Henrik Torstensson's Weblog

I've made a small investment in Videoplaza

2008-07-10T17:47:00.005+02:00

I've participated in Videoplaza's seed round (pdf) and have joined Videoplaza's board of directors. Swedish venture capital firm Creandum led the round.

Revenue proof of concept, Facebook policing apps and games revenue

2008-07-03T00:59:00.003+02:00

Mike on Ads: Are you generating revenue?: "Doesn't matter if it?s adserver, behavioral tracking, a new media network ? each idea has a revenue-generating ?quick win? you can close to prove the business works. Right Media was a profitable for over a year before it launched the exchange. A single good CPA deal with AOL funded most of the first year of the company!" Creating a proof of concept in the market (user and customer demand) is something to do before one starts scaling like crazy.

Inside Facebook: Facebook?s Evolving Approach to Platform Governance: "It's now been 5 days since Slide's Top Friends application disappeared from the Facebook Platform as a result of an apparent Developer Terms of Service violation. This suspension is the most severe punitive action imposed by the Facebook Platform team that the development community has seen yet, and is at least in some sense emblematic of Facebook's evolving approach to Platform governance and regulation." Betting on an ongoing ability to annoy Facebook's or other social networks' users with forced invites and similar things is not something an application developer should do. If the social networks turn into true platforms, there is likely opportunities to build strong application companies (like on the PC). However, application developers must realize that Facebook (the company) as a service provider has more power over application developers than Microsoft had as the product provider of Windows.

Dave Perry (of Shiny and Acclaim fame) posting on Lightspeed Ventures Partners' blog: 29 business models for games. Listing 29 different ways of designing the revenue-generating part of a game's business model.

Weekly roundup

2008-06-29T13:00:00.002+02:00

Master of 500 Hats: Chad Hurley, YouTube CEO/Co-Founder, talks to entrepreneurs @ June Startup2Startup dinner. Telling the story of YouTube.

Facebook. The valuation game Facebook investors played last fall seems to be catching up with them as TechCrunch and Silicon Alley Insider report that one or a few small shareholders are trying to sell (some of) their shares at a $3-5 billion dollar valuation (which still is 3-5 times what LinkedIn is valued at).

Gizmodo: Classic Clips: Bill Gates Chews Out Microsoft Over XP. Creating great and usable products is the best kind of competitive advantage you can have in the Internet space. If management doesn't own that issue, the problems Bill Gates describes in his flame of Windows usability will appear.

Tara Hunt: Happiness as your business model. [via: Fintsomsnus] On motivations and more. Describing why the notion of homo economicus is flawed and how other motivations drive individuals' behavior.

Jyri Engestr�m: Nodal Points: The Emerging Real-Time Emerging Web. Jyri's presentation slides from reboot10. Additional notes on the presentation from Joho the blog.

Nokia acts as data really is the next Intel Inside

2008-06-25T23:44:00.002+02:00

In his article What is Web 2.0? Tim O'Reilly wrote Data is the next Intel Inside (a.k.a. a strategic advantage).

In the PC world it was about controlling the operating system and its API:s (which Microsoft did with Windows), but now it is about access to scarce data. One real-life example: Nokia paid $8.1 billion for mapping company Navteq last fall. Compare that with ?264 million ($410 million) for the 52 % of Symbian Nokia didn't own, followed by making the Symbian operating system open source.

Summer reading

2008-06-25T23:34:00.002+02:00

I've, so far, stacked up on four books for summer reading in July:

- Sarah Lacy's Once you're lucky, twice you're good on dot.com entrepreneurs
- Founder of Dennis Publishing Felix Dennis' How to get rich (corny name, I know)
- Spencer E. Ante's Creative Capital on the birth of venture capital
- Clay Shirky's Here Comes Everybody

Any other suggestions?

