Category: Investing

Perspective – internet boom 2.0 ?

Posted on by Steve Sammartino

There’s been a lot of talk lately about an ensuing second internet boom. With the billion dollar sales of many web 2.0 companies it’s easy to see why:

 

facebook-logo.jpg                          $15.1 billion

 

skype_logo1.png                                   $2.6 billion

  

feedburner_logo.jpg                            $100 million

  

aquantive-logo.gif                         $6 billion

 

doubleclick_logo.jpg                       $3.1 billion

 

youtube-logo.jpg                                $1.7 billion

 

digg-logo.gif                                     $60 million

Among others…

To give a little perspective the Nasdaq composite index peaked in the year 2000 at 5132 points. Yesterday it closed at 2320, just under 8 years later.

If you invested $10,000 at the peak, today it would be worth $4521. Still a very bearish 55% capital loss.

  

Sure we’d have to question some of the valuations, but the market hasn’t started to value ‘ideas’ at over a billion – yet.

  

Start up lesson – your company is worth what someone is prepared to pay for it.

Money follows ideas

Posted on by Steve Sammartino

Lacking the cash to commence a start up is a misnomer. There’s so much cash floating around western markets at present that the owners of this cash simply don’t know what to do with it.

All money in the world resides somewhere based on an idea. Let me explain:

Money in your wallet – based on the idea we’re going shopping, will need cash for lunch or maybe just for an emergency.

Money in the bank – based on the idea we’ll need it at a later date for something more significant and want to save it for this future transaction

Money in shares – based on the idea that this companies fortunes are improving and the money will grow and provide us with dividends and or a capital gain.

Money loaned to us – based on the idea that we can use this money to create something of bigger financial worth than the original loan and the cost of interest repayments.

All money follows an idea. Sometimes both parties profit. Sometimes one party profits, sometimes we all lose. But the thing which there is no doubt about, is the fact that money is out there for any idea, any time.   

If our start up is that idea we ought chase it and give that idea the money it deserves. The better the idea the greater the chance of accessing the money.

Bootstrapping lyrics

Posted on by Steve Sammartino

We need to look and listen for inspiration all day in startup land. We might just see or hear something that gives us a new idea, new perspective or simply helps us stay motivated. I had one such experience while listening to some Talking Heads when their song ‘Life During Wartime’ came on. Which is fron way back in the 1970’s…

 

I think they’re great entrepreneur / webpreneur lyrics (let alone a funky song). So I attached them below. Hope you get something out of them.

LIFE DURING WARTIME

Heard of a van that is loaded with weapons
packed up and ready to go
Heard of some gravesites, out by the highway
a place where nobody knows
The sound of gunfire, off in the distance
I’m getting used to it now
Lived in a brownstone, lived in the ghetto
I’ve lived all over this town This ain’t no party, this ain’t no disco
this ain’t no fooling around
No time for dancing, or lovey dovey
I ain’t got time for that nowTransmit the message, to the receiver
hope for an answer some day
I got three passports, couple of visas
don’t even know my real name
High on a hillside, trucks are loading
everything’s ready to roll
I sleep in the daytime, I work in the nightime
I might not ever get home

This ain’t no party, this ain’t no disco
this ain’t no fooling around
This ain’t no mudd club, or C. B. G. B.
I ain’t got time for that now

Heard about Houston? Heard about Detroit?
Heard about Pittsburgh, PA?
You oughta know not to stand by the window
somebody might see you up there
I got some groceries, some peanut butter
to last a couple of days
But I ain’t got no speakers
ain’t got no headphones
ain’t got no records to play

Why stay in college? Why go to night school?
Gonna be different this time?
Can’t write a letter, can’t send a postcard
I can’t write nothing at all
This ain’t no party, this ain’t no disco
this ain’t no fooling around
I’d love you hold you, I’d like to kiss you
I ain’t got no time for that now

Trouble in transit, got through the roadblock
we blended in with the crowd
We got computers, we’re tapping phone lines
I know that ain’t allowed
We dress like students, we dress like housewives
or in a suit and a tie
I changed my hairstyle so many times now
don’t know what I look like!
You make me shiver, I feel so tender
we make a pretty good team
Don’t get exhausted, I’ll do some driving
you ought to get you some sleep
Get you instructions, follow directions
then you should change your address
Maybe tomorrow, maybe the next day
whatever you think is best
Burned all my notebooks, what good are notebooks?
They won’t help me survive
My chest is aching, burns like a furnace
the burning keeps me alive

Tech bubble v2.0

Posted on by Steve Sammartino

I recently blogged about the unrealistic valuation of Facebook, seems there’s many who agree with startupblog. Sure web 2.0 is heating up, but as usual they’ll be stayers and those who disappear. The only thing that changes…. This is a really clever and fun parady.

