Business Development Diary

According to a new survey by The Kelsey Group and BizRate.com shows
significant usage of search engines by online buyers for finding local business information.

Princeton, NJ (February 11, 2004) – The findings of a new survey of more than 5,000 online buyers conducted by The Kelsey Group and BizRate.com
reveal that local commercial searches – those seeking merchants "near my home or work" – represent 25.1% of all searches being performed by
online buyers, more than double the amount previously estimated by analysts.


Also read this
http://news.com.com/Online+ad+sellers+think+local/2100-1024_3-5690651.html

Former partners squabbling in court, and Google loses round against Digital Envoy:

As reported in CNET, the district court in Northern California has ruled that the lawsuit by geo-location specialist Digital Envoy accusing Google of misappropriating trade secrets may proceed.

The two companies had a licensing agreement as far back as 2000 that relied on Digital's IP technology to pinpoint the physical location of Web visitors for Google so that it could better serve sponsored search results. (The parties no longer work together.) Digital balked when in 2003, Google broadened use of the geo-location technology to include serving targeted advertisements onto third-party sites in a program called Google AdSense.

Ouch.

Brilliant - eBay for ads. Sequoia pumped $4 million into this idea. Brought to you by Philip Kaplan, er, Pud of FuckedCompany fame & brilliance.

AdBrite - The Internet's Ad Marketplace
Like Ebay, many AdBrite users are both buyers and sellers (advertisers and publishers). If you're an advertiser, AdBrite provides great deals from all sorts of websites. Search or browse to find a site you want to advertise on. We'll show you relevant stats, including price and how many clicks you can expect. Add it to your cart, write your ad, and pay. If approved by the webmaster, your ad will appear on that site at the scheduled time.

If you're a publisher, use AdBrite to set your own ad rates, and approve or reject every ad that's purchased for your site. AdBrite enables you to instantly sell ads to your visitors via a 'Your Ad Here' link, in addition to selling through AdBrite's marketplace and sales team.

Our revenue split is 75/25 in your favor. Through a small snippet of HTML placed on your site, we handle serving, scheduling, billing, customer service, and sales. About half of AdBrite's sales are generated from our marketplace and sales team, while the other half are generated from users clicking 'Your Ad Here' on our publisher's sites. "

Interesting threesome (hehe I'm such wag)

"Aptas, ISx and YP Solutions have come together to formLocal Matters. Local Matters a company with a strong legacy of technology innovation. A company well acquainted with the IYP, DA and Mobile vertical markets. A company perfectly poised to lead the convergence of Internet, voice and mobile. A company with experience and talent base second to none. A company with a global presence. A company ready to stake a place in the Local Search and Enhanced Directory Services industries with an unmistakable position of leadership and momentum.

ISX was IBM's old DA business, bought out by private equity firm Spencer Trask, they answer the phones for Qwest.

The Mobile Technology Weblog - "Location Based Services and all about Mobile Marketing" - Mobile Search Hots Up: "The other fascinating element of this emerging market is that no one is talking about local mobile search. While this isn't the only market for mobile search, by any means, it will be an important one.

My opinion is that search on mobiles will polarise into two distinct and sizable markets - maybe even dominated by different types of companies.

The first area is Location-Independent Search (LIS), which is very similar to the type of search you do on your desk top. After all, if you're looking for ringtones to download to your phone, the location of the retailer is of little importance. Distance is dead and all that.

But if you want the name of a shop or restaurant, as an example, location is probably a very important factor indeed. Thus, you'll want to undertake a LDS (Location Dependent Search). The default location will be where you're standing right now, but you'll be able to over-ride this by inputting another location, if you wish.

So the LIS sector could well end up being dominated by Overture or a company like that - I can't see Google standing by and letting them win though. And the LDS sector should be the heartland for Yellow Pages or other locally organised directory service.

It's going to be a fascinating space to watch it emerge.

Story via NMA."

From Fierce Wireless 5/27/05:

Kyocera Wireless' Atul Suri dispels three common myths that surround cellular/wVoIP convergence.

