Facebook isn’t yelling Yahoo! just yet

Yahoo’s burning desire to acquire Facebook has been the talk of the Web 2.0-sphere for lo, these many months. At one point, there was rumoured to be an offer for $750-million, and then another worth $1-billion — and then, silence. Now, the plot has thickened, thanks to TechCrunch’s publication of the Secret Yahoo Spreadsheets for the project code-named “Project Fraternity” (I guess “Project Please Help Us Compete With Google And Make Up For Not Buying MySpace” wouldn’t fit on a PowerPoint slide).

As Mike Arrington points out with a tiny bit of understatement, the numbers that Yahoo used to justify its valuation — at one point it offered a deal valuing Facebook at a YouTube-ilicious $1.6-billion — look to be based on “robust” user growth. How robust? By 2010, the company projected that the social-networking site could be attracting almost 50 million users, or more than 50 per cent of the combined high school and young-adult population of about 83 million.

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And that’s not the only thing that is “robust” about Yahoo’s numbers, as Fred Stutzman notes on his blog. He points out that the projections for Facebook’s revenue — from which the purchase price is derived, as in “6 times revenue at a discount rate of X” — assume that more than 90 per cent of the site’s users are “active users.” That’s not just an aggressive target, it’s right up there in wishful-thinking land.

Was it those kinds of nose-bleed projections that made Yahoo pause in its all-out pursuit of Facebook? Or was it the fact that the Internet giant was being held at arm’s length by Mark Zuckerberg, a guy who won’t get up at 8 a.m. even for a conference call with Microsoft, and who wears sandals to venture capital conferences? Or did weird old Uncle Terry finally put the kibosh on the deal?

Linked In just doesn’t get it

I’ve talked with several friends about LinkedIn since the Business 2.0 puff piece profile hit the Web — calling the service “MySpace for Grownups” — and the reaction to the company ranges from puzzled indifference to outright revulsion. Like me, many people seem to have signed up because it seemed like a good thing to do at the time, but have gotten very little out of it except contact requests from people we would much rather not hear from.

Is that just a few anti-social people, or a sign of a flawed business model? I would argue it’s the latter. Yes, it’s true that LinkedIn is making money, primarily by charging people to send emails to contacts they don’t know (in other words, to send something that might be considered spam). But the Business 2.0 headline inadvertently points out what I think is the main problem: it isn’t really MySpace at all. In other words, it’s a so-called “social network” that isn’t very social, and I would argue that’s a fatal flaw.

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Seamus McCauley puts his finger on it in a recent post at Virtual Economics:

Here’s the problem with LinkedIn – it doesn’t do anything. You sign up, you find some colleagues, you link to them and then…nothing.

Umair Haque of Bubblegeneration says that what LinkedIn is doing is “buying marginal profitability at the expense of scale” (thanks to Seamus for the link). As he points out, the service restricts what you can do — even within your own profile — to such a degree that it makes it virtually impossible to connect with people in any other way but the one or two authorized methods.

MySpace and Facebook and Flickr are popular because they make it easy to connect, share photos, send emails or messages, tag things, search, etc. (yes, you need approval to add someone as a friend on MySpace or Facebook, but you don’t have to pay). LinkedIn does none of those things. In fact, the only thing it does is make it easy for people to spam you with contact requests. Unless it finds a way to expand into a real social network, it is doomed.

Jerry Bowles has some thoughts on his Enterprise Web 2.0 blog, and says that the Business 2.0 article reads like “a wedding announcement written by the bride’s mother.” Good one, Jerry. And Seamus has posted an update to his previous post with some more thoughts about LinkedIn and how it needs to “let go.” And Chuqui is one of those who finds great value in what the network does.

Hey Mark — how much for the sandals?

(this is a post I wrote for my globeandmail blog, which is here)

When talking about the Internet, it often seems as though time has sped up. Take YouTube, for example: A year ago, Chad Hurley and Steve Chen were just a couple of former PayPal employees kicking around looking for something to do with online video, and now they are seasoned veterans of the startup scene who just sold their company to Google for $1.6-billion — which is roughly the Web equivalent of winning the Powerball lottery and the World Poker Championship at the same time.

At a recent conference of heavyweights in the media, entertainment and Web fields, the YouTube dudes were pretty much old news. Not that everyone didn’t want to be seen with them, of course, but the “It Girl” of the moment was another young startup CEO: Mark Zuckerberg, who started a little social-networking site called Facebook with some friends while he was at Harvard (the Harvard Crimson had a great piece looking at the Facebook team last year), and is now rumoured to be looking at buyout offers in the $1-billion range.

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Apparently, the weight of such an enormous amount of money — not to mention the chance that it could never materialize, which must keep the founder of Friendster awake at night — isn’t having much of an effect on young Mr. Zuckerberg. According to the New York Times, he showed up at the FourSquare conference dressed in jeans and a blazer, and wearing Adidas sandals on his feet (sans socks).

Mr. Zuckerberg is also the one who reportedly told Microsoft executives, who wanted to talk about buyouts, that a conference call before 10 a.m. wouldn’t work because he didn’t get up that early. In an interview last year with Marketwatch reporter Bambi Francisco, he wore what appeared to be surfer shorts and a T-shirt that said “My mom thinks I’m cool.” When Bambi asked what kind of presentation he gave to the VCs who wound up giving the company $13-million, he said he “didn’t really prepare anything formal.”

