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Archive for October, 2009


Help Me Abandon Alley Insider

Friday, October 23rd, 2009

I have had it with the signal to noise ratio of Alley Insider.  When I skim their RSS feed, they do three things wrong:

  1. I am uninterested in most of the stuff they talk about
  2. Some portion of the titles that interest me are bald-faced lies
  3. I have to click through every time because they don’t publish the complete article text

On the other hand, they do a few things well:

  1. They cover most of the news I need.  I assume that if they talked about less stuff, they might miss things I need.
  2. They publish AOL news like it is going out of style.

Regardless, I am ready to try something new.  Is there a better web site?  Should I simply use an aggregator like TechMeme?  Should I get all my news from Twitter?  (If so, I am following the wrong people)  Help me pick:

What is the best source for news about the Internet (particularly online advertising) industry?

View Results

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Journalism Is Not Bad Because It Is Occasionally Wrong

Thursday, October 22nd, 2009


Henry Blodget was complaining on Alley Insider about how people that liked old journalism cry too much.

As evidence that things are fine, he says:

“Journalism” is alive and well, as evidenced by the still-robust health of companies like Bloomberg and Reuters, the survival of the New York Times, Wall Street Journal, and other great news organizations, the hyper-growth of online news and commentary sites, and the rise of social media.”

The Wall Street Journal might investigate the next Watergate, assuming Murdoch was OK with that, but to imply that the NYT is proof that journalism is safe is crazy.

The New York Times is falling apart!  Bloomberg and Reuters do very little long term investigative journalism and, as we discussed, the others do none whatsoever.

He further expounds:

For every horror story about how awful and un-accountable this new world is going to be, moreover, there are dozens of examples of uncovered sleaze, unfairness, and hypocrisy that never would have been reported in the old mainstream media world.

Doesn’t dejustify real reporting.  Just saying!

Silicon Alley Insider is not news, it is US Weekly for the Web

Wednesday, October 21st, 2009
Nicholas Carlson

Nicholas Carlson

And its RSS feeds suck.  And they do it on purpose.

It is a shame that no one else so religiously covers the bureaucratic bullshit of AOL, because I hate people that waste my time and SAI loves to do just that.  Let us look at a recent article.

Here is what was in my RSS feed this AM:

Zynga Discloses Revenues!

from Alley Insider by Nicholas Carlson

Ever since the spring, reports have pegged profitable social games maker Zynga with all sorts of 2009 revenues — from $100 million to $200 million.

This morning, the startup finally disclosed some revenue figures itself.

Read the rest of this story »

I hate that they make me click-through when I am typically in a hurry chugging news, but I suppose they deserve a little ad revenue, so I do.  Then, what to my eyes should appear, but here is the rest of the article:

Sort of.

Zynga announced today that, selling special virtual goods in its FarmVille game

over the past three weeks, it raised $427,000 for children in Haiti.


So OK, Zynga hasn’t helped us figure out whether their revenues are $100 million, $150 million, or $200 million with this announcement.

This is not journalism, it is a transparent attempt to generate page views.

What is up, Nicholas Carlson?  Is the payment scheme by post so you make up shit like this?  Or is it pay by page view like when you were at Valleywag, so you come up with sensationalistic titles and RSS feeds to drive views?

I think generating page views like this is going to turn around and bite them in the butt.  One of the things that Tim Armstrong has done right at AOL is stop trying to “amass page views” and instead, focus on the quality of those page views.  Lots of low RPM views, like the incessant slide shows, are unlikely to take SAI where they want to go.

Vibram Five Fingers and Morton’s Toe

Tuesday, October 20th, 2009

I thought I would be the first to blog on this, but Google already has 796 results for this term.  Le’sigh.vibram-five-fingers

I have Morton’s Toe – the name for a foot where the second toe is longer than the first.  One could say I suffer, but apparently it was an idealized form in Greek sculpture and my mom (fellow sufferer) always told me that it was a sign of perfection.  Not much suffering there.  Apparently this is a condition common to 10% to 30% of the population, depending on who you believe.

Anyway, Vibram Five Fingers don’t have long second toe’s!  The result is a sub-optimal fit.

