en-us http://www.keithwatanabe.net/index.php Keith Watanabe's Website http://www.keithwatanabe.net/blogs/2007/7/28/893808c45ca3dd8a553f84922367bda1.html
The problem with SNS is that it's easy to do and a necessity. So everyone tries to do their own. However, there is very little added value that I've seen per SNS. Most involve the obvious profile page, add friends/groups pages, maybe events, some privacy, etc. which end making these things function more like a glorified version of a groupware piece of software. However, these SNS only attract scum or abusers, just like email, which end up being a massive turn off.

The main thing I've come to realize is that the architecture for SNS needs to change. First, most SNS sites need to disappear. The problem is the decentralized ID system. Second, the redundant functionality between SNS gives little reason for people to continuously sign up. Of course, sites like Open ID attempt to mitigate part of this problem, but leaving one's ID to a centralized system is always a security (although it is an excellent business model if you consider the implications).

What people want to consider in an SNS is being able to aggregate information from various sources. You really want something that is able to pull information from each SNS for a specific person into one centralized area. This includes searches. Consider the benefit of having something like a google search geared exclusively (and accurately) through locating people's SNS identities. This is a key feature I think really needed, where open APIs allow aggregating data to allow people to find their friends if they exist on the net. In other words, first generating a data mining tool to pool this data, then being able to search on various parameters.

Right now, the sad truth about SNS is that they are little more than Geocities 2.0. Take a look at the horrible layouts and crap that people put on their pages. What people are saying through SNS is "here I am and here are the people who know me." There is very little add value to this, especially considering the decentralized nature of these sites. Even the ones that do aggregate these identities, big deal. All they are in reality is just a database with a table that has a list of SNS and links to people's identities. Again, no brainer sites.

Then you have people creating topics of SNS. An SNS for Barbie? Or shopping? Come on. Just create a group and have people link into it.

Either way, I hope Murdoch realizes he overpaid for Geocities 2.0. Hopefully, people aren't going to make the same mistakes with Friendster, mixi, Facebook, hi5, etc.
]]> Sat, 28 Jul 2007 22:42:49 -0600 http://www.keithwatanabe.net/blogs/2007/7/28/893808c45ca3dd8a553f84922367bda1.html http://www.keithwatanabe.net/blogs/2007/10/23/8ee4819787a54152788eb948b74654c3.html
Even if Yahoo shut down 360, they need to stay away from companies like Facebook. Certainly, as Facebook slowly overtakes Myspace, what is clear to me is that these services are transient. Once a large company takes over, they practically cease innovation and focus more on integrating their services as opposed to running as an independent service. This is a huge strategic mistake in my opinion. Of course, specific integration tasks such as sharing infrastructure and key information are important. However, these companies shouldn't focus on those elements alone as it seems to me. Instead, these companies need to push their services as if they ran the company independently and continue to push the brand of their service.

Yahoo has been terrible in this regard. I've seen them attempt to brand some of their acquired services, but many still don't even make it to the front page. How can companies attempt to utilize the Yahoo brand name, unless Yahoo is able to market their acquired services properly?

Anyway, this said I hope Yahoo continues to go through their portfolio and slice out their redundant services. Also, I hope they utilize their information rather than generate more subsites that provide little add value functionality. And I hope that they stop acquiring for the sake of just investor appeasement. Focus internally and make us something better, stop being redundant.]]> Tue, 23 Oct 2007 20:26:02 -0600 http://www.keithwatanabe.net/blogs/2007/10/23/8ee4819787a54152788eb948b74654c3.html http://www.keithwatanabe.net/blogs/2008/2/6/1a1d65403b0f49c4df6050b66a9b9810.html Facebook's finances as indicated by TechCrunch. I'm certain many readers found the note to be of shock. They key point for me was that Facebook operates at a negative value. Not just a negative but roughly $150 million in losses.
How can you go from being valued at $15.7 billion to -$150 million?????????

Some people talk about projections when it comes to these types of numbers. Currently, Facebook sees growth at over 100% (I forget the exact number). That's great because it seems that people are simply migrating from places like Myspace to Facebook (all my friends are doing this). Right now, they have a user base of over 63,000,000 registered users according to Wikipedia. According to the TechCrunch article, they are generating $300 million in revenue for 2007. These numbers are fairly impressive for such a young company run by a 23 year old college drop out.

Still, I have to ask how do you achieve the value of $15.7 billion?

I'm not a big fan of projected growth. We've seen the dot com ludicrous valuations from people like Henry Blodget. Heck, I've coined my own term the other day calling these numbers "Blodget Values." Remember the whole Amazon at $400/share? Was that simply the wrong company and Blodget talking about Google in 2006-2007? (Now, he's calling Google at $2000/share). Again, where do these numbers come from?

Is it market cap? If market cap were to determine a company's intrinsic value, then we'd all be paper millionaires. I mean, isn't Facebook just another form of the portal site? That's what Myspace became, except that News Corp/Murdoch focused on media content with a target demographic of 13-35. But going by that philosophy doesn't Facebook belong in the same market cap as Yahoo? I mean, I must be missing something when it comes to these numbers.

For myself, I'm someone who looks at the fundamentals of a company. Reading a book like the Intelligent Investor helps you realize where to look for some of these numbers. In my case, I look at things that go beyond simple market caps. I look at things like overall revenue, operations cost, debt, and market behavior. When I see things like negative operations cost, it tells me that a company is desperate for money and needs to go to other sources like VC (i.e. Microsoft). I've been through this before and it's made me incredibly cynical, causing me to look at theoretical valuations as inside political hype or certain people with agendas.

I like looking at the bottom line. For instance, Google is a very smart company. While their stock price is outrageous, one key fact is that they have tons of money in their piggy bank. This is important because when it rains, they can grab some of that money and deploy it strategically.

According to this report, Facebook has no money. The VC money that companies like Microsoft, etc. are giving them are the only factors driving the company's ability to grow. Perhaps, one day Facebook can be worth $15.7 billion, but many agitated investors have to go beyond projections and find out when they're going to get their money. That's the bottom line that I look at.

The thing is that I don't believe a lot in SNS business models. It's a massive fad. I do understand why it's important in the world of online advertisement. But I completely disagree that these companies can make significant money purely off these models, especially with so many duplicate/me-too companies around.]]> Wed, 06 Feb 2008 17:11:46 -0700 http://www.keithwatanabe.net/blogs/2008/2/6/1a1d65403b0f49c4df6050b66a9b9810.html