other day on Twitter's current fundraising round, see here (asking the age old question, but this time for Twitter, How Much Is Twitter Worth?):

The bigger question: How do you put a value on Twitter, anyway? The company has only just started seeing a trickle of revenue, via advertising on its Japan version. But beyond that there's no money coming in, and it's not clear what the model will be.

While Twitter itself has great buzz, we hear the majority of the site's traffic comes from outside the site, via other apps like Twhirl, mobile access, etc. So traditional online advertising--a difficult prospect to begin with for a communications service (see the struggles of various IM, email platforms) may be even harder.

That said, based on Twitter's growth and brand dominance, $75 million post-money seems plausible. There must be a pony in there somewhere.

I am sorry, Mr. Kafka. A company that has no real technology, a usage base of uber-geeks, and no significant revenue should not be valued at $75 million. It's bad for the business of creating businesses.

The Facebook Explosion

So when something viral reaches me, it's really viral! While I follow the industry, unlike some of my friends I do not Twitter, rarely look at LinkedIn, IM limited to my very close business colleagues (ok, and sometimes my 14 year old daughter Michal), etc etc.

I know my widgets from my gadgets, my blogs from my blooks, and my avatars from my gizmoz. But a real user? Not really. When I am on downtime, I sit back with a good book (after reading the printed versions of the daily newspapers we receive on our front doorstep every morning).

Recently I started to see several "Facebook" invitations  in  my Inbox every day...a  phenomenon  my friend Jeff Pulver commented on as well. The main reason I have heard for Facebook's sudden surge is a new API, that has made easier than ever for people to connect various social networking platforms to Facebook. Or maybe simply Facebook passed the tipping point, and the viral vortex finally started to suck me in.

Whatever the reason, compelled me to take a look at Facebook...and I walked away [virtually] scratching my head...I cannot understand why this particular platform has caught on in such a big way. The interface is not intuitive or graphically pleasing.

But I will knock my head against the wall, but rather will embrace. See you soon on Facebook. We don't always need to understand everything, and we never will...

We Have All Thought About Answering This Way...

Email has long become the established means of communications for the global community. Its "free" (after the input device and Internet connection), works on almost universal standard, and fairly flexible (HTML format, plain text, attaching files, etc.).

However there are competing communications technologies and formats,including IM , SMS, blogs, and new entrant Twitter.  Each have their own  customs,  rules, and etiquette. Sometimes we forget that an email is not an IM, or SMS. We rush to answer, to show that we are part of the 24/7 generation (the Blackberry Effect) that is always "on."

For the past few days  I have  watched a  conversation  play out between  partners of  a venture  fund  in the  US and one  of our portfolio  companies.  Now, the  partners in the  US are  firing off  questions by email, and the CEO of our portfolio company is answering either on his Nokia E61 (full QWERTY keyboard) or his laptop. He is answering at the speed at which the questions come in, which I think is a mistake. Email is meant to be what is says it is, electronic mail, and mail should be an exchange of letters, hopefully that each sender develops with thought, and is treated the same by the recipient.

Unfortunately we are juggling these different formats and slip from one to the other and sometimes they blend, so that emails look like SMS (my 14 year old daughter uses SMS abbreviations in email, telling me LOL after I send her some witticism). Obviously the rapid fire approach does not lend itself to sufficient investment of time and/or thought when answering, and often we press send way too early in the process. [Perhaps Mr. Gates should introduce a warning after pressing Send -- ARE YOU SURE YOU WANT TO SEND THIS EMAIL??]

I came across this spot-on commentary to emails [click here ]...worth looking at, but keep in mind, as you watch, that the review process is very important in communication, and we should resist the slippery slope into IM life. Not everything  is meant to be instant, certainly not answers to questions about the very fundamentals of your business.