Friday, June 29, 2012

Happy 5th birthday iPhone

On the occasion of the iPhone's 5th birthday, I thought it would be interesting to reread the Apple press release introducing the device. Some reviewers, and most competitors, highlighted that there was really nothing new there and, the press release reinforced it by noting it's a "widescreen iPod, an Internet communications device, and a revolutionary phone". Of course, the revolution was combining these elements behind a UI which redefined the way people interacted with their phones. Point and tap replacing hunt and click captured the phone business, undermined the laptop world, and has stalled the desktop market.

Almost as a throwaway, it had a camera too.

Tuesday, June 26, 2012

Time and dollars

The Atlantic published a great graph (similar to Mary Meeker's) detailing which medium people spend their time, and the dollars spent per medium. With all its troubles over the past decade, print still commands a nearly 3.5:1 surplus of dollars to time and emerging mobile has a dollar deficit of 1:10. TV and the Internet have close ratios.

The graph measures time, but not effectiveness. I suspect that with tools such as re-targeting and use of cookies, the internet applications outperform TV. Mobile is behind the web in deploying personalized tool sets, but probably leads in innovation, especially when location data is factored into the equation.

Screen Shot 2012-05-30 at 6.26.25 PM.png

Monday, June 18, 2012

AGC Partners' Capital Markets report

AGC just published its May Capital markets report which has some terrific data on the state of M&A in the technology segment of the market. Here's the highlights, and I would suggest going to the report to cull data for your specific interests:

  • Q2 2012 saw 85 M&A transactions. Flat for the past 3 quarters and a drop from a busy Q3 '11, which saw 120 deals
  • Software & IT Services was the busiest area (33% of deals), followed by Digital Media & Internet  (17%), and communications (16%)
  • Google (26), Facebook (16), EMC (16) and Ebay (14) were the most active buyers in the last 18 months
  • Over the last 4 years, the most active buyers were Google (60), IBM (48), EMC (44) and Oracle (39)
  • The median premium to the 30 day valuation, prior to announcement, was 29%
  • Enterprise value/Last 12 month revenue was 3.6x (caution, this covers all segments and growth trajectories, so is best used in aggregate for gee whiz purposes)
  • 39 Technology related IPO's were priced in the trailing 12 months, though new filings seem to indicate a slowdown in new offerings 

Thursday, June 7, 2012

User value

I've been thinking about the Facebook broken IPO and the ensuing ripples around the valuations and value of many web and mobile based companies. For now, let's leave the topic of valuation for another time as, ultimately, I believe that valuation is a derivative of customer value, and this is what's on my mind.

Three weeks ago, one of my investments (still in stealth mode) opened a Twitter account and the Community Manager began tweeting relevant subject matter, gaining followers, and following others. At the end of two weeks we had 1,000 followers, were following 2,009 people, and found ourselves suspended from Twitter for aggressive following behavior. Twitter rationally put rules into effect which limits spam, churn and other activities which may hinder the community's trust. By growing so fast, in large part through aggressive following, we violated the rules and were put in a 10 day penalty box.

The team felt an acute loss from the suspension. We lost the ability to communicate with a growing group of adherents, lost their feedback, went dark on them and were at a loss to find a suitable replacement. Though only live on this free service for a matter of weeks, it became the fabric for our community outreach.

They say that you only appreciate the value of things/people when you lose them. Twitter has serious value.

Wednesday, June 6, 2012

Shifting sands

A few months ago I posted about an investment round in Tracx and its participation in what we expect to be a fast growing market; social media management. In the 5 months since we closed the round, the company has performed quite well. However, quite recently there has been a huge upheaval in the surrounding competitive environment. Oracle acquired Collective Intellect, in response to SalesForce acquiring Radian6 and Buddy Media, which, of course is an area which SAP is dabbling in via its endorsement of Netbase.

Odds are that at least one of these transactions will not proffer the returns which the acquirer hopes to garner. Nevertheless, no doubt that the product, customer value, and distribution dynamics within this early stage market are in disarray. As an investor, I am accustomed to early stage companies making a 'left' turn as they discover the real market opportunity is a 90 degrees adjustment from where they were heading. It's not too unsettling to see the value proposition, which customers need to evaluate suddenly change too.

This is why I think it's essential to have faith in the team you back. Markets, competitors, and your target customers change oh so quickly. The team is my port in the storm.

Stay tuned.