holy sh*t!!!!

from silicon valley insider:

As we prepare to release our SAI 25: World's Most Valuable Startups list, we're running through some final valuation numbers. One company that is a shoo-in for the list is Craigslist (yes, it has been around a while, but we're defining "start-up" as private companies founded in recent memory that has yet to go public or sell out).

We've struggled to get formal business metrics for Craigslist, but ClickZ has summarized a recent report from Classified Intelligence that should help. CI estimates Craiglist's numbers, but it has at least gone through the laborious process of counting listings, pageviews, etc.

So here are some metrics:

2007 Est. Revenue: $55 million
2008 Est Revenue: $81 million
Monthly Pageviews: 9 billion
Monthly Job Listings: 2 million
Monthly Ad Listings: 30 million
Employees: 25

Estimated Costs

Let's assume that each of Craigslist's 25 employees costs about $125,000 a year, all in. That's probably high--Craigslist is run like a non-profit--but it should be in the ballpark. This adds up to about $3 million of salary and other HR costs. Let's assume that Craigslist will grow this year, and let's assume that it spends another few million on prosaic costs like rent, insurance, travel, etc. Total estimated 2008 operating expenses: $7.5 million.

On the "cost of sales" line, let's assume that Craiglist spends a boatload on servers and bandwidth to keep the site running smoothly. Craigslist's content is not at all bandwidth intensive--all light text, no computation or transactive processing like eBay or Google--so this should keep its costs well below those of other huge global sites. Let's call it $50 million a year. (This is probably high--grateful for any help in refining).

Add all that together and use the CI revenue estimate, and you have a business with about $80 million in revenue and, say, $25 million in operating profit. Apply a 10X revenue multiple and/or 25X operating income multiple, and you would have a company worth about $750 million. But obviously Craigslist is worth a heck of a lot more than that.

Craigslist's Real Value

Why is Craigslist worth more than meets the eye? Because it's run like a non-profit. Craig Newmark and co. don't give a damn about generating revenue or profit, and more power to them. But if Craig ever want to sell Craigslist, he'd probably want to get something closer to true value for it--which means we need to think about the company's real earning power.

Let's assume that, instead of charging for job ads in only 11 cities, Craigslist charged for all job ads (currently 2 million a month). Let's assume that it also charged for another 5 million of the 30 million ads on the site each month. Let's assume that Craigslist users were so horrified by the outrage of being charged even a de minimus listing fee that two thirds of these listers stormed off in a huff so that the 7 million of paid listings dropped to, say, 2.5 million a month. And let's assume that Craigslist charged its standard $25 job listing fee for all of them.

What would that generate in revenue? $62.5 million per month, or $750 million a year.

Let's further assume that this outrageous affront to a minority of users--$25 per listing!--would require huge customer service and processing costs, so that Craigslist's overall cost base jumped to $250 million a year. Then we'd have a business with $750 million in revenue and $500 million of operating profit.

Let's put very conservative revenue and operating profit multiples on that--say 7X revenue and 10X operating profit--and we're conservatively looking at a business worth $5 billion.

Thoughts? Speak now or forever hold your peace.

'Semantic Web,' remember this term

Google may eventually be displaced as the pre-eminent brand on the internet by a company that harnesses the power of next-generation web technology, the inventor of the World Wide Web has said.

The search giant had developed an extremely effective way of searching for pages on the internet, Tim Berners-Lee said, but that ability paled in comparison to what could be achieved on the "web of the future", which he said would allow any piece of information — such as a photo or a bank statement — to be linked to any other.

Mr Berners-Lee said that in the same way, the "current craze" for social networking sites like Facebook and MySpace would eventually be superceded by networks that connected all types of things — not just people — thanks to a ground-breaking technology known as the "semantic web".

The semantic web is the term used by the computer and internet industry to describe the next phase of the web's development, and essentially involves building web-based connectivity into any piece of data — not just a web page — so that it can "communicate" with other information.

