Netflix corporate culture presentation

Netflix, with annual revenue of $1.55 billion from its movie rental subscription business, is one of the larger U.S.-based Internet companies. (On a separate note and with no specific insight, I would guess that the investors in Spotify have had a look at the economics of and $2.5 billion dollar valuation of Netflix.)

The following presentation is an interesting read as it says a lot about how Netflix wants to operate. As the presentation recommends non-standard behavior at times, it will likely make you stop and reflect as you read it.


Sunday links

Some interesting reading that survived my Sunday RSS reader cleaning session. A little bit of everything.

New York Times: How Vizio Went From Nowhere to No. 1. "Why has Vizio, a company that didn't exist until 2002, become the biggest seller of LCD TVs in the United States?" My takeaway: being a new entrant into the industry, pursuing a low-cost strategy with regards to manufacturing and development and innovating in the sales channel. Somewhat like what Dell did when you abstract it to that level. Certainly applicable to online, look at gambling (skins, affiliates) as one example.

Eric Ries: Building a new startup hub. Eric presents startup #1, IMVU and the ideas around the lean startup to TechStars. Long video, listen to it while working.

Judith Wolst: Härliga och läsvärda bloggar!. A list of very good Swedish media/social media/geek etc blogs. (Thanks Judith for the mention, btw.)

Geek Girl Meetup: Geek Girl Meetup. There is a new meetup October 24-25 in Stockholm.

Andrew Chen: How desktop apps beat websites at building large active userbases. If you build a product that is so great that people will actually download it, you'll have more tools available to remind people to use it. Over several months, those reminders will help your economics significantly.

Lightspeed Venture Partners: What is the difference between a good product and a good company? VC comments to Charles Hudson's tweet: "Good products create value. Good biz models capture value. Good companies have both"

Björn Hedensjö: Att lyckas med en mediestartup ? tio tankar om vägen dit. Thoughts on starting a news-oriented media company and how to do it GigaOm/VentureBeat/TechCrunch-style.


On stock options in startups

Aaron Cohen writes a great comment on options and equity in startups (click through to read the entire comment!): "Most startup employees need to realize they are on a journey and that in addition to making a few hundred thousand dollars on a good outcome they are learning how to become more senior at the next company. Real wealth creation will take founding, seniority, or staggeringly large exits."

The blog post itself it also good (even though I don't agree with the statement that strike price is not important when looking at options), but the comments make it really good.


Winners average 8 years to $50 million in revenue

I've said many times that a startup takes at least five years to build into a relatively large, hopefully lasting company. If we aim somewhat higher we see that, on average, it took the 100 largest U.S. publicly traded software companies eight years (inflation adjusted) to reach $50 million in sales. Good to remember when playing with growth rates in Excel.

IPO Dashboards: How Long Does it Take to Build a Technology Empire? "Only 28% of the nation?s most successful public software empires were rocketships. I've defined a rocket ship as a company that reached $50 million in annual sales in 6 years or less (this is the type of growth that typically appears in VC-funded business plans). A hot shot reaches $50m in 7 to 12 years. A slow burner takes 13 years or more. Interestingly, 50% of these companies took 9 or more years to reach $50m in revenue.

Nabeel Hyatt: The quickest path to $50m in revenue? Build fun. "Turns out it takes an average of eight years to hit $50m in revenue, which is about the point when you can start thinking about things like going public. And this is for the top 100 largest software companies, so we're talking about the biggest winners here. One of the most valuable companies ever founded, in any industry, in any country, took 8 years to hit $50m in sales, Microsoft. Oracle took 10. Locally I often point to the timelines of successes like iRobot and Harmonix and the time it took them."


Apple approves Spotify App for iPhone/iPod

Paid Content UK: Updated: Apple Approves Spotify's iPhone App. "Update 2 (6.15pm BST): Apple's Cupertino spokesperson tells us: "The current status as of right now is it's been approved and we hope to add the app to the more than 65,000 apps on the app store very soon. We've been in constant communication working with the developer and have already notified Spotify that the app will be in the app store very soon."

Happy days!


Overnight successes rarely are

Paul Buchheit (creator of Gmail and founder of Friendfeed): Overnight success takes a long time. "This notion of overnight success is very misleading, and rather harmful. If you're starting something new, expect a long journey. That's no excuse to move slow though. To the contrary, you must move very fast, otherwise you will never arrive, because it's a long journey!"