Monday's links

2008-06-23T22:28:00.004+02:00

Some interesting articles from last week:

Paid Content: LinkedIn Raised Its Big Round; $53 Million From Bain and Others; $1 Billion Valuation. "This brings the total money raised by the company to over $80 million and it has said it would have revenue of $100 million for 2008. LinkedIn, which says it is already profitable, will use the investment to make acquisitions and expand its overseas operations. The NYT story also breaks down in more details the revenue sources for the company: LinkedIn will get only a quarter of its projected $100 million in revenue this year from ads; part of it is also the premium subscription, which let users directly contact any other user; and then the third source of revenue is recruitment tools that companies can use to find passive job seekers." It is not only about ads...

Watchmojo: Traffic Does Not Correlate to Revenues. "Revenues grow over time as you become better versed with what clients look for and penetrate advertisers and marketers decision making process. Month over month, revenues grew even if traffic began to taper off." Traffic is business-to-consumer, advertising sales is business-to-business, which explains to some extent why they don't correlate perfectly. Longer term losing traffic will affect your revenues negatively, though.

Jason Calacanis: Finding your startup's "moment". ""The moment" is the exact time when an individual, after engaging your product, "gets it." By "gets it" I mean they understand your product's value proposition at such a deep level that they: 1. get excited, 2. have an epiphany of sorts, 3. can explain the value of your product to others easily"

Paid Content: Display?s Big Spender: University Of Phoenix; Category Continues To Wait For Big Brands. "When it comes to big spenders of online display ads, forget Procter & Gamble or General Motors: the biggest buyer is the University of Phoenix, a for-profit institution which devotes an average of $20 million monthly to online ads, mostly for display. The numbers, from TNS Media Intelligence and cited by WaPo, highlight the glacial pace of big brands shifting their ad dollars to display." Online advertising really is three different types of advertising: search, performance-driven display advertising, and branding-oriented display advertising. While there are several similarities between the three types, it is in understanding the differences and how each fits different sites one can create a profitable business.

Yahoo and Google in search partnership

2008-06-15T22:00:00.003+02:00

Yahoo choosing to use Google to monetize some of its searches is a really big deal. Adding $800 million revenue and $250-400 million or so in cashflow is basically adding the revenue of a combined MySpace and Facebook to Yahoo (and a lot more cashflow). This shines light on the fact that search is far more valuable than other online advertising.

Stoppa FRA-lagen

2008-06-15T21:25:00.002+02:00

Signalspaning mot yttre hot �r i sig inget f�rkastligt, men FRA-lagen �r en d�lig lag som medf�r att milit�ren rutinm�ssigt kan signalspana mot svenska medborgare. Ett antal borgerliga riksdagsledam�ter b�r visa civilkurage p� onsdag och inte f�lja partipiskorna.

1. L�s mer p� Stoppa FRA-lagen.
2. Skriv till din riksdagsledamot om du inte vill att han/hon ska r�sta f�r FRA-lagen.

Sunday links

2008-06-08T00:52:00.003+02:00

Mike On Ads: The Plight of the Ad Technology Startup. "As a new company you have two options ? start an ad-network and inject yourself directly into the money stream or selling your technology to one of the existing players in the food-chain. Realistically ? most agencies and publishers aren?t very tech savvy, so as a cutting edge technology player you are primarily limited to selling to ad-networks. Here's the problem ? although running an ad-network can be a highly lucrative business ? selling technology to one is not."

Futuristic Play: 5 steps towards building a metrics-driven business. "Given my history blogging about viral marketing, I'm occasionally approached by folks who ask me, "For product X, how would you promote it and make it viral?" I think there's an expectation that there's a playbook which you can directly apply to every situation.

Unfortunately, there's no real answer to this - ultimately, I think any advancements that can be made to your business function based on the fact you make very gradual improvements based on creating goals, measuring subcomponents, making hypotheses, and testing them. There's no better way to do this than to just do it."

Futuristic Play: Data portability: Is the social network data you're hoarding treasure or trash? "As a result, it may not surprise you that data around in-market behaviors (aka Intent) are worth a LOT more than the more watered down stuff (aka Interest), particularly because you can prove to advertisers that the former will make them money."