Whereas the existing web is a collection of pages with links between them that Google and other search engines help the user to navigate, the "semantic web" will enable direct connectivity between much more low-level pieces of information — a written street address and a map, for instance — which in turn will give rise to new services.

"Using the semantic web, you can build applications that are much more powerful than anything on the regular web," Mr Berners-Lee said. "Imagine if two completely separate things — your bank statements and your calendar — spoke the same language and could share information with one another. You could drag one on top of the other and a whole bunch of dots would appear showing you when you spent your money.

"If you still weren't sure of where you were when you made a particular transaction, you could then drag your photo album on top of the calendar, and be reminded that you used your credit card at the same time you were taking pictures of your kids at a theme park. So you wouldd know not to claim it as a tax deduction.

"It's about creating a seamless web of all the data in your life."

One example frequently given is of typing a street address which, if it had "semantic data" built into it, would link directly to a map showing its location, dispensing with the need to go to a site like Google `maps, type in the address, get the link and paste it into a document or e-mail.

The challenge, experts say, is in finding a way to represent all data so that when it is connected to the web, links to other relevant information can be recognised and established — a bit like the process known as "tagging". One expected application is in the pharmaceutical industry, where previously unconnected pieces of research into a drug or disease, say, could be brought together and assimilated.

Mr Berners-Lee, who invented the World Wide Web in 1989 while a fellow at CERN, the European Organsation for Nuclear Research in Switzerland, would not be drawn on the type of application that the "Google of the future" would develop, but said it would likely be a type of "mega-mash-up", where information is taken from one place and made useful in another context using the web.

Existing "mash-ups", such as progams that plotted the location of every Starbucks in a city using Google maps, were a start, he said in an interview with Times Online, but they were limited because a separate application had to be built each time a new service was imagined.

"In the semantic web, it's like every piece of data is given a longitude and latitute on a map, and anyone can 'mash' them together and use them for different things."

Mr Berners-Lee, who is now a director of the Web Science Research Initiative, a collaborative project between the Massachusetts Institute of Technology and the University of Southampton, sought to put into context the rapid growth of social networking sites in recent years, saying that once the semantic web was rolled out they would be thought of as one of many types of network available.

"At the moment, people are very excited about all these connections being made between people — for obvious reasons, because people are important — but I think after a while people will realise that there are many other things you can connect to via the web."

He also spoke about what he described as one of the key challenges of the web today — confronting the security risks associated with large databases of information that were attractive to criminals and identity fraudsters.

"There are definitely better ways of managing that threat. I think we're soon going to see a new tipping point where different types of crimes become possible and lucrative, and it's something we constantly have to be aware of.

"One option is to build systems which more effectively track what information you've used to perform a particular task, and make sure people aren't using their authority to do things that they shouldn't be doing."

Next time you see a house you must own

From Springwise

Aiming to invigorate a stagnating housing market, Dutch ING Bank is helping potential buyers bid on houses that aren't yet for sale.

The bank's WoonWaarUWilt ("LiveWhereYouWant") initiative, which launched yesterday, lets clients make an offer on the house they'd love to own. ING is partnering with online real estate firm iBlue. After potential buyers fill in a form on www.woonwaaruwilt.nl, including their dream home's address and the initial offer they're willing to make, iBlue contacts them to discuss whether the offer is reasonable, and adjusts it if necessary. A mortgage consultant also determines whether the buyers would be able to finance the purchase.

iBlue then sends a preliminary offer to the property's current owners, explaining the situation and inquiring whether they'd consider selling. As with other 'Intention Economy' real estate ventures we've covered before (in Finland and elsewhere), the reasoning is that many homeowners aren't actively interested in selling, but can be persuaded to do so if the right offer comes along. By declaring their intention and backing it up with a lender’s financial approval, buyers can help eliminate the uncertainty associated with putting a house on the market. Meanwhile, the concept is a smart way for ING to get a head start on other banks when it comes to financing the transaction.