[youtube=http://www.youtube.com/watch?v=KtdV3z9eCm8]

If we want to be here in the long run here’s some simple advice:

Offer a service people need, ensure it has a built in way to make you money, not an exit plan which sells eyeballs – these only work for a few ‘wordbeaters’ (like facebook & youtube).

Top 100 business blogs

Posted on by Steve Sammartino

It’s nice to be recognised for a consistent effort occassionally. As can be seen below Startup blog makes the top 100 business blogs – number 82.

Honestly, I’d still do it if no one was reading – because it’s worth doing.

  1. Business Opportunities Weblog T: 12 A: 16,213
  2. Copy Blogger T: 36 A: 7,825
  3. Seth Godin T: 47 A: 10,314
  4. MicroPersuasion T: 169 A: 33,643
  5. How To Change The World T: 180 A: 14,709
  6. Duct Tape Marketing T: 215 A: 31,714
  7. Freelance Switch T: 312 A: 10,638
  8. A VC T: 1,226 A: 27,737
  9. Rough Type T: 1,253 A: 69,429
  10. Successful Blog T: 1,432 A: 44,935
  11. Small Business Canada T: 1,517 A: N/A
  12. David Allen, Getting Things Done T: 1,549 A: 53,592
  13. Springwise T: 1,913 A: 23,858
  14. Small Biz Trends T: 2,155 A: 63,364
  15. Fast Company T: 2,310 A: 12,141
  16. Instigator Blog T: 2,477 A: 58,816
  17. Occam’s Razor T: 2,548 A: 45,541
  18. Smart Wealthy Rich T: 2,879 A: 79,415
  19. eMoms At Home T: 3,443 A: 27,125
  20. Escape from Cubicle Nation T: 3,467 A: 202,751
  21. The Marketing Technology Blog T: 3,496 A: 47,038
  22. Business Pundit T: 3,724 A: 114,669
  23. The Engaging Brand T: 4,404 A: 433,644
  24. Influential Marketing Blog T: 4,779 A: 98,886
  25. Drew McLellan – The Marketing Minute T: 4,820 A: 129,669
  26. The Digerati Life T: 4,873 A: 53,353
  27. Success From The Nest T: 4,908 A: 95,008
  28. Business Blog Consulting T: 5,186 A:237,901
  29. Church Of The Customer T: 5,576 A: 250,201
  30. Todd And T: 5,643 A: 161, 019
  31. Net Business Blog T: 5,936 A: 36,107
  32. Don Dodge on The Next Big Thing T: 6,583 A: 92,784
  33. Bootstrapper T: 7,497 A: 50,304
  34. About.com Entrepreneurs T: 7,797 A: N/A
  35. Blogtrepreneur T: 7,897 A: 53,011
  36. Branding & Marketing T: 8,200 A: 710,326
  37. Simplenomics T: 10,252 A:288,753
  38. Freelance Folder T: 10,543 A: 63,590
  39. HELLO, My Name Is Blog T: 11,395 A: 422,218
  40. Self Made Minds T: 11,704 A: 39,719
  41. Sox First T: 12,894 A: 994,161
  42. Young Go Getter T: 14,239 A: 45,373
  43. Trust Matters T: 15,462 A: 58,403
  44. Small Biz Survival T: A: 18,074 A: 875,069
  45. The Personal MBA T: 19,207 A: 142,649
  46. The Entrepreneurial Mind T: 21,958, A: 155,166
  47. Blog Business World T: 23,025 A: 252,405
  48. Working At Home On The Internet T: 23,247 A: 423,900
  49. Biz Informer T: 24,631 A: 904,745
  50. EmpowerWomenNow T: 25,837 A: 117,085
  51. Biz Plan Hacks T: 27,048 A: 1,335,732
  52. CreateBusinessGrowth T: 32,949 A:197,290
  53. Business Opportunities and Ideas T: 33,205 A: 282,805
  54. The KISS Business T: 35,496 A: 621,082
  55. Startup Spark T: 35,747 A: 386,949
  56. Buzzoodle Buzz Marketing Blog T: 41,092 A: 467,418
  57. MindPetals T: 41,714 A: 128,487
  58. Marketing Deviant T: 43,764 A: 281,072
  59. Go Big Network T: 44,842 A: 25,303
  60. Cool Business Ideas T: 49,679 A: 187,126
  61. Neville’s Financial Blog T: 52,048 A: 140,296
  62. Atlantic Canada’s Small Business Blog :T 52,589 A: 795,253
