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Posts Tagged ‘microsoft’

BizSpark

November 5, 2008 Leave a comment

Microsoft just released a program called BizSpark which is “designed to help accelerate the success of early stage startups by providing key resources when they need it the most”  Some of these services include software, support and visibility which allows startups to access Microsoft development tools, connect with network partners and receive global visibility.

BizSpark is free for startups who’ve been in business for under 3 years and generate less than $1 million in yearly revenues.  For the program guide please visit .docstoc.

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Startups & Public Companies

September 3, 2008 2 comments

Below is a Vencorps forum post in response to a question asked about the ability of Bizak to value startups.  – Tom

Startups and public companies are indeed very different animals but revenues are revenues. Bizak valuation is based purely on revenues – not speculation. So if a startup makes $1 million/year and a public company makes the same then our calculations will value the two exactly the same, ceteris paribus. Of course public companies are more established and therefore usually have higher revenues and valuations. Our calculations also take into consideration the value of each visitor – we call it earnings per visitor (EPV). For example, if a gossip site receives 1 million visitors, but only has an EPV of $0.01, and a corporate consulting firm has 1,000 visitors with an EPV of $10 then both sites have the same traffic value ($10,000). This is then added (like a bonus) into the Bizak Estimate. In my opinion if you don’t know anything about your visitors then there is very little value in them – one major problem that Facebook is having.

Facebook was valued at $15 Billion mainly because Microsoft didn’t want Google to get its foot in their door. Back in June, I wrote an article about Facebook’s revenues (Facebook Revenues) which used the Bizak calculator to come up with a valuation of $1.3B for Facebook. This estimate was based on Facebook’s 2008 expected revenues of $350 million. If you input the $15 Billion valuation into the calculator then Facebook needs $313 million/month in revenues to justify that $15B valuation. Since Facebook is having a lot of trouble monetizing I don’t see that happening this decade. I also don’t see Facebook going public anytime soon since the markets will laugh at that $15 billion and value them more in line with revenues.

As for Twitter this was one of my favorite examples that I previously wrote about (Twitter Costs). Since Twitter has no revenue model and huge server costs my calculations actually valued them at a negative $600,000. The negative valuation is a result of that visitor value (EPV) that I referred to in the first paragraph. Of course there is a lot of value in Twitter that must be considered (and has been) by venture capitalists but since Bizak is based purely on revenues we gave it a negative valuation.

In sum Bizak doesn’t predict what the future value of a startup might be, but either does the stock market for public companies. Just like stock prices and market capitalization, the Bizak valuation will increase for startups who increase their revenues. In actuality the stock market probably places more hype and speculation into their valuations then we at Bizak do.

July 2008 Search Engine Market Share

August 21, 2008 1 comment

comScore released its July 2008 search engine market share numbers and once again Google has gained ground – up 0.4% from June to 61.9%.  This share increase was taken directly from Yahoo, likely due to the Microsoft fiasco, who lost 0.4% to 20.5%.

MSN Live search is still in a distant third place with 8.9% market share – my guess most of that traffic comes from those people who still have a Hotmail account.  I can’t for the life of me figure out how Microsoft indexes one page over another but there appears to be less competition for the top spots.  For example, my infoMedMD site is ranked #3 on MSN for medical symptoms but on page 3 for Google.  Even though Microsoft barely makes a blip on the search barometer I still receive the vast majority of my traffic from them.  So in this particular case it’s better for me to be #3 on MSN than page 3 for Google.  However, I would of course prefer to be #3 on Google where I would receive 50 times more traffic for the keyword medical symptoms!  

 

July 2008 Search Engine Market Share

Microsoft Live Search Coming to Facebook

Microsoft Corporation (NASDAQ: MSFT) announced yesterday that that they will be integrating Microsoft Live Search into Facebook.  This really should come as no surprise since Facebook can thank Microsoft for their excessive valuation – the least they can do is allow Microsoft to promote Live.  

It remains to be seen if Microsoft can do a better job, then Google with Myspace, monetizing their search partnership.  Back in 2006 Microsoft was also in contention for Myspace’s search rights but they lost to Google.  As I’ve noted in a couple of previous articles, Facebook Worth & Facebook Revenues, Microsoft’s $15 billion valuation of Facebook is almost three times higher then the next closet valuation.  Microsoft’s valuation of Facebook is still absurd but I’m sure a lot of the reasoning behind it was to guarantee that Google didn’t beat them again.

Advertising Preferred Business Model for 58% of Startups

June 16, 2008 2 comments

Revenue Models of Web Internet StartupsAccording to the latest numbers from Bizak (and to no surprise),  58% of startups rely on advertising as their primary revenue model.

Of this 58%, 25% use in house advertising, 22% implement Google Adsense and 11% use affiliate marketing services like Commission Junction.

Less than 1% of startups use Yahoo Search Marketing or Microsoft Search Advertising

Source: Bizak.com

Facebook’s Revenues

June 6, 2008 6 comments

Facebook ValuationEarlier this year Mark Zuckerberg reported that Facebook revenues for 2007 were $150 million and expects that number to be $350 million (approximately $29 million/month) in 2008. According to Compete.com Facebook had almost 32 million visitors in May 2008. According to FishTrain Facebook has data center costs of approximately $26 million/year or $2,166,666.00/month.

Enter those estimates into the Bizak Calculator and you get a $0.84 EPV ($0.91 RPV – before costs) and a valuation of $1,373,999,976 (that’s billion). Much less than the estimated $15 billion valuation (based on Microsoft’s investment of $240 million for a 1.6% equity stake) but higher than YouTube’s valuation and EPV.

$15 Billion Dollar Valuation

Based on these revenue and cost estimates, Facebook needs to generate over $313 million a month in revenues (almost $4 billion/year) and have an EPV of $9.71 to have a valuation of $15 billion.

Facebook\'s $15 Billion Valuation

SEO Will Eventually Become Ineffective

March 31, 2008 7 comments

I just came across an article entitled, “Bright SEO Career Prospects Could Dim,” which once again has resurfaced my belief that SEO will eventually become ineffective. The decline in SEO utility will ultimately force the majority of website owners to abandon their reliance on Google (for traffic) and look somewhere else. According to the article SEO consultants will see a surge in business over the next 5 years but after that business will plateau and ultimately decline. According to the author the decline will be the result of more educated users and website owners who will just optimize their websites on their own.

I agree that SEO will likely see a surge in business over the next 5 years and a decline after that. However, I disagree as to the reason for the decline. I don’t think the decline will be due to skilled web designers but rather due to the ineffectiveness of SEO. I agree that SEO is not rocket science and anyone can pick up the basics in just a few hours however I think the decline will be indicative of a bigger change in behavior.

Given that search is a very competitive (and crowded) place it will only get worse when the number of optimized websites increases over time. This will lead to an increase in competition that will mean fewer and fewer visitors for optimized sites, in return decreasing the value of SEO. If in 5 years an optimized site can’t guarantee a surge in traffic then SEO consultants can no longer demand their exorbitant fees. Websites obviously still need the traffic but since Google can no longer provide it to them then they are going to seek alternative ways to get that traffic. It remains to be seen whether that means niche search engines, advertising on focused social networks or an entirely new platform??!

I think the disparity between those that are satisfied with Google and those who aren’t will increase over time. Those who remain satisfied with search will be the end user looking for information. He/she doesn’t own a website and isn’t concerned about receiving traffic from Google – he is only interested in finding information when he needs it. Google and the search engines will always satisfy this user with the most relevant source.

The frustration sets in with the website owner who relies of Google for traffic. Over time his website will see a decline in traffic from Google (due to excessive competition) that eventually leaves him frustrated and unsatisfied with Google’s results. This dissatisfaction will ultimately force website owners to be the first group to migrate away from Google. Whether the average user follows remains to be seen but they have in the past. This scenario is not unlike the early days of Google when the more advanced web users fled Yahoo’s directory for Google. As we know everyone else eventually followed.

Not if, but rather when the next migration occurs is just a matter of time.