According to In-Stat's latest consumer report on wireless phone trends, over 4 in 10 consumers are very or extremely interested in buying a cell phone equipped with WiFi, for both voice and data. With all the hype surrounding wireless VoIP (wVoIP) and the threat it may pose to operator revenues, it's easy to understand why many have yet to jump on the WiFi bandwagon. To help operators understand how dual-mode handsets offers them more opportunity than opposition, let's dispel a few myths that prevent operators from integrating WiFi into their service offerings.

MYTH #1: Operators believe WiFi services will erode cellular service revenues
For a wireless operator, gross margins on cellular plan minutes are eroding, and yet network traffic is increasing, which implies that cellular voice minutes are truly becoming a commodity. If carriers could offload some of that traffic to WiFi networks, at a lower cost, while maintaining ARPU, it would result in higher gross margins. In this scenario, even though the carrier does not control the WiFi radio network, they control which WiFi access points the handset can connect to, via a provisioning client that allows them to maintain existing ARPU. Our research indicates that bundled services ARPU, which include dual-mode roaming, may be as much as $30-60 per month higher, based on addressing new market segments for wireless operators, such as fixed-mobile convergence, hotspots services and so on.

MYTH #2: Dual-mode technology is not quite ready for prime time
Recent announcements by Vonage and mobile operator Sprint give clear indication that operators' concerns about converged services readiness may finally be declining. Network trials lend further indication that the technology is ready for deployment. From a handset perspective, we are doing our part to address the key technical issues that come up while discussing the addition of WiFi to a cellular device.

QOS (Quality of Service) - Poor voice quality is the concern operators raise most frequently about wireless VoIP and dual-mode services. Efficient codecs beyond G.711, such as EVRC provide an immediate handset solution that depends on media gateway interoperability in the network. For the initial use cases, there is sufficient QOS being built into WLAN chipsets, such as WMM profiles (part of 802.11e standards) that support priority scheduling mechanisms adequate for offering VoIP and simultaneous data services.

Security - WLAN chipsets today support WPA, which is a vast improvement over WEP, the initial security standard for 802.11x. In the near future some of the same chipsets' firmware may be upgraded to WPA-2 which supports advanced modes of authentication and is part of the 802.11i standards for security.

Battery Capacity - The WLAN subsystem offers a number of low power modes that are programmable, which allow efficient power management by the handset. Battery capacity, then, becomes a function of the WiFi use case and the applications supported. In our experience, we expect only a 10 percent to 15 percent degradation in battery capacity/performance compared to a feature rich CDMA handset.

MYTH #3: VoIP is only for early adopters
With more than 130,000 small and medium enterprises adopting VoIP in the US alone, and over 35 million registered Skype-client users with over 100 million Skype clients downloads, the acceptance of VoIP as a viable alternative to traditional telephony, is less questionable. We have "Crossed the Chasm" of users necessary to make VoIP a mass-market technology and solution.

So as consumer awareness and acceptance for wVoIP continues to grow, wireless operators could emerge as the biggest winners, but only if they act quickly. By outlining future dual-mode plans for consumers, operators can thwart new competition, and improve customer satisfaction, loyalty and retention.

Atul Suri is senior manager of business development for Kyocera Wireless.

Wi-Fi Planet reports that Wi-Fi radios for VoIP are destined to have a strong showing. Just about every company seriously in the Wi-Fi chip market has a super-small, low-power solution either here or imminent. TI is leading with Wi-Fi embedded in 20 products.

A new and very interesting blog from Michael Mandel, BusinessWeek's chief econ dude. In this intersting post "The Real Cost of the Housing Bubble" he gets into how low interest rates are distorting many sections of the economy.

CNET News.com reports: that according to "Deutsche Bank analysts Brian Modoff, Jonathan Goldberg and Vijay Doradla, a recent check of Cingular suppliers and other sources leads them to believe Cingular is planning to add 3G to only 12 to 15 cities."

No surprise really. Cingular is the most conservative of the carriers, and they have no motive to sink all this money into upgrades when they can instead focus on crushing T-Mobile and sending fat dividend checks to the parents SBC and BellSouth.

The top three reasons someone chooses a wireless carrier:
1. Coverage (check)
2. Customer service (half check, once they get rid of the AT&T crap)
3. Nice phones (two checks - GSM and RAZRs are it)

High speed and data services are way down the list. If you want connectivity then just get the Cingular SX66 with Wi-Fi. 3G is dead.

