Quinstreet’s Earnings Beat
A few days after Demand Media beat their earnings estimates and saw their stock price promptly collapse, Quinstreet barely beat estimates and saw their stock rise as much as 22%. The lesson, of course, is to report earnings on a day when the market’s doing great.
Carbonite’s Daring IPO
Carbonite actually priced their IPO, far below expectations—although far ahead of the expectation that they’d give up on going public. The stock closed at $12.35, up 23% from the offering price, but still well below the $15-$17 range the company originally expected.
The WSJ has more background information.
Aol Takes Itself 20% Private
Aol has launched a massive, $250mm buyback. The market is appreciative, and it makes a certain kind of sense: a big part of Aol’s business is still the predictably dying dial-up business, which throws off enough cash flow for Aol to lever up. But in another sense, it looks short-sighted. The market expects Aol to eventually be a content and advertising business, not a dial-up business. And a business like that shouldn’t be buying back stock during its growth phase. Tim Armstrong’s sales skills are renowned, but it shouldn’t cost $250mm to sell the street on Aol’s prospects.
“Live Data” is a Problem, Not a Market
Google has just announced an update to Google Docs’ spreadsheet function, allowing live data imports. There are a few firms that have considered this as a business model: selling live data feeds in order to update statistics as they change. Stale data is a problem on the web, but it’s a problem that very few people will pay to fix—and when they do pay, they’re looking for an extremely reliable solution. Google is actually on the right track, here; this is better as one more feature than as the basis for a business.
Twitter Launches “News Feed”
Twitter has launched a version of Facebook’s news feed highlighting tweets by how interesting they are, rather than chronologically. Dan Frommer of Splatf is thrilled that they’re finally creating something.
This activity stream is clearly a descendant of their recent and much-maligned decision to change the sorting mechanism on their search feature for “All” to “Top” for any given category. This format is, of course, a great way to present ads—they’re not quite “interrupting” something if the live stream is no longer a key feature, and it will be easier for Twitter to match ads to the people who will click on them.
Meanwhile, Twitter, Trendrr, and the Weather Channel are partnering to take advantage of Twitter’s unparalleled ability to tell users whether or not it’s raining near the homes or offices of prolific tweeters.
Forbes Targets Social Media
Forbes has updated their page design in order to highlight authors, commenters, and sharing, rather than the Forbes brand. It has a bit of a cargo-cult feel: It’s pretty unlikely that anything from Forbes will do well on Reddit (the Forbes pieces that do well on Reddit are almost exclusively from Forbes-associated blogs), but Reddit is still listed as a sharing option. And the icons highlighting commenters are clearly based on Facebook’s “Facepile” feature, which uses icons that the reader will recognize. The non-social features—navigation to new stories, and new ad units—are a good sign, though. There’s a decent chance that Forbes will see better revenue per pageview and higher pageviews per user from this, but it needs to be refined.
Startup “Undertakers” Gearing Up
Sherwood Partners, a firm that helps liquidate startups, is talking their book by sharing how excited they are to help shut down the next generation of busted startups. As startups get cheaper to start, there’s less room for this strategy: the classic startup exit now is a talent acquisition by a major web company, which doesn’t leave lots of assets behind.
The most common asset they’re selling is intellectual property. Given the anti-patent attitude, it’s surprising that patents are getting more common, but these may be defensive patents. Or perhaps Sherwood Partners doesn’t often liquidate the kinds of popular, attention-grabbing startups funded by those anti-patent types.
Rocket Lawyer Raises $18.5mm to Keep Disaggregating Legal Services
The deflationary Internet trend continues! Legal documents provider Rocket Lawyer is raising a new round. It’s not just a documents provider, either. Per TechCrunch, “Users can pay as little as $20 for a single consultation to $200 to $300 per year for on call legal service…” Optimistic lawyers can hope that this commoditizes the most boring part of their business. But there’s a good chance that sites like this will exacerbate the bimodal salary distribution among lawyers.
Google+ and “Real Users”
Business Insider helpfully interviews actual users of Google+, and gets a generally pessimistic view: people don’t use it much, and don’t know much about it. That’s not necessarily a reflection of how much people actually use it—as the Facebook Login incident demonstrates, users are resolutely oblivious to a lot of what they’re doing online.
Transparency in Real-Time Reporting
The talented Stacy-Marie Ishmael of FT (who is, in this case, not speaking for the FT) presents ground rules on reporting fluid situations online. This is a good set of standards.
Facebook Lets Friends Opt-In to Their Friends Opting Out
One common complaint about Facebook is that most of the features people complain about can be fixed—but only if users bother to fix them. Facebook is taking advantage of that by allowing users to export their friends’ email addresses, but only if their friends opt-in. The beauty of this scheme is that it’s easier for any one person to just ask a friend for his or her email address, rather than asking them to change their settings. But that means that people leaving Facebook will be absolute pests to their friends by bombarding them with repetitive messages.
Facebook is creating social pressure for people to stick around.
Related: LinkedIn makes it harder to quit if you have more connections. This is smart: anyone with that many connections has clearly invested some time in using LinkedIn; the feedback LinkedIn gets from them will be enormously valuable. And, of course, it helps LinkedIn preserve their professional graph by making it less convenient to quit.
A question about LinkedIn’s future: how soon will they create profiles for people who haven’t actually joined? When people upload their address books to LinkedIn, the company surely keeps track of email addresses that don’t have a corresponding profile. Some of the most valuable connections LinkedIn could report are connections to people too busy for LinkedIn. Once LinkedIn creates these phantom profiles, they’ll give the potential user in question one more good reason to sign up.
Google+ Launches Games
Their secret investment in Zynga, their Slide acquisition, and their gaming hiring spree are all paying off: Google+ has launched a games service. Since Google+ has created a cultural norm around categorizing friends, they may have fewer viral gaming growing pains than Facebook did; Google+ will probably make it normal to have a “Gaming Friends” circle who will receive game notifications, and to default to only sharing those notifications with that group.
In other gaming news, Zynga updated their S-1 to reveal that fewer than 5% of users pay for games, that the distribution of game revenue is similarly skewed to the top few games, and that they’ve raised a major line of credit.
CPC Pricing Update
Efficient Frontier has new data on average costs per click. Month-over-month, retail and autos are up, and finance is way down. As usual, there are plenty of uncontrolled variables in this kind of experiment—finance costs per click, for example, might be under negative pressure because Google is expanding their Google Advisor tool, and generally adding more monetizable clicks to any given results page for financial keywords.
Digital Due Diligence Weekly