There will be more releases

"If you're not somewhat embarrassed by your 1.0 product launch, then you've released too late." - Reid Hoffman, founder of LinkedIn


Li Ka-shing confirms Spotify investment

Forbes: Li Ka-shing Confirms Spotify Stake. Li Ka-shing Foundation has confirmed that it participated in Spotify's latest financing round, but didn't confirm the size of investment nor the valuation. The foundation will have one board seat, initially held by Frank Meehan (CEO of INQ). That it will have one board seat, indicates it took a sizable part of the rumored $50 million round.


5 years after Google's IPO

Five years ago Google became a publicly listed company. Share price then $85, share price now ca $445.


Rules of Thumb

In the mid- and late nineties, I read three magazines more than others; Edge about video games, Wired about the Internet and Fast Company about work-life. Fast Company was in many ways the most interesting read, even though I knew very little about work at that time.

Two weeks ago, while reading blogs, I found an excerpt from Fast Company co-founder Alan Webber's new book Rules of Thumb. I liked the excerpt and as it was in the middle of summer it was easy to order the book.

The book is easy to read with each of the 52 rules being roughly five pages consisting of a story and some comments. Being easy to read doesn't mean it is a shallow book, though. Even though I have already read or glanced over most rules, this book will stay on my desk for quite a while.


Net Gain

"One man gives freely yet gains even more. Another withholds unduly, but comes to poverty." - Proverbs 11:24


Spotify to launch in China with TOM Group

Reuters: Tom Group to bring Spotify music service to China. "Chinese media conglomerate Tom Group said on Wednesday it is teaming up with European Internet firm Spotify to bring the company's popular digital music streaming service to China."


What would you walk to the end of the earth for?

Peter Bregman: The Interview Question You Should Always Ask. "But people are often successful not despite their dysfunctions but because of them. Obsessions are one of the greatest telltale signs of success. Understand a person's obsessions and you will understand her natural motivation. The thing for which she would walk to the end of the earth."


Wellington Partners adds Spotify to portfolio

According to the Financial Times Spotify has raised up to $50 million from Li Ka-shing, Wellington Partners and existing backers at a $250 million valuation. Spotify has not confirmed the rumors, but Wellington Partners has added Spotify to its list of portfolio companies.


Sad news

On August 3rd Andreas Oscarsson, founder of Pokerlistings (one of the world's largest poker affiliates and one of the larger Swedish Internet companies), was found shot. My condolences to his family and friends.


Microsoft gets to play, Yahoo gets cash

Going truly offline for a week was very nice, especially as the time was spent sailing in Croatia. And obviously it was the week when Microsoft and Yahoo finally came to an agreement about search.

A few years back I spent far more time thinking about search, so please add your thoughts in the comment section!

In terms of revenue it is one of the largest Internet deals done. Given the deal complexities and the lack of a huge upfront cash payment, it seems like many are underestimating the importance of the deal. In short: This is Microsoft's play to actually create a real Google competitor.

Yahoo has been struggling to compete with Google in search technology and advertising since the company acquired Inktomi, FAST and Overture back in December 2002 and July 2003. Before that Yahoo licensed search technology (from Google and others before that) and used Overture for search advertising. It has had issues with developing a stronger search platform of its own (Panama et al).

At least since 2004 Microsoft has invested significant capital into developing search technology and the accompanying data centers needed to try and catchup with Google.

Obviously neither company has managed to effectively compete with Google, who really turned out to be this decade's Microsoft.

The 10-year deal between Microsoft and Yahoo is somewhat complex and there are several implementation risks, but it seems to make a lot of sense to both parties.


* Yahoo doesn't have to spend significant amounts of capital and additional management attention on getting search development right and instead get 88 cents on each search dollar.
* Yahoo gets a cash flow boost of $275 million if the press release is to be believed. With Yahoo's weak profitability that is a significant amount of cash.
* Yahoo is doing the sales to large clients (which makes sense in the US, but less so in Europe), so Yahoo keeps its relationships with large search advertisers.
* Yahoo can focus on building other web and media properties well instead of trying, against all odds, trying to catch Google.


* Bing's search technology get more searches and becomes the serious contender instead of being number three.
* AdCenter (search ads) goes from being a small number three to a solid number two (especially in the US). It should attract more advertisers (who think current volumes are too small) and more bidding (higher bids on popular search words and better coverage).
* The result should be better organic search, higher revenue and a better chance to get a positive feedback loop going.
* It is a statement that Microsoft is serious about search. Steve Ballmer might have said it many times, but actions speak louder than words.

So what do you think? Will this matter? Will advertisers make more of an effort and spend with both Google and Microhoo? Please comment below.