Making an offer is free for clients, but if the owners are interested in pursuing the offer, iBlue acts as the buyer's agent and charges a commission once the deal is done. The Intention Economy was first described by Doc Searls as follows: “The Intention Economy grows around buyers, not sellers. It leverages the simple fact that buyers are the first source of money, and that they come ready-made. You don't need advertising to make them.” Which offers exciting opportunities for businesses who are willing to shift from marketing to buyers, to facilitating their intentions.

Website: www.woonwaaruwilt.nl

Military using social networking, clever

From Roughtype

February 25, 2008

Call it Gruntbook. As part of its long-term effort to pioneer "network-centric warfare," the US military has rolled out a social networking system for soldiers in Iraq. Called the Tactical Ground Reporting System, or TIGR, the system was developed by DARPA, the same Defense Department agency that spearheaded the creation of the internet forty years ago. As described by David Talbot in an article in Technology Review, the system is built around detailed maps of the routes of army patrols. Patrol leaders can add photographs, videos, audio recordings and notes to the maps, building a shared intelligence database from the ground up:

By clicking on icons and lists, [patrol leaders] can see the locations of key buildings, like mosques, schools, and hospitals, and retrieve information such as location data on past attacks, geotagged photos of houses and other buildings (taken with cameras equipped with Global Positioning System technology), and photos of suspected insurgents and neighborhood leaders. They can even listen to civilian interviews and watch videos of past maneuvers. It is just the kind of information that soldiers need to learn about Iraq and its perils.

Talbot says that the system, an amalgam of fairly routine Web 2.0 technologies, is for some units "becoming the technological fulcrum of the counterinsurgency." Right now, soldiers can tap into the system only when they're at their bases, before or after a patrol. But the military is planning

to install it in Humvees and other military vehicles, allowing soldiers to download and act on new information in real time. Some of these vehicles already have some low-bandwidth connections, and [a spokesman] says DARPA is working on ways to make the software work using these thin pipes. In addition, the system may soon deliver new kinds of information. In the next two to three years, it could offer surveillance pictures from circling unmanned aerial vehicles (UAVs) or other sensor systems. It could store biometric information, so that a soldier could see if a civilian being interviewed was a known insurgent suspect.

One thing that Talbot doesn't mention in his otherwise excellent article is the fact that cheap, simple web-based systems are also easily available to insurgent and guerrilla forces. It's clear, for example, that insurgents are already using online mapping tools, like Google Earth, to target attacks and missiles, and other web-based social-networking and data-management tools are well-suited to the kind of real-time information sharing that armies can use to plan and coordinate their actions. Because they're cheap and easy to deploy - and in many cases freely available over the web - the tools of what might be called social warmaking represent a two-edged sword for large, modern armies. They can provide a powerful new way to share tactical information, but they also tend to level the battlefield.

MSFT to Yahoo - "You're Mine"

SEATTLE - Microsoft Corp. will authorize a proxy battle for Yahoo Inc. this week to convince the Web company's shareholders to agree on a takeover deal that the Yahoo board so far has rejected, the New York Times' DealBook blog said on Tuesday.

Quoting people briefed on the matter, the Times Web site said that Microsoft, which has been expected to raise its cash-and-stock bid originally worth $44.6 billion, would seek to nominate a slate of directors by March 13, if Yahoo's board did not enter talks.

A Microsoft spokesman said the company had always maintained it reserves the right to exercise all options but declined to comment specifically on the DealBook report.

A person familiar with the matter told Reuters a proxy fight would cost about $20 million to $30 million but was not aware of Microsoft making the decision to pursue the fight.

"Microsoft is doing the smart thing. It's giving both the carrot and the stick," said Morningstar analyst Toan Tran. "The carrot was the big premium on Yahoo stock and now the stick is the threat of a proxy fight."

Proxy fights waged by corporations to facilitate a hostile acquisition are rare and represent less than 5 percent of all proxy fights since 2001, according to data from research firm FactSet SharkWatch.

