Facebook, MySpace investors must remember Yahoo in 2000

In 2000, the assumption was that Yahoo could capture up to 20% of off line ad dollars within 10 years. Remember Yahoo was valued at around $90 billion at the time? Guess what folks - nothing is completely defensible and least not when it comes to internet destination sites or electronic ad networks. There is no border, there is very little cost to build, and absolutely no end to the upper limit of the supply of internet "space" for content, commerce and advertisements. The only real border or limit that matters is the population of the people consuming the advertising and the return, or lack thereof, on those ad dollars.

Main stream media reporters will keep cheer leading around the idea that Facebook is worth $15 billion or Myspace is worth $65 billion. Entrepreneurs and VCs will continue to conclude correctly that 1) this (media and advertising evolution) is a big and rapidly changing market and 2) the cost of the option* is pretty cheap. When the data comes out in 2009 that 8 out of 10 startup media or ad companies launched between 2006 and 2008 failed, don't be surprised at main stream media when they run stories about how carried away everyone was. Sure, they will run a piece on someone who was publishing gloom and doom too. What they want publish is an analysis of their own collective work showing the lack of critical and independent thinking.

*The option here is that you can build a media company or ad network that has a shot at any meaningful piece of the growing pie.

Tale of Two Residential Real Estate Markets

"...it was a tale of two cities" wrote Charles Dickens about Paris prior to the revolution. Today in the United States, it is a tale of two very different residential real estate worlds and the wide disparity in supply and demand should not surprise any one. It is all about jobs (and job quality) and supply. At one end of the spectrum is a market with negative job growth and plenty of buildable land (pockets of Michigan). On the other end you have markets with growth in both jobs and wages and no meaningful increase in housing supply (Manhattan, San Francisco, Atherton, Ca). In between you have things like Fort Meyers (no jobs, but it is nice a couple months a year), and markets like Las Vegas and Phoenix. In these markets you have momentum on job growth but lots of space and little restriction on building.

Main stream media will continue to sell dramatic headlines to us. The reality is that any one who is awake can not be surprised at the numbers in their local markets. At the same time we have 400 properties auctioned in Orlando, we have record prices in premium neighborhoods in San Francisco and New York City.

Prosper company income data weak

This guy in Austin is doing some good work.
$100K in revenue for the month of September 2007?
http://prosperousland.blogspot.com/2007/10/prospers-september-revenue.html

How many employees here?
Let's think about the growth assumptions required just to get over the liquidation preference in this deal (Prosper Marketplace, Inc.) ...I think it is $39.5 million at this point.
http://www.rateladder.com/2007/06/20/prospers-20mm-series-c-venture-capital-details-press-release/

Good luck to the prosper stock option holders!
Will they borrow on prosper to finance their option exercises?
Would artificially created some volume but not sure any one has the faith yet to go after than long term gain treatment.

Dotcom bubble back. Yahoo throwing money away?

Good article by the International Herald Tribune. Focus is on Yahoo's (YHOO) acquisition of Right Media and fact that Yahoo initially invested at a $200 million valuation and then 6 months later paid $850 million for entire company. Are you valuation services companies paying attention to this? That is either quite a control premium, a really discounted prior deal, or as the article suggests, another sign that these public companies - Yahoo, Google, eBay have currencies (their stock) that needs to be used to go out and try to buy growth. As we saw recently with eBay/Skype the deals are probably too generous and there probably needs to be more carrot with management as part of the deal.

The Right Media founder offers a surprisingly candid quote:
"I have to say I giggled," O'Kelley, 30, said of Yahoo's acquisition, which earned him $25 million. "There is no way we quadrupled the value of the company in six months."

http://www.iht.com/articles/2007/10/16/business/bubble.php

Lookout email search relaunched via Google Desktop

Sadly, this is not a news headline - this is a fantasy of mine. Those who used Lookout email search remember how slick and intuitive it was and, like me, have an extremely hard time living without it since Microsoft bought it and scraped it. It is not entirely surprising that our (mine and presumably yours) friends at Microsoft would "buy and bury", they are pretty good at that. What is terribly surprising is that our friends at Google have not improved Google Desktop in any meaningful way. Searching for an email from sergy@gmail.com? Okay, you would think that using a syntax such as from:sergy or simply from sergy would yield results of emails from people with sergy in the email address wouldn't you? Not what you get. The yield (time benefit to society) on coding this is so great it is crazy. Emails are just one example. Mamma.com is owned by Copernic has a good set of display options for desktop search results like grouping by folder, time, etc. I have found the software to be a bit unstable and disruptive to my processing power - so much so that I exit the program each time I use it. This would be a fatal flaw if Google Desktop could match its features. My hope is that someone at Google reads this and gets inspired or leaves a comment that help is on its way. I do not expect the Lookout guys to come back to the market. Footnote: I tried Neo - it was not as good as Lookout.

Silicon Valley Leadership Group Pres Carl Guardino aka "spaceacer"

Who is Carl Guardino? Well, this is how he described himself on his organization's website (warning, it goes on and on):

Carl Guardino, one of Silicon Valley’s most distinguished business and community leaders, is the President and CEO of the Silicon Valley Leadership Group, a public policy trade association that represents more than 200 of Silicon Valley’s most respected companies.

