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Twitter’s S1: How Do the Numbers Stack Up To Google and Facebook?

By - October 03, 2013

Twitter’s S-1 filing is now public, you can read it here. There’s no dearth of coverage, just Google News it. I’m interested in a few metrics compared to its most likely comparables, namely Google and Facebook. First, a couple tidbits from Twitter’s S-1:

* Top line growth y/y: 118%. Twitter shows financials up to Q2 2013, so through June. Growth 1H 2012 to 1H 2013 is our most recent comparison: $101.3mm in 1H ’12, to $221.4mm in 1H ’13. That’s impressive y/y topline growth of $120.1mm, or 118%.

* Implied 2013 topline: nearly $600mm, but possibly pushing $750mm. Twitter’s earned 62% of its 2012 revenue in the second half of the year. If it does the same this year, that would imply a topline revenue for 2013 of $582.4mm and a second half of around $361mm. Given Twitter took the option of filing its IPO under the JOBS Act, which allows for confidential filing for businesses under $750mm in annual revenue, one could argue that it filed because it knew it was going to have a blowout second half, which would push its FY topline over $750mm. If indeed revenues are accelerating beyond the norms set in 2012, we may see a second half revenue figure of closer to half a billion, which would be pretty spectacular.

Now, when I think “spectacular,” I think of the Google IPO, the original S-1 is here. How does Twitter stack up? Well, Google had far more revenue, and was very profitable. Twitter is profitable only on an adjusted EBIDTA basis, which is good, but not spectacular. On a growth basis, at the time it went public, Google’s y/y growth was 217%, if you take the comparable first quarters of 2003 and 2004. So from a financial point of view, Twitter’s no Google. But it’s no slouch, either. Here are the two companies financials, from their originally filed S-1s:

Google:

GoogS1

 

Twitter:TwitterS1

Now, what about Facebook’s initial S-1 filing?

Well, a quick look reminds us why there was so much hype: The company had huge revenues and was extremely profitable. See for yourself:

Facebooks1

 

Facebook was pretty much ready to go public a year or two before it actually did. By the time it went out, the public has already assumed it was a behemoth, and the offering failed to “pop.” It seems Twitter is learning from Facebook’s IPO, and is going out just at the moment it hits its financial stride, a bit earlier than Google, but before Facebook, in terms of financial maturity.

Now that Twitter is on the road to going public, it’ll be very interesting to see what the company’s third quarter filings look like. My guess is they’ll be very strong – the company is far too smart to plan it any other way. If I had to wager – and remember, I have no inside information, this is all speculative – Twitter will report a quarter that shows stronger growth than historical norms of 2012 might imply. We’ll know soon enough. If you’re a Twitter employee, partner, or investor: Congratulations on achieving such an important milestone. The world’s really watching now.

PS – I’d also be interested in a free-cash flow analysis of the company, but I don’t have the time to do that work. Anyone seen a good analysis? 

  • Content Marquee

Thoughts on Ford’s OpenXC: In The Future, Brands With Open Data Will Win

By - August 18, 2013

Ford Open XCI spent today at the first-ever Boing Boing Ingenuity, a two-day hackathon cum “vaudeville show” – truly Boing Boing brought to life. It made me so proud to see the essence of conversational marketing at work – a major brand adding deep value to a community, an independent publisher realizing its dream of celebrating its voice and community through a unique event that built up online over many months.

Here’s the Twitter stream. It was really great. And the main insight I took away was this: Brands will soon have no choice but to become data (because we are all becoming data, after all). A car creates tons of data every mile it is driven, for example. Faced with this fact, how might a car brand respond? It could see that data as its private asset, put up fences around it, and make that data really difficult for the driver (and society at large) to access. Or, it could act like Ford did, and tack in the direction of openness.

Ford has created a platform called OpenXC that opens APIs into 50 or so data streams coming out of your car. On the first day of Ingenuity, teams of makers, hackers, and regular folks came up with amazing ideas that leveraged Ford’s innovative platform. For example, one team built an app that senses when a pet or child is in your car, then monitors the car’s internal temperature. If it gets too hot, this app can lower the windows, turn on the AC, and text the car’s owner. I mean, how cool is that?!

Boing Boing’s editors presented the winners on stage on Sunday during Ingenuity, a day long celebration of, well, the weird and wonderful people and ideas that make Boing Boing, Boing Boing. There was a hack that turned driving data into music – if you drive aggressively and waste resources, the music gets aggravating. If you drive well, it gets soothing. Another hack interpreted braking, steering, and other information into new signals for other drivers – imagine a taillight flashing “Thank you!’ when someone lets you merge into oncoming traffic, for example. Yet another hack took all that data and turned it into a “cost per trip” dashboard that gamifies driving and encourages you to drive in a way that saves money.