Chairman Bill Gates told Reuters on Monday that there was "nothing new" in the Yahoo takeover process. "We've sent our letter and we've reinforced that we consider that it's a very fair offer," he said.

The two companies are at a stand-off in Microsoft's unsolicited bid to acquire Yahoo. Microsoft has offered to buy Yahoo for $31 a share in cash and stock, a bid which Yahoo's board rejected, saying it undervalued the company.

Microsoft countered by saying that its offer was "full and fair," but did not say what it planned to do next.

The deal is now worth $41.9 billion due to the decline of value in Microsoft's stock.

The fees for paying lawyers and solicitation firms to wage a proxy fight are a fraction of what it would cost Microsoft to raise its offer. For every dollar the offer is increased, it would cost Microsoft an additional $1.4 billion.

If Microsoft decides to launch a proxy fight, it would nominate a slate of directors to take control of Yahoo's board and support the company's proposal. The nominees would be voted on at Yahoo's annual shareholder meeting in June.

A Yahoo-Microsoft proxy fight would be largest corporate proxy fight in the eight years FactSet SharkWatch has been tracking statistics on this, it said.

Microsoft shares rose on the Nasdaq. The stock is down 12 percent since the offer for Yahoo went public.

Shares of Yahoo dropped. The value of Microsoft's cash and stock offer currently stands at $29.18.

More tech m&a - Google buys Plaxo

Google will announce plans to acquire Plaxo, the company that stores online business contact details, by March 15th.

Wired recently reported a rumor to this effect, suggesting that Plaxo may accept an offer from Google in the $200 million range.

Corporate chess game - MSFT YAHOO

From Alley Insider - great site!

It's no secret Moishe likes deals and even more then deals he likes angles - here is a story covering the MSFT YHOO deal that talks about all the angles.

How Will MSFT Respond To YHOO's Counter?

Henry Blodget | February 9, 2008 5:54 PM

Yahoo's "rejection" of Microsoft's $31 bid isn't a rejection but a counter-offer of $40 a share. It remains to be seen whether the company will state this explicitly in its letter to Microsoft (unlikely), but it has already sent the message through theWall Street Journal. So the next question is...how will Microsoft respond?

The answer likely depends on how impatient Steve Ballmer is. Microsoft is in a strong position. No other bidders for Yahoo have emerged, and none are likely to. Yahoo has now indicated that it won't refuse to sell the company--thus forcing Microsoft to decide whether to pursue a hostile takeover--and many Yahoo shareholders have gone on record saying that they like the $31 deal (although they'd no doubt like a $40 one better).

Microsoft might therefore choose to take another page out of Rupert Murdoch's playbook by saying, politely, that it's not going to raise its offer and that it hopes to persuade Yahoo's shareholders to take it. And then, as Yahoo's stock drops back to the mid-20s and shareholders begin to grumble that Yahoo should have just accepted the bid, Microsoft will slowly ramp up its charm offensive.

After the Bancrofts rejected Murdoch's bid for Dow Jones, Murdoch quietly launched a full-court schmooze. Specifically, he met with the Bancrofts and reassured them that he wasn't going to destroy their baby. In Yahoo's case, there are no controlling shareholders to win over, but there are plenty of big ones. And Steve Ballmer has already met with the largest--Capital Research and Management--last week.

Cap Group Meeting in NY Post: A Message to Yahoo

The stated reason for the Ballmer-Cap Group meeting, as leaked to the New York Post, was Cap Group's desire to see if Ballmer was considering raising his Yahoo bid. Cap Group also owns 6% of Microsoft, and it was reportedly concerned that if Ballmer raised his bid, Cap Group would lose more on its Microsoft position than it made on its Yahoo one.

This may have been one reason for the Ballmer-Cap Group meeting, but there were undoubtedly others (Ballmer wanting to take Cap Group's temperature). News of the meeting was also obviously leaked for a reason (Microsoft and Capital Group are perfectly capable of keeping their mouths shut unless they have some ulterior motive). Our guess? Team Microsoft wanted to tell Team Yahoo that Yahoo's largest shareholder was already pressuring Steve Ballmer NOT to raise his bid.

