azeem.azhar

The iPad is a beautifully pitched complement the Apple’s suite of products, which we may consider as Desktop, Laptop, Mobile and media centre devices.

In my own use cases, there were clearly situations where the iPad would better perform than one of the other devices, and virtually all of these use cases are in the home. Here are the four use cases where we currently struggle with an appropriate device.

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Popularity: 37% [?]

So, James Harding has announced the Times will start to charge with a daily pass.

I agree: I just don’t see people paying for the kind of news which makes it into the British newspapers, at least not under this model. I can imagine–under the Allbriton model–people paying to send a journalist to a war torn area but the idea that I’ll pay for standard news is idiotic.

My sense is that Harding has got this the wrong way round–although a lot depends on the pricing points. If a day pass is significantly below the cost of the print edition (say 40 – 50p) I may well find myself grudgingly paying for it, in order to get to a recommended columnist or sports writer. If a day pass is close the print paper and the columnist is really good, I may buy the paper. (But let’s face it, I only buy the paper when I am stuck at a train station).

I might pay for access to expertise and authority though. You can charge for scarcity. So if Bill Emmott or Anatole Kaletsky is writing a column and said person is thoughtful and a veritable expert, I may well pay for it. (I buy their books after all). The Times did suggest they would keep columnists behind a paywall.

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Popularity: 25% [?]

The Kindle finally arrived. Message: a great first try but needs rapid iteration.

Unboxing

• I am used to Apple products. Found the Kindle’s box cheap and the unboxing process far from that of any Apple product. However, far better than the typical piece of consumer electronics (e.g. Blackberry)

Physical feel

• Feels futuristic. It is really light. But is feels solid. Very clever
• However, key pushes feel really tacky. I have to push harder than I would like. I don’t get the solid feedback of a genuine keyboard, nor the instance, velvet response of a touchscreen.
• The keys (especially next page, previous page) need quite a push and are joined by a horrid cheap clicking sound.
• The ‘full keyboard’ on the Amazon Kindle is fiddly.

Reading

• The device is light so holding it is a easy.
• However, the contrast ratio on the E-ink screen is really really poor. It is like reading an old, old book with battered pages.
• To move to a new page, you need to click (quite hard), get that tacky clicking sound, and then the screen flashes (I assume to reset the eink). That hold process is f-ugly. Distracting and unpleasurable.
• The screen options available do not suit my style of electronic reading. I am a very fast reader and when I read only I like to have well-spaced lines with a few words on each line and scan extremely quickly. (Sort of modified rapid serial visual presentation). I also don’t like the limited choice of fonts, vastly preferring modern sans serif.

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Popularity: 32% [?]

Google has changed the layout of it’s famously parsimonious and user-friendly results page, pushing adverts front and centre.

This marks the end of putting the user front and centre of the Google experience, in favour of a layout that drives adverts to dominate the search results page. It isn’t as bad as Ask yet, but it certainly is much worse, much worse than it was yesterday.

This in my view represents a turning point, away from the land grab (hunting) phase of Google’s core search offering towards the farming phase.

Google is full of smart people (lots of them), so this decision is not accidental but has come after months of testing and modelling. In the old days, we might have assumed a change on the core search was for improved usability. But this change pushes ads front and centre, so the rationale must be to increase ad-clicks per search. Not a user-driven feature but a monetisation feature.

Now, why would Google, after years of eschewing ads in the face advertising, make this change? Well because they have understood that the growth is tailing off. They have reached a point of saturation–there isn’t anything more to offer from the Google core offering–so now is the time to harvest the eyeballs. Read the rest of this entry »

Popularity: 45% [?]

So my Sunday newspaper, The Observer, is rumoured to be under a strategic review. And we all know what that means for a loss-making

newspaper in 2009.

Let’s play a thought experiment and assume that, GMG’s denials aside, the Sunday Times is right and:

The Observer is thought to have lost £10m- £20m a year in recent years, and not to have made a profit since it was bought by The Guardian in 1993 …. [and]

Members of the Scott Trust, the charitable foundation that owns GMG, discussed the plan on July 6. They were shown trial copies of an Observer-branded news magazine that would replace the paper and be published on a Thursday.

How might you go about saving the Observer?

Guardian News and Media made a loss of £30m to March 2009. Revenues were £254m. It would be generous to assume that about 20% of revenues were from The Observer (or about £50m).

Let’s assume that half of £30m  accountable to the Observer, being a low circulation Sunday. This loss of £15m translates to an annual loss (or subsidy) to its readers of £37.50 a year or adding nearly 80p a week to the cover price.

Let us also assume that editorial costs run to about £15m per annum. I have no real verification of those other than the Guardian and FT’s editorial budgets are rumoured to be in the £50 to £75m annual range.

Let’s also assume that

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Popularity: 39% [?]