PCMag reviews the Siemens SX66 - "The new triple threat in networked handhelds with Wi-Fi, Bluetooth, and a phone into a Pocket PC PDA.

This Cingular phone has poky GPRS (expect 40 Kbps—useless for Web surfing, but okay for text e-mails) but speedy Wi-Fi, as well as Bluetooth. The SX66 also works on European GSM networks, albeit with high per-minute roaming charges.

Why would you want EV-DO now? Or 3G?

An interesting article: in the New York Times discussing the exit of "Tourist VCs" - detailing Stuart alsop's exit from NEA and Beirne's from Benchmark. There's a high attrition rate for VCs, but is that really surprising?

Welcome to RCRNews.com: "Sprint selects InPhonic to manage wireless product e-commerce
May 18, 2005
WASHINGTON-Online wireless retailer InPhonic Inc. reported an agreement with Sprint Corp. to manage Sprint's targeted e-commerce initiatives using InPhonic's online marketing channels and e-commerce platform. The agreement calls for Sprint PCS to direct targeted marketing campaigns to a Sprint-branded, InPhonic-powered Web site.

Sprint noted the agreement will improve the online purchasing process for its customers, which analysts have claimed provide up to a 60-percent savings in customer acquisition costs compared with traditional retail sales channels.
continued below

'We have seen tremendous growth in online adoption evidenced by a growing number of customers using Internet tools to research and purchase wireless products and services,' said Jeff Lynch, assistant vice president of eBusiness for Sprint. 'With InPhonic's successful history in this area, Sprint will provide our customers with more ways to reach us.'

In connection with the agreement, InPhonic said it will launch a new carrier marketing team to support Sprint's online customer acquisition strategies.

Terms of the agreement were not released."

A Pay Per Click Search Engine Advertising Tutorial 2: Yahoo! Search Marketing: "Yahoo! provides detailed reporting tools to help you track the performance of the PPC campaign and traffic generated. Yahoo! also offers a special Keyword Selector Tool to assist in the selection of your keywords, a View Bids Tool, where you can see the current maximum bids and listings for the top 3 advertisers on any search term, a PPC ROI Calculator and a CPM ROI Calculator."

Very interesting and complicated story: about how brokers are trying to increase the value of run-of-site advertising by taking low cost inventory and contextualizing it with past Google searches. For dummies, if you searched for "affordable healthcare" on Google 24 hours ago, it makes sense to show you a Blue Cross banner today, even if you are surfing ESPN.com

Really simple:

1. Execution is harder than Strategy
2. A simple strategy is difficult to execute
3. A complex strategy is very difficult to execute
4. Therefore, keep the strategy simple and focus on execution
   

In other words, focus on running the football up the middle.

Here's a very good summary by David Rowley, VP BD @ Macrovision,

"In his most recent book, Winning, retired chairman and CEO of GE Jack Welch provides a chapter on a simple, no-nonsense 5-slide framework for making sure your strategy is grounded in some sense of reality."

The Current Playing Field

• Who are the competitors in this business, large and small, new and old?
• Who has what share, globally and in each market? Where do we fit in?
• What are the characteristics of this business? Is it commodity or high value or somewhere in between? Is it long cycle or short? Where is it on the growth curve? What are the drivers of profitability?
• What are the strengths and weaknesses of each competitor? How good are their products? How much does each one spend on R&D? How big is each sales force? How performance-driven is each culture?
• Who are this business's main customers and how do they buy?

Competition

• What has each competitor done in the past year to change the playing field?
• Has anyone introduced game-changing new products, new technologies, or a new distribution channel?
• Are there any new entrants, and what have they been up to in the past year? Who is behind them?

What You've Been Up To

• What have you done in the past year to change the competitive playing field?
• Have you bought a company, introduced a new product, stolen a competitor's key salesperson, or licensed a new technology from a start-up?
• Have you lost any competitive advantages that you once had - a great salesperson, a special product, a proprietary technology or patent?

What's Around The Corner?

• What scares you most in the year ahead? What could competitors do to nail you?
• What new products/technologies could your competitors launch that might change the game?
• What M&A deals would knock you off your feet?

What's Your Winning Move?

• What can you do to change the playing field - is it an acquisition, a new product, globalization?
• What can you do to make customers stick to you more than ever before and more than to anyone else?