Risks to Waiting? Some, But Slim

There are some risks to Microsoft's biding its time, of course. No other bidders have emerged, but given enough time, Yahoo might be able to put some kind of alternative deal together. Yahoo has already used the Journal and NYT to suggest that it has an alternative--outsourcing search to Google*--but this isn't really an alternative and Microsoft probably won't be fooled by it. One other issue that makes time a factor: Yahoo may deteriorate as an asset if a prolonged period of purgatory causes its best people to leave. Microsoft can't start locking up executives until it gets a commitment, and in the meantime, many executives may exit.

Microsoft may well be willing to raise its offer by a couple of dollars, especially, if, as the NYT reports, it was ready to offer $35 until Yahoo blew Q4. But if Microsoft's "final offer" is, say, $35, there's no reason to make an explicit counter-offer now. Instead, it can wait until the parties are at the table and throw in a concession to make Yahoo feel like it has won something. It's also worth noting that, based on Microsoft's current share price, the offer isn't $31 but $29. So Microsoft's last- minute concession could merely be to hike the offer back to the original bid.

Our current guess, therefore, is that Microsoft will respond to Yahoo's counter-offer by trying to win over Yahoo's big shareholders and biding its time.

The Industry Standard is back, some of you may remember them from internet bubble days - now with a prediction betting component to their website

The Industry Standard is back, was a great reporter and barometer on the internet boom in the late 1990s, some may remember issues jam packed with so many ads it could have been a womens fashion magazine. Anyway they are now back as an internet only magazine and they have added an online prediction betting component to their site where you can place wagers on events related to the tech world, for instance, will yahoo be bought by Microsoft? (fake money only, sorry Morty). check it out www.thestandard.com.

Google looking to cockblock Microsofts Hostile Take Over of Yahoo?

SAN FRANCISCO (Reuters) - Yahoo Inc would consider a business alliance with Google Inc as one way to rebuff a $44.6 billion takeover proposal by Microsoft, a source familiar with Yahoo's strategy said on Sunday.

Yahoo management is considering revisiting talks it held with Google several months ago on an alliance as an alternative to Microsoft's bid, which, at $31 a share, Yahoo management believes undervalues the company, the source said.

A second source close to Yahoo said it had received a procession of preliminary contacts by media, technology, telephone and financial companies. But the source said they were unaware whether any alternative bid was in the offing.

Few natural bidders exist beside Google that could engage in a bidding war, and Google would be unlikely to win approval from antitrust regulators, some Wall Street analysts said on Friday....

Read On:

First Yahoo, is AOL next?

Interesting take from Portfolio.com:

The news that Microsoft finally put a formal offer on the table for Yahoo places new emphasis on an oft-asked question: What will happen to AOL?

Speculation that Time Warner would spin off the troubled internet unit it merged with seven years ago has persisted since shortly after the deal closed. The $124 billion merger, reached at the very peak of the tech bubble, is widely regarded as one of the worst corporate combinations ever.

Time Warner could seek a buyer for all or part of AOL, or it could spin it out in an initial public offering. Today's news that Microsoft values Yahoo at a 60 percent premium to what the market values it is great news for Time Warner brass looking to unlock shareholder value.

David Katz, a Time Warner shareholder and chief investment officer at Matrix Asset Advisors, believes that AOL is worth 60 percent more today than it was yesterday. "It puts significantly different valuation metrics on the business," he says.

Only that's not how the market is viewing it. Time Warner shares surged more than 9 percent before the market opened, but they've since settled down to trade about 1 percent higher.

This makes an I.P.O. look like a challenge for AOL. Even though the cash-rich Microsoft values Yahoo at a premium, there's no guarantee that investors will do the same for AOL.