In February 2007, Governor Arnold Schwarzenegger appointed Guardino to a four-year term on the California Transportation Commission. He also serves on numerous other boards and is actively involved in a wide range of community organizations and projects. In 2000, the San Jose Mercury News named Guardino one of the “Five Most Powerful” people in Silicon Valley in a once-per-decade study.

Guardino has been the chief executive of the Leadership Group since 1997. He previously served as a vice president with the organization between 1991 and 1995. In between, he held an executive position in governmental affairs with Hewlett Packard. Earlier, Guardino spent six years on the staff of Central Valley Assemblyman Rusty Areias, the last three as his chief assistant.

Known throughout the region as a consensus builder, Guardino has championed a number of important issues, especially in the areas of transportation and housing.

His transportation leadership includes successful management of ballot Measures A & B in 1996 that funded 19 key road and rail improvements with $1.4 billion; and co-management of a 2000 traffic relief initiative that will generate some $5.5 billion in local funds to bring BART to Santa Clara County, improve CalTrain and other transit improvements. The American Public Transit Association recently honored him as the national “Businessman of the Year,” only the second person to ever receive the award.

As a housing advocate, he co-created the Housing Trust Fund, which has helped 6,200 families afford homes in high-cost Silicon Valley by raising more than $32 million in voluntary contributions; co-managed Prop. 46, the statewide Housing Bond, in 2002, generating $2.1 billion to provide 137,000 affordable housing opportunities for California families; and co-chaired Prop. 1-C, the November 2006 statewide Housing Bond, which generated an additional $2.85 billion for affordable homes.

Guardino is the chair of City Year San Jose Silicon Valley and the founder and race director of the annual Thanksgiving Day “Applied Materials Silicon Valley Turkey Trot.” In addition, he serves on the boards for Girls for a Change, the San Jose Metropolitan YMCA, the Second Harvest Food Bank, the Housing Trust of Santa Clara County, the Leukemia & Lymphoma Society and the State Superintendent of Public Instruction’s “P-16 Council” to improve California’s education system.

Guardino was born and raised in San Jose and received his Bachelor of Arts degree in political science from San Jose State University, where he is a Distinguished Alumnus. The California Junior Chamber of Commerce named him one of the “Five Outstanding Young Californians,” and he is a member of Junior Achievement’s “Silicon Valley Business Hall of Fame,” and a recipient of the “Lifetime Achievement Award” from City Year.

Carl is married to Leslee Guardino. In their spare time, they compete in marathons and Ironman-distance triathlons. They have a daughter, Jessica, who has wrapped Carl around her little finger.

Okay, what I thought you might like is that here you have this important corporate/public interest representative that is at a minimum odd and at worst pretty offensive and insensitive comments for a politician. I read a comment he left on a Chronicle article and when I clicked on his username, all his other comments showed up. Read them all and you get his angle. He left his name and title at the bottom of one of his comments as you can see here and that is how I found out the identity of this Killelea like commenter called "spaceacer". The quote that struck me as unusual for someone who is supposed to be concerned about housing in the bay area:

"...I will be seeing some of you in the soup kitchen... sorry to see you lost your home..."

He goes on to make comments aimed at working professionals in the bay area, suggesting that Silicon Valley employers are anxious to cut labor costs. He types: "Why pay someone 100K if you can cheaper skilled workers with 40% decline in Texas or Washington." What's up with that Carl Guardino? Does not exactly what I would expect from one of Silicon Valley's "most distinguished business and community leaders".

Bay area housing bubble bloggers still frustrated

Folks who understand just a little about economics and can read through the "news" could see a few things in developing in residential real estate in this decade:
1. Individuals investors looking for investment alternatives outside of stocks and bonds.
2. A very liquid mortgage market and an appraisal system that has been, let's just say, imperfect.
3. Homebuilders with capital and available land (or space) in certain markets like Las Vegas, Phoenix, Florida, San Diego, etc.
4. Employment and wage data, while noisy quarter to quarter and carrying significant variances from region to region, that has been overall quite stable and relatively strong. Certainly in the major job center markets, labor has been tight.
5. Relative to jobs and wages, there has not been an oversupply of residential real estate (whether for rent or for sale) in major employment centers like San Francisco, Silicon Valley, and Manhattan.

The most famed bloggers focused on housing, are hosted and "led" by Mr. Patrick Killelea who, according to an article by the San Francisco Chronical reportedly rents a 3 bedroom in Menlo Park. The article says that Killelea works as a contractor and takes a substantial time away from work which, all else equal, must make it difficult for Mr. Killelea to obtain the same type of mortgage financing available to comparably skilled workers who collect a W2. Mr. Killelea and the other bubble watchers do not view consuming housing the same as they view consuming a car or a cup of coffee, which is fair enough. Housing is a big investment for most people and it is absolutely fine to attempt to quantify and separate consumption features from opportunity cost features for housing.

But what is wrong with the bubble bloggers? With all this blood in the streets, why are they still blogging? Reportedly, Killelea spends most of his time on his blog and it generates about $1,000 per month in advertising - this seems like a relatively low return on investment if we are to believe that the man earns $100 per hour. Maybe these bloggers are still blogging because they live in the bay area. By their arguments, these bloggers imply a personal conflict between not being able to afford the properties that they really aspire to live in and the simultaneous refusal to live in a community where houses are so cheap that it costs less to own them then to rent.