The folk a Techcrunch, a blog, have done some nice digging to build a first draft model for valuing social networks based on user-numbers and advertising yields in different markets.

It is a clever model which attempts:

to rank various competing social networks. It bumps down networks like Orkut and Friendster who have tens of millions of users in markets with very little advertising spend, and bumps up networks with lots of users in higher value markets.

Now corporate valuations are notoriously tricky. The big bibles reinforce just how many caveats there are. And the art of getting a good price is what makes for a succesful investment banker

I like the effort to bring some clarity to the question, now I’d like to see the next version of the model to take into account several other factors.

1. Read the rest of this entry »

Popularity: 27% [?]

As we saw today, Twitter reach has zipped past the Wall St Jounral and New York Times. I put the growth rate in perspective, courtesy of Compete.com

In relative terms , Twitter has clearly outpaced Facebook and the neo-journalism of the Huffington Post.

Twitter makes Huff Po and Facebook look like laggards, but in traditional business terms increasing your customers by a factor of two or three in a year is hockey-stick stuff.

Incumbent’s digital products are merely extensions of their brands and their success is measured by the relative growth compared to stagnant or mature analogue products.

The one incumbent that seems to be an exception is FT.com which tripled its US reach last year due to the credit crunch–not something it can easily repeat this year.

Popularity: 4% [?]

Cooley’s latest private financings report shows some interesting trends:

So it is not surprising to see the Series A valuations come down, with less capital around investors will drive harsher terms from companies.

It helps inject some perspective into various debates around what exactly VC is from Fred Destin and Fred Wilson.

With a median holding period of around 5 years to exit (according to Thomson), these companies will be exiting in 2014 or so. The deals struck in Q1-Q3 look exceptional expensive, more so that ones in 2007 where the bulk of a series A may have been spent.

Of course those doing deals at the $3.75m can expect to do very much better than those roped in during Q4 2008. Why? Simple maths. If you pay £100 for something at sell it a year later for £150, you have a return of 50%. If you were able to negotiate down to £75 in the first instance and sell for £150 a year later your return is 100%. Having purchased at £75, if you achieved a sale at £112.50 you would have the same return as the first scenario.

In other words, initial purchase (or investment price) is a really huge driver of returns.

For an entrepreneur, the question is where are you better off. In 09Q1 you have sold off a third of your company for basically $1m. In 08Q1, you sold off a third for $3m. So looks like you are worse off?

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Popularity: 5% [?]

Fred Wilson has started a fascinating debate on VC and whether it is sustainable. The debate has been picked up by The Deal.

In a free market, money will flow to asset classes with the right characteristics, as you saw.
One thing that seems to be mis-priced around venture is the illiquidity premium (10 years is a long lock up).
The second is the tail risk of venture investing. Since we know that venture returns are not normally distributed (not even with high kurtosis) but are powerlaw distributed, our typical models for asset allocation don’t work. These are based on an assumption of a Gaussian which is a bad approximation for liquid assets like equities (as recent months have shown) and a terrible one for venture.
The allocation models of investors in venture funds assumed differently. Indeed, the tail risk of the asset class generated a notionally high option value making venture funds more interesting to allocation models of LPs.

Frankly, if I was a pension fund and I couldn’t get into one of the fifty firms (in which I included both of yours), I wouldn’t come close to the venture class.

There is another angle on the issue of the over-allocation of funding to venture capital firms. Very bright, persuasive people get into VC because it is a fantastic business. Even if you don’t enjoy the notion of working with tech firms or brilliant entrepreneurs, as an asset management business a two per cent management fee makes for a decent lifestyle even with zero return. Needless to say lots of smart bright people are drawn to it, creating lots of smart, persuasive PPMs floating around the pension fund world and lots of funds drawn in.

One way of addressing this over-allocation would be for successful funds to reduce their management fees and perhaps increase the allocation of success fees. That way LPs would see the signal of low management fees as successful funds, thereby eschewing funds charging higher management fees. VC would become relatively less attractive to GPs, reducing the number of funds and hence the over investment in the class.

Reverse logic. But I think it’ll work.

Originally posted as a comment by azeemazhar on A VC using Disqus.

Popularity: 2% [?]

Consider this:

Vodafone and Telefonica agreed to share infrastructure in order to save hundreds of millions of pounds of duplicated costs. These companies compete directly in several markets.
LA Times and Chicago Tribune are sharing their foreign desks to save money. (These papers don’t compete directly.)

What the Internet has told us was that sharing could be good–and better still a source of profits.

A narrow conception of capitalism and a rivalrous view of competition drove us into silly, inefficient behaviours. We knew this; and we knew it a hundred years ago with the duplicated build-out of train lines outside of London in the 19th century. Those who preached these simple mantras are being forced to re-examine them.
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Popularity: 2% [?]