Apparently, Vibram’s CEO also suffers from Morton’s Toe, yet his advice to fellow perfect people is to simply buy a bigger size.  Allow me to offer my beta-testing services should they make the wise decision to roll out perfect shoes for their perfect customers.

Cogmap Product Adoption

Monday, October 19th, 2009

It has been a little while since we had a nice Cogmap blog post, so without further ado:

Cogmap new charts since inception:


You can see the traditional initial PR burst and then how adoption has grown over time.  In May, 2007, we added a lot of maps internally, so that is an artificial spike.  March 2008 saw the introduction of private maps.   Adoption has fairly consistently grown since then.

What does it all mean?  Comment away.

Would You Investigate The Watergate Cover-up?

Thursday, October 15th, 2009

Not to belabor the obvious, but newspapers appear to be hopelessly doomed.  Here is their revenue:

Source: Neiman Labs (

Here is my theory for what is going on:

Now there are all of these meta-newspapers such as Drudge, HuffPo, Delicious, Yahoo Home Page, Google Finance, etc.  They do not generally product a lot of their own content, but they point to content.  If a newspaper writes a good article, back in the day you would buy that paper and subsidize all the other content.  Furthermore, it made every advertiser in the newspaper happy, not just the advertisers adjacent to that one good article.  Now, people hop in and hop out, using their meta-newspaper to find good content on many sites, ignore the bad content, and deal with information overload.  What is sad is that not every article resonates with large audiences – and it is hard to know in advance if there is something there.  So generating content is a risky business.  Much like Hollywood, you have to weigh the odds that the investment pays off every time you invest upfront in value creation.  Journalism as a hits business.  Will this individual article generate enough revenue to cover its costs?  That is a lot harder.

It goes without saying that people read meta-newspapers now and not real news web sites.  HuffPo just blew past the Washington Post:

So now that no one reads real newspaper web sites, using meta-sites to get pointed to moments of goodness by real reporters, what happens?

Watergate began June 17, 1972 with the break-in.  Watergate ended August 24, 1974 with Richard Nixon’s resignation.  In between are two years of steady investigation by Woodward and Bernstein that resulted in a resignation by a sitting President.  If you were the editor of an online magazine, would you have told your two best reporters to go off into a hole for months and months and months working on a story that may or may not have a positive outcome?  Maybe they will find out they were barking up the wrong tree.  Maybe they will find out that there isn’t much there.  Maybe it turns out that the President isn’t involved in this break-in and it is an interesting, albeit not too interesting story.  This is a really, really risky story.  Would you write a $100k check to maybe get a great story?  $200k?  $500k?

What will become of real investigative journalism?  Who will keep politicians honest if, in a world of TMZ and Perez Hilton, doing real investigative work does not pay the bills.

I fear for the safety of our global community in a world where investigative journalism does not have a viable economic model.  Who will keep politicians honest?  Remember, the direct result of Watergate was not just Nixon’s resignation: It was FOIA, the Freedom of Information Act.  It was the Ethics in Government Act.  Politicians didn’t publish their tax returns before.    All of this new visibility is because journalists proved it was necessary to keep us safe from our politician caretakers.  What does the future hold?

Performance Enhancing Drugs in the Workplace

Tuesday, October 13th, 2009

adderallThey are coming!

In sports, people take performance enhancing drugs for one reason:  Professional sports are extremely competitive.  The difference between a superstar and an average professional athlete is a razor thin margin.  The push to be your absolute best is intense, no less so when the compensation differences between superstars and average players (all of whom were huge superstars in college and high school) is orders of magnitude.

This is an area where people are under intense scrutiny to not use performance enhancing drugs.  In many respects, being caught taking them is comparable to a death sentence, yet the incentive to perform better is so enormous, people take that chance.

In the workplace, without such oversight, if there were drugs you could take that make you a superstar, what would you do?

I suspect people will dope like crazy!

I have been reading many articles lately about the Adderall trend.  I now believe the following facts to be true:

  • There are drugs that you could take today that would improve your performance in the workplace.
  • These drugs are frequently taken by college students today and have been taken for years by a younger generation, illustrating that the long term side effects of such drug use are relatively low.
  • The generation entering the workplace today is taking these drugs and performing better as a result.