The Dealmaker Forum Sports Highlights:

Business Models

• Open Source is gaining a lot of traction - vertically focused software showing good profitability (e.g., MedSource); of greater concern - how do you tackle outsourcing, IP, and valuation issues
• Installed vs. subscription licensing - pay-as-you-go vendors are also offering a combination of perpetual and term licensing; software as a service is gaining more and more traction
• Foreign players are influencing U.S. product development and business models - based on end-user/consumer usage
• Developing products feature to feature (CISCO, Sony)
• Outsourcing - new employment models
• New Internet (advertising, social software), e.g., Google, Adworks

VC Funding

• Where venture dollars are going (consensus): Open Source software, wireless, digital media, and consumer-facing technologies; other areas (no consensus): VOIP, on-line business services, Internet 3.0, analytics/business intelligence, enablers for on-demand computing
• Areas to avoid: security, enterprise software; digital media is probably on the cusp of being over-invested
• Do more for less: If a start-up might have commanded $35 million in total funding three years ago, VCs expect them to do it for $20 million today
• Companies that get funding: An experienced, hungry, and patient management team, clear market opportunity, defensible IP, a capital-efficient model, and an unrelenting focus (from CEO on down) on getting the sale

Growth Strategy

• Minimize expansion risks
• Partner with start-ups before you buy
• Test - prove that a market exists
• Weigh ROI to accurately gauge market value
• Minimize internal threats
• Is there internal enthusiasm for the growth initiative?
• Is it sustained by more than one department?
• Look at your market niche and how you can grow to fend off competition and provide complete services, e.g., Adobe and Macromedia
• Balance short-term vs. long-term growth: making quarterly goals vs. growing a product over time

M&A

• Don't...
• ... run your company without contemplation of a sale
• ... sell from weakness, not from strength
• ... be piggy: don't expect to double the initial bid
• ... tip your toes in the M&A pond: be in or be out
• Issues that make buyers walk away from a deal: the buyer's lack of comfort that may not stem from anything as dramatic as fraud or misrepresentation, but from a feeling that the seller's processes are not solid
• Valuation
• Sellers tend to use public market comparables or deal comparables: they are easily obtained and tend to increase the valuation
• Buyers prefer to use multi-year discounted cash flow (DCF) analyses
• Structuring deals
• Buyers do small deals for cash, not for shares; if they want IP or a team, they will structure the deal as an asset purchase
• If they are buying an ongoing entity with revenues and customers, they will do a stock purchase
• Unanimity that earnouts don't work and inevitably lead to bad blood and disagreements

The Real Deal: Pick your battles with Internet privacy - CNET reviews: "Pick your battles with Internet privacy"

Process of Forming a Company: "The Process of Forming a Company

John Nesheim, in his best-selling book High Tech Start Up: The Complete Handbook for Creating Successful New High Tech Companies, concludes from his research that there are 14 stages in taking a venture from idea to IPO, as follows:

Stage 1: Getting the Idea
Stage 2: Meeting Around the Kitchen Table
Stage 3: Getting the Founders' Commitments
Stage 4: Pullout from Employer
Stage 5: Creating the Business Plan
Stage 6: Filling the Management Team
Stage 7: Raising Seed Capital
Stage 8: Incorporating and Cash in the Bank
Stage 9: Finding a Home
Stage 10: Starting Up
Stage 11: Raising Secondary Rounds of Capital
Stage 12: Launching the First Product
Stage 13: Raising Working Capital
Stage 14: Initial Public Offering"

From the Local Pay Per Click Analyst (who knew there was such a thing?):

Overture’s Local Match (Yahoo!)

• Minimum CPC: $0.10
• Distribution: Yahoo, Alta Vista, AllTheWeb, InfoSpace, Citysearch
• Information shown: results link to a “Locator Page” including business contact details, business description, location map, driving directions and link
• Geo- targeting: Based on the location included in the search
• Notes: Bidding in Local Match is separate to Overture’s standard pay per click program
• Verdict: This is the first local search advertising program to trial for your website.