Martin Spanar!: Visdomsord fr�n en v�n. "�terigen po�ngen - den tid det tar att g�ra n�gonting riktigt bra, �r inte n�dv�ndigtvis l�ngre �n den tid det tar att g�ra det hafsigt, tillr�ckligt bra, glida f�rbi l�gsta-niv�n. Genom att l�gga ribban h�gt sparar man allts� tid totalt. Dessutom, det som �r v�rt att g�ras, �r v�rt att g�ras ordentligt."

Martin Spanar!: LinkedIn - 10 steg till svart b�lte. "Klipp-och-klistra inte fr�n ditt CV - Linkedin fungerar i sina b�sta stunder som ett s�tt f�r dig att n�tverka professionellt och h�lla kontakten med v�nner i yrkeslivet - men det �r ingen HR-avdelning eller rekryteringsrobot du skriver f�r. Du skulle nog inte dela ut blad med din meritf�rteckning innan du har introducerat dig f�r n�gon s� g�r det inte h�r heller. Ist�llet ska du t�nka p� att beskriva dina erfarenheter och f�rm�gor som du skulle framst�lla dom f�r en person du tr�ffar. T�nk p� att skriva f�r datorsk�rmen - korta textblock som �r visuellt attraktiva."

Union Square Ventures: The Weird Economics of Information. "But entrepreneurs don?t just have one conversation, they have hundreds. The more open they are in each of those conversations, the more the person on the other side is likely to engage. They may unconsciously see it is a fair trade, the entrepreneur?s ideas for theirs. The more detailed the conversation the more places for a counterparty to interact. The more they understand about the entrepreneur's plans, the more likely they are to come across other insights from other conversations that would be valuable to the entrepreneur and the more likely they are to pass them along. So an entrepreneur who is aggressively open with his or her ideas builds a very effective network that aggregates data, information, and insights that are immediately relevant to those ideas."

Good places on the US West Coast?

2008-06-08T00:42:00.003+02:00

I'll spend a big part of my vacation this summer taking a road trip in California and other parts of the U.S. West Coast. If you have tips on places to visits, hotels to stay at, people to see, things to do etc, etc please leave a comment or send me an e-mail (henrik@torstensson.com).

Article based on easiest available data

2008-06-03T18:10:00.004+02:00

I found Dagens Industri's article and commentary on Swedish community sites today to be very shallow business journalism and the headlines to be worthy of a tabloid. Unique visitors to a single site is an important metric, but it is far from the only one. Revenue, profit and overall reach for a company's web sites are also important. The readers deserved a more in-depth look at the subject than they got.

Stardoll and media consumption

2008-06-02T00:08:00.002+02:00

Two weeks ago Mattias presented Stardoll at Google's European Zeitgeist08 conference. A good summary of and dive into the world of Stardoll (not least what our users had to say). The Stardoll specific part starts 6 minutes and 50 seconds into the clip.

I found the following comment on the presentation from Martin Sorrell, CEO of WPP interesting:

"Somebody said to me that they went to the Google Zeitgeist... and there was a presentation on the site by three teenagers and the three teenagers were asked whether they watched and what do they do - this site was I think Stardoll where you build virtual dolls... And the three teenagers were asked whether they watched any television. They said no. I was talking to a journalist and he found that remarkable. Anyway so that's just another example of consumption as it's changing, media consumption as it's changing."

Game on

2008-06-02T00:05:00.002+02:00

What's Next: Hack the News. (directed to SvD, DN, GP etc) "Jag kallar utmaningen hack the news. S� h�r g�r det till P� 30 dagar bygger vi en parallell n�ttidning �t er. Inf�r �ppen rid�. Fr�n dag ett kan vem som helst titta f�rbi. Vi prototypar, kastar ut id�er till bes�karna och ser vad som fastnar. Vi f�rb�ttrar det som �r bra, slopar det som �r d�ligt. Alla kan pitcha ideer. Journalister, ledning, bes�kare. Ledorden �r innovation, transparens, crowd sourcing och extremt korta utvecklingscykler. Jag kallar det agile publishing."