Given the evidence we have seen of how professional poker players and college students have reaped the benefits of Adderall use, I suspect that today many Wall Street employees probably take Adderall.  It is a competitive industry and compensation is tightly linked to performance.

If your peers were suddenly working harder and being more productive than you, would you feel pressure to enhance your performance artificially?  What if the people working for you were suddenly working harder and more productive than you.  Would the person performing poorest be less likely to be promoted?  Would you promote the least productive person on your team?  Who would you promote if everyone else was using Adderall?  The possibility of not just upward mobility halting, but continued employment may be threatened for non-enhancers.

This is you entering the world of professional athletes.  Everyone is doping to get ahead, if you do not, you risk not getting ahead.  Is your company suggesting people don’t?  Nope, they are in a battle to the death with competitors and the enhanced performance of their employees is critical to victory.  Your company wants you to do it, your co-workers are doing it, and not doing it makes you a worse employee.

Is this bad?  I don’t know, but it is certainly seductive.  If I told you that you could take a pill when you got to work that would give you unparalleled ability to focus for the next 12 hours, would you refuse?  Who doesn’t like to flow?  Be in the zone.

The American Psychological Association believes that achieving “Flow”, the state of intense focus, is critical to a person happiness.  Hey, I believe it.  When I am flowing, it is awesome.  Flowing is the most awesome thing around.  Now you can self-medicate to instantly flow.  For me, it typically requires 4-5 hours of uninterrupted time for me to be able to achieve flow for the last 2 hours.  And that only works 25% of the time.

I work with coders.  Coders are the kind of people that would probably benefit disproportionately from the ability to decide to instantly flow for a few hours.  What would you be willing to do to flow on command?

Are you tempted?  Comment.

Risk Adjustment, Good Jobs, Big Markets, and Big Exits

Wednesday, October 7th, 2009

twitterEveryone I know is tweeting about Dave Troy’s new post: What your “Good Job” is costing you. (That link love is indicative of how much I love Dave)

Now I am a classic example of a guy hiding out in corporate America, and while I generally agree with his themes, I thought the assessment was not appropriately risk-adjusted.

Here are the tricks:

1) He pushes aside risk of failure with a few comments:

  • #1: “…failure cannot be counted strictly as downside. There is recoverable value in failure.”
  • #2: “Too often people cite general statistics about entrepreneurial failure that include all entrepreneurs everywhere and in every sector; these metrics are all but anecdotal in nature.”
  • #3: “Not being stupid helps (we already established you’re smart), and your position in social networks likely has more to do with success or failure than any other factor…”
  • #4: “And please don’t counter that I’ve inaccurately accounted for the capital required to create a startup, how “impossible” it is to get funding, and how doomed you might be for whatever reason before you start: startup capital requirements are lower than ever before – you can get started for as little as $10-$50K with a seed of an idea and the right partner.”

Let’s break that down:

  1. What is “failure” of a 5 year business worth?  I say, $100k, because, like him, I think it is worth a lot.
  2. Is 90% failure rate anecdotal?  VCs seem to swear by it and they have money riding on their bets.  I bet this is less anecdotal than one might think.  Further, they use these numbers even with respect to their investments.  I assume the deals they pass on have a higher failure rate.  I don’t think that we should write off the fact that most new businesses fail.  Of course, I apply an exit curve:  10% shot at $3m, 40% shot at $300k, 50% odds of $100k ($0 + $100k failure value).
  3. Does being smart reduce failure?  Sure.  Although I think that is taken into account in the failure rate.  Everyone that quits their job to do their own thing thinks they are smart.  Much of an exit is luck, in my experience.  Loose correlation.
  4. “THE RIGHT PARTNER” – now there is an interesting rub.  You just cut your equity in half.  And I think a good partner is important to getting to your exit.  If you can’t convince your best friend or someone else smart to do it, it may not be a great idea.

So the failure rate model needs to be taken down by half, except for the failure value.

So if we wanted to risk adjust the $3m exit your company could achieve, it might look like this:

$260k value of exit (NPV of 90% failure rate model with a partner and no investors).

Now, there are a lot of problems with this model.  The 10% could be a $30m exit!  What is a reasonable exit?  Dave implies $3m, but that is simply a number pulled out of the air.  I think there are a range of options.  Maybe $3m is actually the risk adjusted number:  10% of $30m?

