VCs as Lobbyists
One symptom of founders getting stronger relative to VCs is that VCs have been forced to expand their repertoire. YCombinator has an in-house designer, Sequoia has an in-house PR person, and of course many early-stage VCs are informal recruiters (in the sense that they find good employees for their hot startups, and find cushy exits for the early employees of their less hot startups—it’s a brutal business).
Now, Ron Conway is getting attention for his lavish campaign donations to San Francisco politicos. This is an odd side effect of the geographic concentration of many VCs’ portfolios: with enough investees in the Bay area, it is indeed in Conway’s interest to lobby local politicians. But it isn’t working too well. In this case, AirBNB still needs to pay a hotel occupancy tax despite Conway’s efforts.
- Larry page has posted an annual letter on Google’s progress this year. It’s a fairly banal piece, but it’s notable that Google+ still gets top billing. For investors who expect Google to pull back from plus and aim for more immediate monetization, that’s a warning.
- Android is on 50% of US smartphones, according to ComScore. But it monetizes worse for Google than the iOS does, according to some well-crunched numbers from Asymco.
- If Facebook is pursuing search—which they are, but not urgently thanks to Bing—it could be good news for Google since it would theoretically show that other big companies are competing in search. On the other hand, they already have Bing.
- Google has summed up 50 changes to their algorithm in March. Many of them deal with synonyms, specifically toning down Google’s too-smart-for-its-own-good synonym matching. This won’t have a measurable effect, but could pull early adopters away from alternative search engines, which will pay dividends in the future.
- At last, ad benchmarks: Social Fresh has released a survey pegging Facebook’s average CPC at $.80, and average CPM at .041%.
- After the new fan page layout, Facebook engagement for brands has universally dropped. This is expected, and good news for Facebook; they’ve successfully found a way to charge for what they used to give away.
- Business Insider Intelligence surveys Facebook advertisers to figure out what they hate about the site. Their big issues: poor APIs, uncertain data ownership, and slow analytics.
Is Advertising too Fragmented?
Terry Kawaja argues that there are too many adtech companies each stage of the ad sales process. (And he certainly has good financial reasons to think so: he gets paid basically every time anyone decides to reduce inefficiency in the ad market by buying somebody out.)
It’s hard to make the case that there are too many companies in this space, though; startup costs are still fairly low, and rapidly-declining transaction costs mean that it’s more affordable to add layers to each transaction, as long as each layer is adding at least some sliver of value. Given how automated the business has gotten, we could easily have a situation where half a dozen large display ad companies are replaced with dozens or hundreds of smaller players which have parcelled out tiny pieces of the full chain of transactions. That outcome makes sense given that costs are getting lower and coordination is getting easier.
And it’s not awful news for investment bankers in the space. There’s still plenty of room for scale acquisitions (#1 player buying the #2 player in an otherwise fragmented business) or talent acquisitions (treating the company as an extended audition for the next gig).
How Do Groupon Deals Affect Yelp Ratings?
Finally, we have data! Groupon deals tend to hurt Yelp ratings, especially immediately after a deal is launched, and close to the deadline for using the deal. The study has more details on exactly why this happens.
HomeAway’s Travel Roll-Up Continues
HomeAway has purchased a European vacation home rental site for roughly $19mm. As Paul Graham pointed out about AirBNB in 2009, Europe can be a great market for vacation home rental: “Just wait till all the 10-room pensiones in Rome discover this site.” And, of course, there are natural economies of scale for a site like this: it shouldn’t be too hard to guess which HomeAway users would consider a European vacation. Add in airline deals (also easier at HomeAway scale than at this site’s scale) and it’s even easier to tweak subscribers into making one more purchase.
Why Doesn’t the Philippines Sleep?
Based on ODesk data, the Philippines has a comparatively even sleep/wake cycle compared to other countries. It’s a place with a large English-speaking population and a fairly weak local market, so this makes some sense. More than a few SEO-driven companies have either a) Philippines offices, or b) an unusual amount of traffic to their sites originating in the Philippines.
Digital Due Diligence Weekly