Hacking the economy

2008-05-31T11:26:00.001+02:00

How to Hack the Industrial Economy: "Today, it's hugely powerful to apply hacker principles not to bits, but to industries, markets, and companies - because putting resources and activities together is cheap and getting cheaper. If that doesn't make sense, think about Wikipedia: Jimmy Wales and the Wikipedia kru took hacker principles, and applied not to phone lines or programs, but to the publishing industry itself.

The problem is that there?s a massive reversal taking place in today?s economy. While today's revolutionaries are losing sight of these principles, ironically, its industrial-era corpocracies who are learning to use them to rethink their DNA."

Be so good they can't ignore you

2008-05-31T11:22:00.001+02:00

"Be so good they can't ignore you." - Steve Martin

Sunday links, first go

2008-05-25T17:18:00.002+02:00

Bronte Media: Twitter and Friendster Parallels. "One eye-roller of Internet assumptions for me is that 'social networks are transient'. That they are in some way faddish, which is a complete load of shit. What does kill companies, is poor service. One of the most basic tenets of a web service is being up. Friendster's US market success was killed by its inability to stay up. Not because of MySpace's innovation, not because people change social networks like underwear and not because of any other reason. Quite simply, people couldn't login to the service and so were forced to go someplace else to express themselves."

Bronte Media: Feature vs Company. "The folks who ask this question display zero recognition that their current framework would have prevented them from investing in Google at any stage along the way. And so if you are an entrepreneur having to hear the question, you can smile at the irony."

Martin J�nsson: Sakta v�xer en ny communityj�tte fram. "Familjeliv, Br�llopstorget, Djungeltrumman, Odla, Myblock - och s� nu juvelen i kronan, sportsajten Svenska Fans. S� ser Stampens sociala medieimperium ut i och med dagens f�rv�rv. Det �r en ganska imponerande samling m�tesplatser, med ett totalt bes�kartal p� mer �n 600 000. D�rmed st�r Stampens ink�pta communities snart f�r dubbelt s� mycket trafik som modersajten gp.se."

Resum�: Spray och Passagen g�r ihop. "Allers F�rlag och Eniro sl�r sina p�sar ihop och bildar ett nytt bolag av webbportalerna Passagen och Spray. Samtidigt k�per man in sig i den finska portalen Suomi24."

VC ER

2008-05-19T00:30:00.002+02:00

VC ER. Dot.com crash humor.

Online ads 10 % of US advertising spend

2008-05-16T00:01:00.006+02:00

Fredrik Wass and the Swedish Jaiku community have conducted an interview with Google's Swedish Managing Director Stina Honkamaa and European Policy Manager Nicklas Lundblad.

An interesting interview, but one answer stuck the data nerd in me as just plain wrong. Stina Honkamaa claimed, if quoted correctly, that online had a 30 % share of U.S. advertising spend. (Update May 17th: Stina was misquoted. See comment from Nicklas Lundblad at bisonblog.)

After some digging I believe that the claim is (way) wrong and online's share in the U.S. is 10-15 % (depending on how the advertising market is defined). Which would be about the same as online advertising's share in Sweden (estimated to be around at 13-15 %).

Sources:

- IAB says that US Internet advertising spend for 2007 was $21.2 billion.
- TNS Media believes that the total US advertising market was worth $148.99 billion in 2007 (excluding paid search online and yellow pages advertising offline)
- eMarketer says that Internet's share of total US advertising spend is about 9-10 % (expected $27.5 billion in 2008), growing to 13 % in 2011.
- ZenithOptimedia expects 9.4 % ($44.5 billion) of global advertising spend to be spent online in 2008.
- ZenithOptimedia claim that more than 15 % of advertising spend is spent online in only four countries: United Kingdom, Denmark, Norway and Sweden.

CBS acquires CNET for $1.8 billion

2008-05-15T23:03:00.003+02:00

Corporate raider Carl Icahn's attempt to sell Yahoo! to Microsoft is not noise, but it is CBS acquisition of CNET for $1.8 billion that I find truly interesting. My relationship with CNET is no longer a daily love affair, but in the pre-blog world News.com was a daily read.