Google AdWords (Local targeting)

• Minimum CPC: $0.04
• Auto bid management: free
• Distribution: Currently shown in main Google SERPs and on Google Local.
• Information shown: Standard AdWords text and link to the advertiser’s website.
• Geo- targeting: Based on the IP address of the searcher within Google’s main results; based on the keywords and location in the search query on Google Local (e.g. for Lawyers New York).
• Verdict: Google’s ad targeting uses the IP address of the searcher (for the main Google results) and this is the weakness in the system. IP addresses are not always an accurate indication of the location of the searcher because of the way ISPs assign and reassign them over time.

SuperPages.com

• Minimum CPC: $0.20
• Auto bid management: free
• Distribution: SuperPages.com - 20% of the IYP market (comScore's January 2003)
• Pay per call: advertisers can add an optional “Free to talk” link to their listings. Searchers click this and enter their phone number in the box provided and receive a call from the advertiser. Alternatively they can talk via their computer. Powered by eStara.
• Geo-targeting: Based on the location entered by the searcher.
• Notes: SuperPages.com’s PPC advertising is powered by technology supplied by FindWhat.com
• Verdict: SuperPages.com’s PPC offering is well-designed; the site is a well established destination for local searches and worth trialling as a source of traffic.

Allen Holub writes in the SD Times about the impact of software primadonnas that can wreck the entire team's productivity. Allen's right:

"The 20-to-1 productivity rule says that 5 percent of programmers are 20 times more productive than the remaining 95 percent, but what about the 5 percent at the other end of the bell curve? Consider the software terrorist: the guy who stays up all night, unwittingly but systematically destroying the entire team’s last month’s work while “improving” the code. He doesn’t tell anybody what he’s done, and he never tests. He’s created a ticking time bomb that won’t be discovered for six months."

In a very interesting interview Cisco CTO Charlie Giancarlo lays out their strategy - "hard" VOIP phones. Hey this makes so much sense:

"The phone adaptor is just at the beginning and I believe it's just a transitional device. What we are going to see soon are hard IP phones as well as Wi-Fi phones. The majority of phones that are bought in the home are cordless. With a WiFi VoIP phone you get that cordless functionality but, because its IP right to the handset, you have the opportunity for so much more.

You'd have an unlimited number of lines, you could link into your buddy list and dial right off your buddy list. You could have instant messaging. You can have push-to-talk [walkie-talkie functionality]. A whole variety of new functionalities opens up as soon as IP goes all the way to the handset. We definitely see that occurring.

We'll launch the first Wi-Fi phones this year. The consumer hard phones [that you plug directly into an Ethernet cable] will start this year. Probably first in the small business context, where the additional functionality of extra buttons and more lines is worthwhile. But we are also going into the home within 12 months."

ScanSoft has announced its plan to buy speech recognition rival Nuance for $220 million. Scansoft had previously acquired Speechworks, the assets of bankrupt Lernout & Hauspie, and voice assets from Philips Electronics.

This deal will likely end up at the DOJ - as in speech recognition Scansoft's chief rival is Nuance; Gartner estimated that at the end of 2004 the two vendors together controlled 77 percent of the market for speech server systems.

This is the second nice exit by CEO Chuck Berger - who previously sold Vicinity (VCNT) to Microsoft. I want to be on his next ride. ScanSoft will pay 0.77 shares of ScanSoft stock for each share of Nuance plus $2.20 cash per share. Nuance had a $112 million market capitalization pre-announcement, which given the net loss of $4.6 million on revenue of $11.8 million for the quarter ended 3/31/05, is a nice valuation indeed.

So Scansoft is paying 4.6x revenues at a 100% premium for a zero growth money-losing company. Good job Chuck!

Corporate Naming and Branding News from around the World: "Fresh from the corporate branding newsroom at A Hundred Monkeys, brand consultants, we bring you news about company names and product names from around the world. What is branding all about? What are the latest branding strategies? Find out here."

Welcome to RCRNews.com: "Wireless revenues fuel THQ's quarterly profit
May 5, 2005
CALABASAS HILLS, Calif.-Revenues from THQ Inc.'s wireless subsidiary more than tripled during the fiscal fourth quarter compared with last year, helping push the company to an 86-percent gain in overall profits during the period. Net income for the quarter was $10.1 million or 24 cents per diluted share.