These kinds of innovations can only occur in an ecosystem of openness. As our society tips toward one based on data, our collective decisions around how that data can be used will determine what kind of a culture we live in. And what I observed at Ingenuity strengthened my belief that companies that lean into an open approach to data will win. There will soon be streams of data coming from all manner of products – appliances, clothing, sporting goods, you name it. Wouldn’t you rather live in a world where you can export the data from your son’s football helmet to a new app that monitors force and impact against a cohort of high school players around the country? Or would a better world be one where Riddell Inc. owns and controls that data?

Way back in 2008 I wrote a piece about Facebook and data called It’s Time For Services on The Web to Compete On More Than Data. My point was this: winning on a strategy of data lockdown is a short-term play. What matters is the service you provide on top of that data. For companies like Ford, the key won’t be to lock in customer data and try to be the best at leveraging your proprietary insights. It’ll be allowing your customers to take that data out, remix it into a robust ecosystem, and feed it back to your company and products, so they can get better. Companies will compete on how they best leverage a customer’s data, not on whether or not they’ve locked those customers’ data assets in (are you listening, cable companies?!).

Of course, a true test of this optimistic scenario will come when GM, Toyota, or other car companies join Ford in offering a data platform, and a long-time Ford customer buys a Chevy. Will Ford let that customer take their data over to GM? Time will tell, but I know where I come down: Openness and portability will win in the end.

LinkedIn On A Roll

By - July 19, 2013

LInote

It’s been pretty obvious from the stock price, but LinkedIn, which I’ve written about every so often, is really on a roll lately. The influencer content play (which I will admit I’ve been part of, in a small way) is a clear winner, the company is enjoying very positive press, and its premium services are getting really interesting as well.

Just today I got an email from the company titled “What’s new with people you know?” I found it compelling in a way that emails from nearly every other service I use – Twitter, Facebook, or Google – are not.  CEO Jeff Weiner tells me that this email has been sent out every six months for the past three years, but it’s clearly been redesigned as more of a media product. I care about my network on LinkedIn, and the email was full of pictures of people who really matter to me, all of whom have gotten new jobs.  It’s  one of the most engaging messages I’ve ever gotten from a “social network.” (In case you want some history, I called LinkedIn out as a media company more than a year ago here.)

I also found the focus on numbers very interesting. 10% of my network – which is pretty big – have gotten new jobs in the past six months. That’s quite an intriguing lens on how things are changing in our industry. LinkedIn has always been a data-centric company, and each time I speak with Weiner,  he’ll cite engaging statistics his team has culled from the network’s servers. This rolls up to Weiner’s big hairy audacious goal (BHAG) for the company – to map the global “economic graph.” As he puts it:

..we want to digitally map the global economy, identifying the connections between people, jobs, skills, companies, and professional knowledge — and spot in real-time the trends pointing to economic opportunities. It’s a big vision, but we believe we’re in a unique position to make it happen.

It seems Wall Street agrees. I’ll be watching LinkedIn more closely over the coming year, and I bet Google and Facebook will be too. Hoffman, Weiner and team have built something that both those companies, and many more, must find quite enviable.

The PRISMner’s Dilemma

By - July 16, 2013

prismSometimes when you aren’t sure what you have to say about something, you should just start talking about it. That’s how I feel about the evolving PRISM story – it’s so damn big, I don’t feel like I’ve quite gotten my head around it. Then again, I realize I’ve been thinking about this stuff for more than two decades – I assigned and edited a story about massive government data overreach in the first issue of Wired, for God’s sake, and we’re having our 20th anniversary party this Saturday. Shit howdy, back then I felt like I was pissing into the wind –  was I just a 27-year-old conspiracy theorist?

Um, no. We were just a bit ahead of ourselves at Wired back in the day.  Now, it feels like we’re in the middle of a hurricane. Just today I spoke to a senior executive at a Very Large Internet Company who complained about spending way too much time dealing with PRISM. Microsoft just posted a missive which said, in essence, “We think this sucks and we sure wish the US government would get its shit together.” I can only imagine the war rooms at Facebook, Amazon, Google, Twitter, and other major Internet companies – PRISM is putting them directly at odds with the very currency of their business: Consumer trust.

And I’m fucking thrilled about this all. Because finally, the core issue of data rights is coming to the fore of societal conversation. Here’s what I wrote about the issue back in 2005, in The Search:

The fact is, massive storehouses of personally identifiable information now exist. But our culture has yet to truly grasp the implications of all that information, much less protect itself from potential misuse….

Do you trust the companies you interact with to never read your mail, or never to examine your clickstream without your permission? More to the point, do you trust them to never turn that information over to someone else who might want it—for example, the government? If your answer is yes (and certainly, given the trade-offs of not using the service at all, it’s a reasonable answer), you owe it to yourself to at least read up on the USA PATRIOT Act, a federal law enacted in the wake of the 9/11 tragedy.

I then go into the details of PATRIOT, which has only strengthened since 2005, and conclude:

One might argue that while the PATRIOT Act is scary, in times of war citizens must always be willing to balance civil liberties with national security. Most of us might be willing to agree to such a framework in a presearch world, but the implications of such broad government authority are chilling given the world in which we now live—a world where our every digital track, once lost in the blowing dust of a presearch world, can now be tagged, recorded, and held in the amber of a perpetual index.

