Posts Tagged ‘Yahoo’

What does it cost to get a social network user to churn?

// March 14th, 2008 // 0 Comments // Social Media

Saucy social networking social networker Laurel Papworth has cleverly pointed out that AOL’s announced acquisition of Bebo may jeopardise Yahoo7′s big partnership deal with Bebo in Australia, since AOL Australia and Yahoo7 are competitors locally.

It’ll take a while for the deal to go through and international partnership deals to be rejigged, perhaps as much as a year or so for them to get around to figuring out what to do with a market as small as Australia, but it would be reasonable to expect that AOL Australia would want the Yahoo7/Bebo deal to be unwoven asap.

Laurel says the Bebo deal represents as much as half Yahoo7′s available ad inventory. Holy CPM, Batman! No idea if that’s correct, but that’s a big kick in the guts to lose that many eyeballs with only 6-12mths warning.

Before I pick my jaw up off the floor, there’s something else that leaves me agape. I haven’t reported on the deal yet because I’ve been waiting for the perspective to be able to see the deal from AOL’s valuation side of things. Surely it would make sense if I gave it time. But nope. No sense yet.

So, what’s with AOL offering $850 million, in cash? Is it all upfront? Or are there performance metrics Bebo needs to make to collect most of it? Did anyone tell AOL this business was started by a couple of people only three years ago? Did anyone point out that since most of AOL’s customers are in the US, they don’t want a Bebo account because they’re either wedded to Facebook or MySpace already?

Speaking of which, where are the studies looking at the cost of getting someone to churn from one social network to another? Has anyone looked at that yet? If I’ve been focused on my Facebook account for one, six or 12 months, what’s it going to cost a competitor to get me to switch to their product?

Personally, I’m all over Facebook, a bit active on MySpace, and on Bebo, I’m an “unengaged user” – i have an account there, but only to see how it works and browse through the kinds of users to be found there. So Facebook has me as an “engaged user” – using it several times a day, with almost all my real-world friends connected, and a big social history stored there. This animated blackboard toy is the only thing I really like about Bebo right now.

I don’t have any numbers, but intuitively, I think there are two kinds of social network user: engaged minority and non-engaged majority. The non-engaged majority will churn quite easily, but because their engagement is low, they’re not worth very much to you and will churn again to your next new competitor. The engaged user is, I’m guessing, extremely hard to dislodge, even if you give them the means to migrate all their content, social history and reputation to your new social network.

Yet the network effects that give a social network its value depend entirely on those highly-engaged users. In other words, if you succeed only in acquiring another network’s unengaged users, you’ve failed. They won’t stick because they don’t care about documenting their social history, and they won’t stick because you don’t have the engaged users you need to keep the unengaged connected.

That’s my guess, anyway: would love to see the numbers if you have them.

Can the snake swallow the elephant?

// February 2nd, 2008 // 0 Comments // strategy

Microsoft swallowing Yahoo! is either going to be fast and ugly, or slow and ineffective. And I’m being positive! Scott is even less hopeful.Good friend Goonker said it best. Referring to Steve Ballmer’s quote that he feels “putting these things (Microsoft and Yahoo!) together with a great integration should be quite an accelerant to progress.” Goonker says, “accelerant as in: flame out quickly?”I appreciate that Microsoft recognises it needs to take drastic action if it’s to get back into the game, interweb-wise.Today’s offer is a big premium on the market price on the previous day’s close and is sure to be higher than any price Microsoft may have taken to the table with Yahoo! in the past.According to Comscore, Google has 77% of the search market globally, with Yahoo! only 16% and MSN a piffling 3.7%. So an acquisition might garner Microsoft a total of less than 20% assuming no overlap. I don’t know the revenue share but I’m guessing it’s in-line with that. Ballmer suggests it could save the two companies $1B a year, but I’d bet it would be costing $100m a year over five years to smash the two vastly different companies together.Microsoft’s web technologies are as unrelated to Yahoo!’s as the Dark and Light sides of the Force. Before you even begin your Comp. Sci. degree you’ve already made a decision to join one camp or the other. There’s no love lost between the two sides, and very few developers jump from one camp to the other mid-career.Perl, PHP and Ruby developers carry PowerBooks with startup stickers on them, ride a bicycle and wear a tee and jeans. They are too skinny. They are more likely to have an iPod earbud in their ear than a phone. Microsoft developers wear chinos and a business shirt or collared tee, carry a black generic laptop identical to their coworkers. They are a little overweight, but only because they have a good wife at home who loves to cook. They have a full schedule of meetings and tasks always with them in their Exchange-connected phone, which they carry in a leather holster on their belt, with a blinking-blue Bluetooth headset always jammed in their ear. They think the Zune is “kinda cool” but like a quiet working environment (Frank, I love you anyway man).So the only way to borg Yahoo!s products and get them running an all-Microsoft backend would be across the vacant desks of the various Yahoo! development teams, vacant because you’d either fired them or they’d beaten you to it and taken a job elsewhere. The number of senior developers with prior experience migrating global-grade FreeBSD/Apache/Perl platforms to .NET would be approaching zero. I can’t see Flickr running on .NET, ever.Yet Microsoft can hardly continue recommending its web development products to the market while running its own consumer internet business on competing products.Working for a Bay Area startup at the moment, and it’s a tough market to be hiring developers, so a flood of ex-Yahoo! developers into the market would be good news for us and the other Bay Area startups. Most of Yahoo!’s huge developerbase is here in Sunnyvale and that big silo of developers will just fall over and empty out. That should bring hiring costs and avg.-time-to-hire way down.Good point from good friend Luke: if the deal goes through it tightens the market for startups hoping to be acquired, leaving only Microhoo and Google as the big startup-buyers in town. Could we see Cisco step forward as a new force in consumer web acquisitions? Or HP, Intel or Apple? Each owns some consumer-facing web platforms already, each has a hardware business that could benefit from consumer lock-in via a compelling web product.If I still held Yahoo! shares, I’d take the money. If I still held Microsoft shares, I wouldn’t be happy about a deal happening.Because, the way I see it, Microsoft absorbing Yahoo! is either going to be fast and ugly, or slow and ineffective. 