Branded titles based on Nickelodeon, MotoGP and major sports leagues fueled sales for THQ Wireless, which saw revenues hit $25 million during the quarter ending March 31. Mobile games accounted for 4.6 percent of the parent company's overall sales for the quarter and 3.3 percent of sales on the year. Wireless sales generated only 1.5 percent of the company's revenues in the fourth quarter of 2004, and only 1.1 percent of revenues for last year.
continued below

THQ's results beat Wall Street estimates, but the company predicted a larger-than-expected fiscal first-quarter loss, partly due to expected marketing costs for its mobile division.

'We also expect to benefit from extending our brands onto the new handheld platforms and doubling our wireless revenues as we roll out Star Wars and other compelling content,' said Brian Farrell, president and chief executive officer of THQ.

Shares of THQ were up 1 percent to $26.34 in mid-day trading on the Nasdaq."

Twenty bags full for Traffic.com:

"Traffic.com, Inc., the leading independent provider of traffic data and content, has secured a financing commitment for a minimum of $20 million. An initial $10 million has been funded by Washington D.C. based Columbia Partners L.L.C. Private Capital. This achievement was one of many in the first quarter of 2005. In addition, the company is pursuing an aggressive growth strategy for interactive and television solutions, and to support this strategy, has released new products and enhancements, signed new agreements with partners and clients, and expanded its geographic digital data coverage.

'Accurate, real-time traffic information has become an essential service demanded by mobile consumers and an invaluable tool for businesses,' said Robert Verratti, Chief Executive Officer, Traffic.com, Inc. 'Our strong start to the year gives us great momentum, and this new round of funding will enable us to expand our sales, marketing, and product development capabilities to support the growing needs of our customers.'"

Even ABC is now turning to micropayments. See this article in Information Week.

This guy knows what he's doing and his blog PaidContent.org: rocks. He now has a number of spinoff sites going ...

1). Flagship: paidContent.org site and newsletter...(Daily website and daily newsletter)
2). Main Spinoff: MocoNews.net: covers the mobile content market (Daily website, and 3-times a-week newsletter)
3). Broadband Content Report: Weekly newsletter covering the broadband content market.
4). Digital Media Jobs Blog: Jobs section...both premium/classified openings, and others jobs blogged from around other sites.
5). ContentNext Interview/Blogging Series: Blogs and interviews with leading thinkers and CEOs in digital cotnent sector...
6). Mobile Music Report: A monthly premium report which covers the mobile music market...Feb, March and April, May/June, & July/August reports are here...
7). Digital Media Deal Report: A quarterly report (right now) covering the venture capital investment, mergers & acquisitions, and IPOs in the digital media sector. "

Somebody should have told the UMichigan students that Mates was a brand of condom launched by Virgin's Richard Branson in the 80s. Maybe the naming is intentional, as Mates is "A location-based social networking system." Bottom line, this is an IM system with location awareness built in. The location input could be manual (you set your location), Wi-Fi positioning like Ekahau, or wireless (say cell ID or GPS). The interesting part is that the system has associative memory, so it tries to associate IP addresses with locations.

Harvard Business School Business Case argues that now in the UK an innovative marketer, Flytxt, has convinced users to give personal information in exchange for direct marketing pitches to their phones.

Mobile Marketing Manifesto according to Carrie Himelfarb-Seifer, VP of sales at Vindigo and a board member of the Mobile Marketing Association (as reported in ClickZ.com):

• Of 180 million wireless phone subscribers in the U.S., 58 percent use their devices for non-voice functions.
• WAP (define) 2.0 has gained traction. Over 44 million subscribers used the mobile Web to access news, information, and entertainment in February.
• Ring tone sales are projected to hit $500 million in the U.S this year. This is an amazing number. People use their phones as a form of personal expression. They personalize phones with wallpaper and ring tones -- and pay for those features.
• Over 10 million mobile subscribers play games each month.
• 3 billion text messages are sent each month -- yes, billion.
• 3G (define) networks, which offer higher performance and more capacity than existing 2G networks, are up and running in some U.S. cities. Handset makers are rolling out 3G-compatible phones."

According to M:Metrics, an estimated 6.2 million users downloaded a mobile game in the quarter ending February 28, an increase of 8.2 percent over the previous quarter. Text messaging (sending and receiving) is the most utilized mobile content service with an estimated 65.7 million users, though growth was relatively flat at one percent.

More stats here .