  63. College Startup T: 53,143 A: 184,398
  64. Reflections Of A Biz Driven Life T: 79,365 A: 361,398
  65. Branding Blog T: 93,462 A: 1,110,518
  66. Carnival Of The Capitalists T: 93,462 A: 1,897,375
  67. Young Entrepreneur T: 104,933 A: 26,491
  68. Marketing Genius T: 132,066 A: 2,222,119
  69. Better For Business T: 137,774 A: 590,797
  70. The Small Business Blog T: 140,824 A: 577,490
  71. Focused Mind T: 162,356 A: 520,971
  72. Small Business Tips T: 166,367 A: 74,005
  73. Lifes Perspective T: 194,358 A: 179,801
  74. Business Opportunities Blog T: 199,700 A: 832,678
  75. The Savvy Entrepreneur T: 224,227 A: 391,147
  76. Egg Marketing Blog T: 231,062 A: 740,867
  77. The Franchise King Blog T: 273,240 A: 520,732
  78. Small Business Entrepreneur T: 317,977 A: 883,094
  79. The Great Startup Game T: 331,293 A: 421,492
  80. Work At Home Start Up Guide T: 345,597 A: 1,190,178
  81. Dorm Room Biz T: 360,865 A: 957,072
  82. Startup Blog T: 377,609 A: 2,552,189
  83. Open Innovators T: 395,824 A: 1,230,257
  84. Get Entrepreneurial T: 437,475 A: 446,085
  85. Bplans Blog T: 437,475 A: 1,373,525
  86. Stuff4Restaurants T: 461,534 A: 298,982
  87. Canadian Entrepreneur T: 484,461 A: 237,901
  88. Strategize T: 487,964 A: 2,856,731
  89. The Marketing Spot T: 587,893 A: 2,550,840
  90. The Ravings Of A Mad Entrepreneurial Scientist T: 587,893 A: 566,836
  91. More Than We Know T: 871,446 A: 2,964,420
  92. Solo Entrepreneur T: 1,212,405 A: 471,491
  93. Stuff4Business T: 1,391,575 A: 298,982
  94. Consultant Journal T: 4,262,598 A: 667,342
  95. Startup Addict Musings T: 4,446,976 A: 1,03390,690
  96. Edith Yeung T: 8,911,336 A: 125,290
  97. Boostrap Me T: 8,911,336 A: 550,348
  98. The Selling Sherpa T: Not Listed A: 772,292
  99. BizzBangBuzz T: Not Listed A: 1,484,797
  100. The Freestyle Entrepreneur T: Not Listed A: 1,519,518

Business valuations & Facebook

Posted on by Steve Sammartino

The recent deal where Microsoft took a 1.6% stake in Facebook for $US240 Million valued the company at $US15 Billion.

 

Here’s some numbers:

  • Facebook has a revenue of approx $100m per annum. 

  • Although profit is currently undisclosed, even a generous 50% profit on sales margin would result in a diminutive profit of $50 million.

  • This would result in a PE ratio of 300 times!

  • Which means, it will take Microsoft 300 years to pay back their investment.

Start up blog view: This could be the most ridiculous sale price anyone has ever paid for a company.

Has everyone forgotten about these start up web 1.0 heroes of the late 1990’s and early 2000’s:

kozmo.com

Global crossing

Worldcom

govWorks.com

eToys

Boo.com

Pets.com

theGlobe.com

Where Investment banks and reputable companies such as Microsoft paid exorbitant  prices for many now non-existent companies with zillions of page views, sessions and ‘potential’?

It’s different this time, right?

At some point in our journey we all have to value a business. So we must remember the following:

When selling: Potential, emotion and short memories can get you a great price

When buying: Forget ‘potential’ and focus on ‘current’ earnings and investment payback period.

Bonus conspiracy theory: Microsoft really bought the personal information of the 42 million active Facebook members.