The company is in the midst of a turnaround as it shifts from a subscription-based business model to an advertising-based one. As a result, AOL's subscriber numbers have fallen off a cliff in recent quarters. But the advertising side has yet to pick up the slack: During the last quarterly earnings conference call in November, Time Warner said it expected advertising revenue growth to slow in the fourth quarter, and it believed its pageviews would be flat.

Instead, the company is focused on growing profits by slashing costs—not exactly the kind of show to take on the road. They could spin it as a separate entity for Time Warner shareholders, but the sales pitch might still be challenging.

An alternative scenario would be that another major media player takes Time Warner's problem off of its hands by acquiring it. Google took a $1 billion stake in AOL, in a deal that valued the company at $20 billion.

But that was two years ago. Yahoo's market value has been cut in half since then (as of yesterday's close), so it's hard to argue that AOL's has fared much better. At the time Google made the deal, AOL accounted for 10 percent of its advertising revenues. Now it accounts for half that.

Perhaps a better option for Jeff Bewkes, who took the helm at Time Warner last month and who has pledged to focus on shareholders, is to use Microsoft's lofty valuation of Yahoo to sell AOL for a deal.

It's hard to imagine Google swooping in and coughing up a 60 percent premium for a company in which it's already realized a loss. Another potential acquirer, News Corp., already paid that eye-popping premium for Dow Jones last year, so it might be tough to pull off two years in a row, even for Rupert Murdoch.

But Matrix Advisor's Katz does have a point. Valuation metrics in the online advertising industry are changing with today's news. If Microsoft is willing to buy Yahoo for a 60 percent premium, then AOL at a 20 or 30 percent premium looks like a steal.

But a premium to what? A clearer answer should emerge next week, when more is revealed about just how bad things are at AOL during Time Warner's fourth-quarter earnings call on Tuesday.

Microsoft to buy Yahoo - thats some s&$t!!!

Microsoft said Friday it offered to buy Internet media giant Yahoo for $44.6 billion in stock and cash, in an attempt to boost Microsoft's presence in the online services market.

Yahoo said its board plans on reviewing Microsoft's proposal in the context of its strategic plans and will "pursue the best course of action to maximize long-term value" for its shareholders.

Interesting piece on future web ad models from Micro Persuasion - Good Stuff

During a recent exchange with one of my colleagues he posed a thought-provoking question that I hadn't quite pondered. "What new digital business models might take hold over the next four to five years," he asked.

This question should be on every marketing and media executive's mind. As we've seen, the Net is so disruptive that big ideas can come out of nowhere and reinvent advertising overnight - even in a recessionary climate. Google, for example, commercialized pay-per-click ads just after the dot-com crash in 2000.

Here are three models that might evolve over the next few years.

Advertiser-Supported Advertising: Brands are increasingly launching their own content platforms. Some, like Budweiser's BudTV, go it alone. Others partner with online media properties. P&G, for example, embedded Capessa inside Yahoo Health.

In the future some of the more successful marketer-sponsored content sites will accept advertising. The retail space is especially ripe here. Barnes & Noble's media site, in theory, could partially support itself by allowing publishers who they already co-market with to buy ads. Under such a scenario, transparency is critical.

Advertiser-Subsidized Devices: Content is a commodity. The barriers to entry are obliterated. Still, this means we all need to make choices - human attention doesn't scale. So how do you get consumers to choose your stuff? Simple. Use incentives.

Marketers will partner with consumer electronic companies to co-brand white-label gadgets. For example, a Gap-branded set-top box could come with exclusive video podcast subscriptions. Upstart device manufacturers that are looking to enter markets with entrenched players will be the first to dabble with this approach.

Just-in-Time Advertising: Digital advertising creative and planning, like any marketing discipline, follows an arc. It's planned, placed, measured and eventually evaluated, tweaked or tossed. However, in the digital world, brands need to be more nimble.

With the help of new technology, marketers will rely on "just-in-time" campaigns that adapt to conditions. Basically, this takes the Dell manufacturing model and applies it to advertising. Ad creative will morph based on certain triggers. This will include sales/ERP data, blog chatter/consumer feedback, weather/external conditions and more.