startingup

The trouble with the AdMob-like behavior is that acquirers pretty much know founders would flip and go. No rational acquirer these days can expect founders to stick around very long. It may happen - YouTube guys stuck around - but the odds don't favor it.

Golden handcuffs and such only go so far, because if a person's mind is not fully engaged, what's the point in him or her showing up?

This has the effect of lowering the price acquirers would want to pay. I have seen this dynamic play out. When one of the companies I am involved with acquired a small company (note that most such deals are never publicly announced), they simply told the founders to stick around 3-6 months, hand over the technology and go. There was not even a plan to ask them to stick around. Of course, the price paid reflected that. This is the flip-side of the "talent acquisition" deals we read about - pure tech acquisitions, valued only for the code and the jump-start it gives someone else.

I am noticing a trend lately where private market valuations seem higher than what equivalent public companies get. Of course, it is hard to find a public company equivalent of Facebook or LinkedIn, but I would say Google can be a good proxy for FB or LI.

This is puzzling at first: if private parties thought public markets were undervalued, why won't they directly invest in already public companies?

I believe the answer has to be that private parties believe private companies are relatively undervalued compared to what "they should be" in public markets - in other words, they are not undervalued compared to currently public companies, but they are undervalued compared to some notion of what they ought to be as public companies themselves.

This idea is not surprising - after all every start-up investment, almost by definition, reflects the investor's bet that they found something that is "relatively undervalued compared to its eventual public status."

I made that original comment. Thanks for doing the analysis I was too lazy to do! Your analysis jives with the broader point I was trying to make - in the past 15 years, finance has been the surest path to riches in America. It is not just at the level of the Forbes 400. During the real estate bubble, newly minted mortgage brokers (often coming from other fields such as car sales, they found selling debt far more lucrative) were taking home $0.5 million - and not just a few of them. I have had acquaintances in Goldman, at fairly low level in the org chart, who have been taking home similar sums in bonuses every year. I know Unix systems administrators in Wall Street who take home ~$300K/year - and these guys are generally very low in the Wall Street totem pole.

It has been the age of the financier for a while now. No, this is not capitalism at work; it is Federal Reserve policy. It allowed specially privileged entities to lever up (30x leverage in case of investment banks like Goldman or Morgan Stanley, 10x in case of hedge funds), allow them to speculate with easy money, and have them pay out huge bonuses in case of investment banks or huge carried profit in case of hedgies ... and finally bail them out when their leverage blew up on them, only to have them start speculating all over again.

pg, unfortunately for America, in recent years most of the highest paid people (to the tune of hundreds of millions per person) have been financiers. Even fairly successful outcomes in the start-up world, such as Mint.com to take a random example, don't make founders that rich.

I suspect if you look at the new inclusions in Forbes 400 list over the past 10 years, that list (of deltas) would be dominated by Finance. This is not a good thing.

I have some colleagues and good friends in Beijing, most of them coming from various provinces to Beijing for their jobs - they are not high up in the ladder socio-economically. The impression I get is that they love China (to the extent of choosing not to go abroad to live and work), but resent the party's overbearing ways. They are not going to go out and protest, but that doesn't mean they like their government much either. They tell me banned publications are fairly widely available, if you know how to find them, and many of them are fairly knowledgeable about stuff the party doesn't want them to know about.

My suspicion is that Facebook revenues could be much higher than they are letting on. I say that as a non-Facebook user and a fairly neutral outside observer. If they were being coy because revenues were actually too good, it wouldn't be the first company to do so. Google was coy about its revenue in the 2002-3 timeframe, and it surprised a lot of people when it was later revealed just how much they were making.

Here is my theory: Facebook's traffic, measured in terms of users or page views is about even with Yahoo. Facebook has the added advantage that every single page view is a from a logged in user, who has provided Facebook with a fair amount of personal information, far, far more than what Yahoo has. Facebook has considerable information from the users' profiles as well as their various activity streams that Facebook tracks. This should enable Facebook to target its ads more precisely than Yahoo can, and therefore achieve at least as much revenue as Yahoo. From an advertiser perspective, it would seem like Facebook, with its vastly superior knowledge of user behavior, should be a better bet than old-school Yahoo. Of course, Facebook probably hasn't pushed its sales efforts as hard as mature Yahoo; still, I would expect Facebook to be doing a goodly fraction of Yahoo's revenue, which is running north of $6 billion per year.