MSFT & YHOO: can the snake swallow the elephant?

// February 2nd, 2008 // 0 Comments // strategy

Microsoft swallowing Yahoo! is either going to be fast and ugly, or slow and ineffective.

Good friend Goonker said it best. Referring to Steve Ballmer’s quote that he feels “putting these things (Microsoft and Yahoo!) together with a great integration should be quite an accelerant to progress.” Goonker says, “accelerant as in: flame out quickly?”
I appreciate that Microsoft recognises it needs to take drastic action if it’s to get back into the game, interweb-wise. 
Today’s offer is a big premium on the market price on the previous day’s close and is sure to be higher than any price Microsoft may have taken to the table with Yahoo! in the past.
According to Comscore, Google has 77% of the search market globally, with Yahoo! only 16% and MSN a piffling 3.7%. So an acquisition might garner Microsoft a total of less than 20% assuming no overlap. I don’t know the revenue share but I’m guessing it’s in-line with that. Ballmer suggests it could save the two companies $1B a year, but I’d bet it would be costing $100m a year over five years to smash the two vastly different companies together.
Microsoft’s web technologies are as unrelated to Yahoo!’s as the Dark and Light sides of the Force. Before you even begin your Comp. Sci. degree you’ve already made a decision to join one camp or the other. There’s no love lost between the two sides, and very few developers jump from one camp to the other mid-career. 
Perl, PHP and Ruby developers carry PowerBooks with startup stickers on them, ride a bicycle and wear a tee and jeans. They are too skinny. They are more likely to have an iPod earbud in their ear than a phone.  Microsoft developers wear chinos and a business shirt or collared tee, carry a black generic laptop identical to their coworkers. They are a little overweight, but only because they have a good wife at home who loves to cook. They have a full schedule of meetings and tasks always with them in their Exchange-connected phone, which they carry in a leather holster on their belt, with a blinking-blue Bluetooth headset always jammed in their ear. They think the Zune is “kinda cool” but like a quiet working environment (Frank, I love you anyway man).
So the only way to borg Yahoo!s products and get them running an all-Microsoft backend would be across the vacant desks of the various Yahoo! development teams, vacant because you’d either fired them or they’d beaten you to it and taken a job elsewhere. The number of senior developers with prior experience migrating global-grade FreeBSD/Apache/Perl platforms to .NET would be approaching zero. I can’t see Flickr running on .NET, ever.
Yet Microsoft can hardly continue recommending its web development products to the market while running its own consumer internet business on competing products.
Working for a Bay Area startup at the moment, and it’s a tough market to be hiring developers, so a flood of ex-Yahoo! developers into the market would be good news for us and the other Bay Area startups. Most of Yahoo!’s huge developerbase is here in Sunnyvale and that big silo of developers will just fall over and empty out. That should bring hiring costs and avg.-time-to-hire way down.
Good point from good friend Luke: if the deal goes through it tightens the market for startups hoping to be acquired, leaving only Microhoo and Google as the big startup-buyers in town. Could we see Cisco step forward as a new force in consumer web acquisitions? Or HP, Intel or Apple? Each owns some consumer-facing web platforms already, each has a hardware business that could benefit from consumer lock-in via a compelling web product.
If I still held Yahoo! shares, I’d take the money. If I still held Microsoft shares, I wouldn’t be happy about a deal happening. 
Because, the way I see it, Microsoft absorbing Yahoo! is either going to be fast and ugly, or slow and ineffective.