It seems like the bar for major media companies is to 'soon' have at least $1 billion of revenue from their respective Internet operations. While CNET was considered a 'business mess' by many, but $400 million of revenue is significant. And that might push 'older' CBS to reach $1 billion in online revenue ahead of 'younger' sister company Viacom.

Spotify presentation at Facebook Developer Garage

2008-05-13T23:57:00.003+02:00

Jon Mitchell presenting Spotify at Facebook Developer Garage London May 2008. (Update 15th May: The video is, unfortunately, no longer available on YouTube.)

Kiva follow-up, month 1

2008-05-12T23:40:00.003+02:00

A little over a month ago, I wrote about the non-profit Kiva who makes it possible for individuals to fund microloans. At the time I put my money where my mouth was and lent money to four groups of women. One month later all four groups paid their first installment.

MySpace did $210 million in Q1

2008-05-12T22:40:00.004+02:00

MySpace is growing its advertising sales at a decent rate, but will miss News Corp's earlier revenue goal of $1 billion for the year and likely end at $900 million. That still places Fox Interactive Media/MySpace as one of the largest advertising-driven online publishers in the world including larger online than all other traditional media companies if memory serves me. A few interesting points on Fox Interactive Media's performance from News Corp's Q3 reports:

* Revenue of $210, about a third from the search deal with Google
* Performance-based grew quicker than branded (24 % vs 21 %)
* HyperTargeting, MySpace interest-based targeting system, campaigns are 20 % of all campaigns, have double the CPMs of non-targeted, the average order is 60 % larger, and the repurchase rate is 75 %
* Key pages and 'skinned' homepage attract large brand advertisers

Worth noting is that even as MySpace seems to be doing a pretty good job at attracting more brand advertisers, the amount of money from performance-based advertisers grew faster. Sometimes it feels like the discussion is about search and brand advertising, when the reality is that performance-based is about as big as brand advertising. (And search roughly the size of those two combined.) The data for HyperTargeting suggests that the approach works, but that MySpace really hasn't yet brought in new, smaller advertisers with the system.

Egmont acquires Manolo

2008-05-07T09:16:00.003+02:00

Bj�rn & co at Manolo have, for the second time, sold the Swedish fashion blog to a large publisher. This time it is Egmont Tidskrifter, publisher of the fashion magazine King among many other things, that has acquired Manolo from the founders and the main shareholder Sydsvenskan. From what I've seen, the price has not been disclosed. Press release.

Sometimes winning is a bad thing

2008-05-06T22:28:00.003+02:00

With Microsoft's $47.5 billion (at $33 per share) bid for Yahoo withdrawn, at least for the time being, some people label it as a failure for Steve Ballmer. It might be a failure in the sense that the deal didn't go through, but on the other hand had the deal gone through success wasn't guaranteed. One is probably well-served to remember that most (friendly) major mergers and acquisitions don't create long-term shareholder value.

In order to create value after paying anywhere near $50 billion, a lot of things have to go right. Anyone can decide what the odds of a lot of things going right would be with the actions taken by Yahoo to discourage Microsoft's bid, Yahoo's weakening position in search, the likelihood of having to spin out either Yahoo! Mail or Hotmail and the business operational issues of both Yahoo! and MSN.

Where people find the time

2008-05-04T23:39:00.002+02:00

Clay Shirky at the Web 2.0 Conference: Gin, Television, and Social Surplus (full, but lightly edited, transcript of the video below). Good stuff!

"Here's something four-year-olds know: A screen that ships without a mouse ships broken. Here's something four-year-olds know: Media that's targeted at you but doesn't include you may not be worth sitting still for. Those are things that make me believe that this is a one-way change. Because four year olds, the people who are soaking most deeply in the current environment, who won't have to go through the trauma that I have to go through of trying to unlearn a childhood spent watching Gilligan's Island, they just assume that media includes consuming, producing and sharing."

(via: SIME Blog)