So here we are, having the conversation at long last. I plan to start posting about it more, in particular now that my co-author Sara M. Watson is about to graduate from Oxford and join the Berkman Center at Harvard (damn, I keep good company.).

I’ve got so many posts brewing in me about all of this. But I wanted to end this one with another longish excerpt from my last book, one I think encapsulates the issues major Internet platforms are facing now that programs like PRISM have become the focal point of a contentious global conversation.

In early 2005, I sat down with Sergey Brin and asked what he thinks of the PATRIOT Act, and whether Google has a stance on its implications. His response: “I have not read the PATRIOT Act.” I explain the various issues at hand, and Brin listens carefully. “I think some of these concerns are overstated,” he begins. “There has never been an incident that I am aware of where any search company, or Google for that matter, has somehow divulged information about a searcher.” I remind him that had there been such a case, he would be legally required to answer in just this way. That stops him for a moment, as he realizes that his very answer, which I believe was in earnest, could be taken as evasive. If Google had indeed been required to give information over to the government, certainly he would not be able to tell either the suspect or an inquiring journalist. He then continues. “At the very least, [the government] ought to give you a sense of the nature of the request,” he said. “But I don’t view this as a realistic issue, personally. If it became a problem, we could change our policy on it.”

It’s Officially Now A Problem, Sergey. But it turns out, it’s not so easy to just change policy.

I can’t wait to watch this unfold. It’s about time we leaned in, so to speak.

Halfway Into 2013, How’re The Predictions Doing?

By - July 07, 2013

1-nostradamusOver the past few years I’ve taken to reviewing my annual predictions once half the year’s gone by. This weekend I realized exactly that had occurred.

It’s been quite a six months, I must say. Personally I took back the reigns at a company I founded in 2005, found a co-author for my book, and hired a CEO for the company I started last year (he starts next week). But I haven’t been writing nearly as much as I’d like here, and that sort of saddens me. However, one of my “half year” resolutions is to change that, and it starts with this review of my Predictions 2013.

This year’s predictions were a bit different in that I wrote about things I *wished* would happen this year, as opposed to those I thought most likely to happen. They were still predictions, but more personal in nature. So let’s see how I did, shall we?

1. We figure out what the hell “Big Data” really is, and realize it’s bigger than we thought (despite its poor name).

Halfway into the year, I think there’s no doubt this conversation has picked up speed dramatically. The PRISM program, in particular, has thrown new light on how “big” big data really is, and what kind of a society we’re becoming as we all become data. I’d say that on this prediction, which was pretty easy to make, we’re well on our way to checking the box as “true.” The bigger point of my prediction had to do with how we, as a society, are coming to grips with the more far reaching implications of all this data. I’ll report back on that at year’s end.

2. Adtech does not capitulate, in fact, it has its best year ever, thanks to … data. 

I think so far, I’ve been proven right here. Terry Kawaja, he of the famous Lumascape, has revised his charts to show a more than doubling of the companies in the space this year. While there have been plenty of deals, it doesn’t look like adtech is capitulating at all.

3. Google trumps Apple in mobile 

I predicted that Google would come out with an iPhone killer this year, so far, this hasn’t happened (though many do view current Google phones as equal.) There are still six months to go, with the crucial holidays to come.

Also, there are many ways to measure “trumps Apple,” including market share (where Google has already surpassed Apple), profit (where Apple is still killing Google), and the softer “buzz,” which I have to say, Google is winning in my small world. For now, I think the jury is out.

4.  The Internet enables frictionless (but accountable) payments, enabling all manner of business models that previously have been unnaturally retarded. 

This is a “slow burn” issue, and I think we may look back at 2013 as the year payments got really, really easy. Square, Stripe, and Braintree are leaders here, and I really do sense a breakthrough happening. But I can’t quite prove it at midyear. Many, many startups are using these services as base ingredients for their business models, I can say that.

Related, I also predicted that major consumer-facing online platforms based on “free” – Google and Facebook chief among them, though Twitter is a potential player here as well – will begin to press their customers for real dollars in exchange for premium services. This is undeniably true. Twitter, Facebook, and LinkedIn have all been asking me for money for premium services this year – for advertising my account, or upgrading to “pro” services. This trend is well underway.

5.  Twitter comes of age and recommits itself as an open platform. 

I just don’t know about this. Honestly, I don’t know. On the one hand, the company has deprecated RSS to the point of it not being usable. On the other hand, the company stands for free and open speech like no other. What do you all think?

6. Facebook embraces the “rest of the web.” 

Well, as I said in the beginning, this was a set of predications based on what I wished would happen. I predicted that Facebook would “make it really easy to export your identity and data.” I’m not really seeing anything that merits a “win” here, but maybe I missed a memo.

7. By the end of the year, Amazon will have an advertising business on a run rate comparable to Microsoft.

I think this has already happened if you take out Microsoft’s search business, but we don’t know it for sure because Amazon won’t break out its ads business. More here and here. