Wednesday, November 27, 2013

The Snapchat dilemma

After Snapchat turned down a billionaire offer from Mark Zuckerberg himself, a lot of people couldn’t really understand how could they possibly refuse a winning ticket for the lottery. Other focused on FB and how they might have just gone crazy offering that much money to such a young startup, but these were probably the same people who couldn’t understand the importance of the instagr.am acquisition and how it was seriously jeopardizing FB’s mobile growth.

I then started looking backwards to other people who made the exact same decision Evan Spiegel made, and reading their interviews there is a common line re long term value and vision which is really the reason why sometimes you have to make (very) hard decisions in order to protect your company and allow it to grow into something even better. And sometimes those decisions will not necessarily be in the best interest of your wallet.

To name a few, FB turned down and offer in 2008 from Yahoo ($1bn), Dropbox refused to be bought by Apple in 2009 (rumors of 9 digits offer), Twitter said no to Facebook in 2008 ($500m), Box.net said no to a $550m offer in 2011. If you look at the articles back then, every time the press goes nuts about people turning down such offers.

But Aaron Levie interview (Box.net’s CEO and founder) is describing perfectly the point I’m trying to make, FOMO strategy (Fear Of Missing Out) doesn’t really apply to founders, they usually tend to focus on the long term strategy and creating value for their companies.

Rarely I’ve met a successful founder who was more into making quick bucks rather than building a solid and growing business. Ironically those who usually focus more on the latter, end up making the biggest money.

I think that (again) Groupon makes a good example in this scenario, yes they turned down a very interesting offer from Google, then they went to IPO the company at a much higher valuation but now they are trading at a price much lower than what Google offered, Mason had to step down as a CEO and the long term value of the company looks now lower than what it could have been within Google.

Having to deal with the Snapchat’s dilemma per se is a hint that you might be doing something right and that, at the end of the day, it may be worth much more to keep doing it rather than take the money and have to quit. 

Thursday, November 21, 2013

Why Facebook is not about short term growth but about long term value

I’ve read that analysts predict a slight slow down in the rally that hit FB shares in the past months.

I agree the company will struggle to keep growing at 60% pace, but my take is still that the company has only begun to scrape the surface of their potential for the following reasons: 

1- In a discussion with a friend who’s often in the Valley a couple of weeks ago I’ve found out that on average every engineer that has an interview at Google will be called for one at FB too, but only half of the engineers whom received an offer from Google will receive one from FB too - the hiring bar is still incredibly high.

2- All the e-commerce companies I’m advising or am in touch with right now tell me the same, that they buy customers on FB at half the price they do on Google and that those customers convert twice as much.

3- I agree the teenager problem is crucial, but FB has a proven track record of buying companies that can provide both platform enhancement and customer base growth (see instagram). Sure Snapchat made a bold move by turning down their offer, but FB has the pocket and the people to keep buying and aquihiring at full scale in the next years.

I know stock market thinks differently and is mainly focused on growth, but in the long run I believe that this is what will contribute to adding more and more value to the company.

Wednesday, January 4, 2012

And you will Unruly the World!

This morning Unruly announced the closing of a $25m Series A round led by Amadeus, Van den Ende & Deitmers and British Growth Fund

The financing is the largest ever for a private company in the social video sector and will be used to accelerate international growth and cement Unruly’s position as the global leader in this fast-growing area.

Founded in 2006 by Scott Button, Sarah Wood and Matt Cooke, Unruly is the global platform for social video advertising. Headquartered in London and with offices in New York, Paris, Sydney, San Francisco, Amsterdam, Stockholm, and Berlin, Unruly has delivered, tracked & audited 1.34 billion video views and executed 1,400+ successful social video campaigns for global brands and agencies including T-Mobile’s acclaimed Life’s for Sharing series, Evian’s global Roller Babies hit, Old Spice’s game-changing “Man Your Man Could Smell Like” campaign, Coke’s Happiness series and Google’s Search Stories.

Reaching an audience of 725 million monthly unique users, Unruly distributes social video campaigns across platforms including YouTube, Facebook, Twitter, premium publisher sites, influential blogs and mobile applications.

I’ve had the pleasure to work with the Unruly team in the last months and I am really thrilled for the milestone achieved, now it’s their turn to do what they do best, Unruly the World!

Tuesday, January 3, 2012

Why Italian VCs reputation is not an issue and why we must have faith in our country

I’ve just got back from my Xmass break and I read this article by Mike Butcher about an Italian startup getting funded by a German fund. One passage in particular is somehow a perfect picture of what is going on in my beloved country:

“Italian VC investors (I mean the ones based in Italy) are, in general, famously useless at identifying high growth businesses in their own country so it will be interesting to watch outside investors looking to pick up good deals in the country. Mobile, in particular, looks like a good bet given the Italian penchant for the platform.”

Obviously this started a huge conversation within the startup community (especially on ISS), but surprisingly enough the focus was mainly on the fact that Italian VC investors have a poor reputation.

Why should anybody even care about VCs reputation in Italy? In my view a VC should be more focused on closing deals, raising money and helping entrepreneurs to become stars, and in the process make an interesting return. As long as you make all of the above, your reputation will be safe forever, it has nothing to do with the communications of deals as suggested.

And on the other hand I founded TC’s article honest, a bit harsh if you will, but quite compelling and if you read carefully it tells you three things which are amazingly true and represent interesting opportunities:

1-    There are good deals in Italy. Notwithstanding all the difficulties you have to face to start a company in Italy, the entrepreneurial spirit is still alive and is now (slowly) shifting from traditional industry toward web and tech. There is hope, and to anyone thinking about becoming a startupper this article tells you loud and clear that you can do it.

2-    We are late (a lot) on many things and we will have a hard time competing on cutting edges technology but hey, we’re pretty good at mobile and mobile has still a huge potential, we can start from there and maybe something good will come out of it. Check Dada for example, it was a big success case and out of it came MusiXmatch and Beintoo.

3-    Ventureland in Italy sucks, but there is still a pretty decent amount of capital in the Eurozone and in Europe in general, so if you’re an Italian startupper you do not need to focus on where you will raise your money. It won’t necessary mean you will need to move abroad to start your company, it means that there are many places you can look and dig into to get some cash. On the other hand it also tells you that if you are planning to raise some money now and start a VC, Italy could be an interesting place given the poor reputation of the other competitors.