If you buy my theory, long term, Facebook should overtake Yahoo in revenue; in fact a lot of Facebook revenue will likely come by stealing advertisers from Yahoo. So the company with the most to fear from Facebook is not Google but Yahoo.

I sense too much negativity and frustration on this thread. I can sympathize. I was exactly the same way at 24, a nerd who couldn't hold a conversation with the opposite sex, had rejection after rejection, and was pretty depressed about it too.

I consciously decided to "improve" myself. Here are things I did:

1. Improved my wardrobe. Believe me, it makes a difference. 2. Consciously taught myself to listen, and ask questions that will lead to more conversation. 3. Consciously taught myself to gauge the level of interest of the other person. Move on if the other person isn't interested - as they say, there is always more fish in the ocean. 4. Push the envelope a little bit ... the man has to push - you have to ask for the phone number! And it is a good way to gauge interest. 5. Don't forget that some level of IQ compatibility is critical. Just as "they" don't want the nerd in you, may be some of the "airhead" types aren't great to be around for you either.

Let me just say that I hit success after consciously doing it. It is like doing a start-up. Know your strengths and know how to compensate for your weaknesses - a superior IQ can help you figure out how to compensate :-)

This is one of those evil taxes - you pay a life time of taxes and accumulate stuff, and then when you die, it gets dinged another 55%.

Can anyone compare Git vs Mercurial? This decision is coming up for us, and would appreciate the input.

You hit the nail on the head. This is really the effect of the massive credit bubble - natural resource companies and financials. Given the way things are going, we will likely see a lot more of this in the next decade.

There is an interesting analogy to India too, which had a sclerotic, state-dominated economic system for 40+ years. India had far less of a dispora than China, but far more than Russia. And India's economic reforms have been half-hearted, and results have been in between China and Russia.

In the name of freedom, what the MySQL flavor of GPL has achieved is to give special powers of dual-licensing to the "original author" - all animals are equal, some animals are more equal than the others. The MySQL business model is entirely based on this special power they reserved for themselves. Stallman's defense of it (which is not new) is precisely why I have always been wary of using GPL code and am a passionate believer in BSD/MIT license approach to software freedom.

The time has come for a reevaluation of what constitutes real open source. I believe GPL should be excluded from it, and the MySQL business model is the classic example.

To those who answer "Linux", keep in mind that Torvalds unilaterally declared that applications that run on top of Linux (calling Linux via the standard libraries) are exempt from GPL. This is in effect LGPL, not GPL.

MySQL specifically takes the opposite tack: any application that uses the database using standard libraries comes under GPL, for distribution purposes.

LGPL and GPL are very different animals.

I think the real debate here is that value in the internet is moving relentlessly away from content producers towards content aggregators. Even a big newspaper site doesn't have the diversity that you find in an aggregator like Google News; likewise, no tech blog can compete with the diversity of news in Hacker News. I visit TechMeme and Hacker News far more than I visit any single blog, for example. TechMeme makes far more money than any professional tech blogger too.

Aggregators tend to build much more value to themselves quickly by riding on other people's content. Yet, aggregators are worth nothing without the underlying content. This irks many content producers, particularly the professional ones whose output accounts of the bulk of the traffic that aggregators end up sending. This trend of professionally produced content accounting for the bulk of the links is evident even in Hacker News.

If these trends continue, giant aggregators could end up controlling much of the content. Yahoo already produces a lot of content, and licenses content for Yahoo News (which is fitting considering Yahoo News has more traffic than any news site in the world). Google News, Digg etc. could follow.

This is the future I suspect Murdoch does not like, because it appears from his perspective to be third parties building value out of his content, without compensating him. Legally, I am not sure he has a claim - if there is a lawsuit on this, it will reach the Supreme Court, that's for sure.

When I was in college, I wanted it all - wanted to prove theorems, found companies, join politics and so on. As I got older, I realized that just getting deeply focused on one thing gives you all manner of creative opportunities. Pick one area, and get in deeper and deeper - that would be my advice.

This is a great article, but keep in mind that the numbers are illustrative of one type of company. Mint was dealing with financial information, so they had to get "serious" fast and that means spending on things that, say, a Facebook or Twitter would not have had to spend. They project $30/per user for user acquisition (if I read that right), which again is very different for different kinds of companies, and different business models. Extremely high value niche companies would pay hundreds of dollars per user. On the other side Twitter being a mass player, would spend far, far less. Financial sites are valuable, so $30 seems like a good deal.