Yahoo! still stays still for the camera

// August 9th, 2007 // 0 Comments // Social Media, strategy

This is the earliest digital photo I have on online storage. Uploaded 10 December 2000, it’s from a holiday to the NSW ski fields, looking down on some ducks that were skating around on the frozen lake in front of our hotel.

Anyway, for the last seven years it’s been hosted with Yahoo! Photos, where it did almost nothing except take up 200k of disk space. Nobody much came and viewed it, nobody emailed it to a friend, nobody happened across it while browsing popular tags, nobody made a new friend as a result of viewing it, and crucially, nobody ever printed it out on a mug or a mousemat.

Not because it was a bad photo necessarily (though it might be) but because Yahoo! just failed to grok the social networking 2.0 wave that it helped touch off by launching web 1.0 market leaders like Yahoo! Messageboards, Yahoo! Groups and Yahoo! Bookmarks. Rather than grok it, Yahoo! was swamped by the wake of social networking 2.0 as it powered on past, floundering in the backwash of early precursors like eBay and Geocities, then by Flickr, MySpace and Facebook.

What is MySpace but Geocities with easier page editing and friend-finding? What is Facebook but Yahoo! Groups with an open API and some ajax? And what is Flickr but Yahoo! Photos plus social networking?

So in a few weeks my little duckies will be migrated across to live with my other photos on Flickr, where for the first time they will get pageviews, comments, favourites and other forms of sticky social interaction. All my little duckies will be in a row. Yahoo! had to pay reportedly USD35M for this to happen, when it probably had 4-5 years of breathing space to see this coming and just build it themselves.

Flickr was acquired in 2005, and since then, have we seen further significant innovations from the Flickr team? No, not really. It’s taken them nigh-on two years to wait for management to summon up the courage to jam the two services together, fer chrissakes!

Should they add video uploading and sharing as a matter of urgency? You know they should. Will someone eat their lunch if they don’t? Of course they will. Do they already know that, and are they constrained from doing it due to organisational lethargy and lack of dev resources?

Well, it wouldn’t be the first time…

Yahoo! still stays still for the camera

// August 9th, 2007 // 0 Comments // Social Media, strategy

This is the earliest digital photo I have on online storage. Uploaded 10 December 2000, it’s from a holiday to the NSW ski fields, looking down on some ducks that were skating around on the frozen lake in front of our hotel.

Anyway, for the last seven years it’s been hosted with Yahoo! Photos, where it did almost nothing except take up 200k of disk space. Nobody much came and viewed it, nobody emailed it to a friend, nobody happened across it while browsing popular tags, nobody made a new friend as a result of viewing it, and crucially, nobody ever printed it out on a mug or a mousemat.

Not because it was a bad photo necessarily (though it might be) but because Yahoo! just failed to grok the social networking 2.0 wave that it helped touch off by launching web 1.0 market leaders like Yahoo! Messageboards, Yahoo! Groups and Yahoo! Bookmarks. Rather than grok it, Yahoo! was swamped by the wake of social networking 2.0 as it powered on past, floundering in the backwash of early precursors like eBay and Geocities, then by Flickr, MySpace and Facebook.

What is MySpace but Geocities with easier page editing and friend-finding? What is Facebook but Yahoo! Groups with an open API and some ajax? And what is Flickr but Yahoo! Photos plus social networking?

So in a few weeks my little duckies will be migrated across to live with my other photos on Flickr, where for the first time they will get pageviews, comments, favourites and other forms of sticky social interaction. All my little duckies will be in a row. Yahoo! had to pay reportedly USD35M for this to happen, when it probably had 4-5 years of breathing space to see this coming and just build it themselves.

Flickr was acquired in 2005, and since then, have we seen further significant innovations from the Flickr team? No, not really. It’s taken them nigh-on two years to wait for management to summon up the courage to jam the two services together, fer chrissakes!

Should they add video uploading and sharing as a matter of urgency? You know they should. Will someone eat their lunch if they don’t? Of course they will. Do they already know that, and are they constrained from doing it due to organisational lethargy and lack of dev resources?

Well, it wouldn’t be the first time…