Is there a salary along the way?  What if it looked like this:

1Y: $0

2Y: $35k – struggling

3Y: $35k – struggling

4Y: $90k – taking off

5Y: $125k – nice business and exit

Now the value of the start-up is $535k.

All this illustrates the range of unknowns we are talking about here.

If there was a 1% chance of a $30m exit, it completely blows the model apart.  The biggest mover of numbers in this story is the possible exit range.  This is why VCs like people going after big markets: Big markets mean there is room for a big company.  If you only have a few million in revenue, you can only exit for so much.  Big exits require big upside potential for the company.


Tradevibes Acquired, Can Cogmap Be Far Behind?

Wednesday, October 7th, 2009

logoYay!  Venturebeat recently announced that they had acquired Tradevibes, a crowd-sourced web site of company information, for an undisclosed sum.  A huge victory for Venturebeat, as the acquisition of crowd-sourced company information is a key strategy for success in the modern economy by any company.  Surely Venturebeat is just one good acquisition away (hint, hint) from dominating the tech news market.

Tradevibes is an interesting company.  Great pedigree: 4 paypal guys raise $900k from Ron Conway and Dave McClure, some of the best angels out there.  They blew past 10,000 companies in the database a year ago and I eyeball that they probably have more than 20,000 companies in their database today.  Is the data good?  I checked out Facebook:


  • Mark Zuckerberg, Founder & CEO [x]
  • Dustin Moskovitz, Co-founder & VP of Engineering [x]
  • Owen Van Natta, Chief Revenue Officer, VP of Operations [x]
  • Matt Kohler, VP Strategy & Business Operations [x]
  • Chamath Palihapitiya, VP of Marketing & Operations [x]
  • Gideon Yu, CFO [x]
  • Sheryl Sandberg, COO [x]
  • Jonathan Heiliger, VP of Technical Operations [x]
  • Elliott Schrage, VP Global Communications & Public Affairs [x]
  • David Fischer, VP Online Sales & Operations [x]
  • Christopher Kelly, General Counsel [x]
  • Ben Ling, SVP Development

A lot of those people are gone.  Dustin is gone, Owen is gone, Chamath is gone, Gideon is gone and Ben is gone.  And those are just the ones I know about, and I know nothing about Facebook.

Obviously, I live in a glass house, so I won’t be throwing stones, but the data is certainly no better than ours and in many cases sparser.  The page was viewed 50,000 times and has 100 edits.  The most recent edit was 9/30/2009, so you have to like that it was edited recently – although many obvious errors were not corrected. 1 in 500 users makes an edit, which seems realistic.

On Cogmap, Facebook has had more than 3,000 views and has 20 edits, so we are getting edits about every 60 views.  A more engaged community?  Hard to say, we have fewer maps: Slightly more than 7,000.  It would be interesting to compare their most popular companies and our most popular maps head-to-head, or global site activity, however we don’t have that data.

Anyway, enough head-to-head battles, let’s talk about the transaction: I bet it went poorly for Tradevibes.  VentureBeat has raised $300k in capital and doesn’t seem like it is awash in cash, so it is unlikely that Tradevibes saw the kind of exit that returns 10x to the investors.  Certainly, VentureBeat probably doesn’t have a plan to use Tradevibes in a way that generates the kind of value that would justify a 10x payout.

Did Ron and Dave get out with their initial investment?  I bet they did not get out at all.  I wonder if they realized Tradevibes was not working out and simply became investors in VentureBeat.  I checked LinkedIn in an effort to discover if the Tradevibes founders had stuck around.  All I was able to find was that Peter Chu, the CTO, left a year ago.  I had heard that Tradevibes was struggling, that is more evidence that the business was going sideways.

One of the funny exercises in small companies selling out to other small companies is that, if it is not an all cash transaction,  it is not simply about valuing Tradevibes – it is about valuing VentureBeat.   Assuming VentureBeat was not going to write a check for more than a million dollars (probably the only scenario where the investors get out whole), they took some cash and some stock – probably more stock.  If they took stock, then the question you wonder is how VentureBeat was valued relative to Tradevibes.

Here at Cogmap, we look forward to working with Matt and the VentureBeat team – or anyone that wants to crush them.  We love business development deals!