The Adidas sandals the 22-year-old CEO was wearing at the FourSquare conference may or may not have been the same ones he wore in the photo that ran with this Rolling Stone magazine feature. The article says that Zuckerberg was a teenaged computer whiz who put together his own mp3-player software while in high school and turned down a $950,000 offer from either Microsoft or Musicmatch in order to attend Harvard.

Zuckerberg also says “We’re not doing this to cash in. We’re doing this to build something cool.” Yes, but building something cool and then cashing in — what a combination.

Update:

Valleywag, now being written by Gawker supremo Nick Denton, says that Zuckerberg is rumoured to be in talks with Barry Diller’s IAC Corp. about an acquisition.

Hey Kevin — what’s with the silent treatment?

It seems that Kevin Rose is in the news again — the blogosphere news, at any rate — and this time not for being on the cover of Business Week. It appears that Digg has been doing some more algorithm-tweaking, and has pissed off a bunch of its top contributors, because the filters it is using are preventing them from getting on the front page with as much frequency. Two top contributors write:

Why then, we wonder, does Digg continue to snub its most prolific community members, rather than reward or even encourage them? With the latest change in Digg’s promotion algorithm, it seems that the message you are sending to the site’s most active users is that its time for them to quit.

My first response to this complaint, I have to admit, was something along the lines of “So quit, already. Who needs you? Go submit stories somewhere else if your poor little ego is bruised.” As Markus Frind of PlentyOfFish points out, the top contributors to just about any public forum or site often become egotistical maniacs and troublemakers. And what does being a top Digger consist of? Being the first to post links to things you found online. Not exactly rocket surgery.

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My friend Tony Hung at Deep Jive Interests makes a good point, however, which is that Kevin can be criticized for more than just tweaking an algorithm to deny top Diggers their moment in the sun — apart from a blog post during the last algorithm crisis, one which came long after the fire had started, there has been little or no response from the Digg gang to any of the concerns raised by their most frequent submitters, and little or no consultation with them.

As Scott Karp notes at Publishing 2.0, this whole “social media” thing is a delicate dance, not to mention something that we are all pretty much having to make up as we go, and it requires more than just sticking a “Web 2.0” or bloggy label on something. As Edelman has found with the Wal-Mart fiasco, it is not enough to talk the talk — you have to be prepared to walk the walk. If Kevin Rose wants Digg to be social media, he had better start getting social.

Update:

BloodJunkie, a Canadian who is in the top 10 Digg submitters, says in the comments on the Mu Life post: “The change they made to the algo was so obvious (and drastic) that I expected to read a blog post about it on digg’s blog all week. But that never happened. At the very least, they should explain what they have done and how it makes digg better.” And Drums ‘n Whistles points out that Flickr is also taking flak for changing its algorithms.

Update 2:

Kevin Rose has posted a very brief comment on the changes to the algorithm — one which isn’t likely to soothe any ruffled feathers in the Digg-osphere.

Social networking and media isn’t all good

Social networking and social media — sites such as MySpace.com and YouTube.com — are often written about as though they are universally a good thing. And there’s no question that it’s great to have places where kids can socialize online, so to speak, and share blog posts and photos and music, or where they can go and watch video clips of people trying stupid bicycle tricks or kittens trying to get out of Kleenex boxes or whatever. But as my friend Scott Karp of Publishing 2.0 is fond of pointing out, there is a dark side to these kinds of networks.

A couple of stories I came across recently reminded me of that. One was actually fairly comical: a university student posted a picture of a teacher’s dog on MySpace, along with a note saying that he planned to kill the dog — which got animal rights activists and others all in a lather. However, it turned out to be part of a media assignment in which students were asked to do whatever they could to make the teacher’s dog famous (I would have said the student should have won hands down, but threatening the dog was not allowed).

Another story involving students and teachers saw some high-school students set up a MySpace page that they pretended had been set up by their teacher, confessing that she was a lesbian, etc. She is suing two students for defamation and libel, and one of the students is facing criminal charges. And another story that just recently broke in Toronto involves high-school kids videotaping each other having fist-fights and then uploading them to YouTube.

Obviously, these kinds of stories are just the tip of the iceberg. Others have written about adults trolling for sex with children on MySpace, and the social-networking site has been sued by the family of a 14-year-old girl who says she was sexually assaulted by a man she met through MySpace. And some critics of YouTube have argued that having a forum to upload video of people fighting or engaging in other questionable behaviour can encourage that kind of behaviour.

True? Who knows. It’s possible that YouTube and MySpace and VampireFreaks.com (the social-networking site for goths and emos that was associated with the recent shooting in Montreal) are just making it easier to discover things that have always existed, but were harder to come across before the Internet. In any case, I expect we’ll be seeing more of these types of stories — but the potential liability of MySpace or YouTube in such events remains a big question mark. And if you’re a parent, think about what the parents of Amanda Wenk went through — a high-school senior, she uploaded racy photos of herself and her friends and they spread around the Internet like wildfire, until she had become a quasi-celebrity.

Update:

Pete Cashmore at Mashable says Bebo — which is even more popular than MySpace in Europe — is cracking down on bullying and other behaviour.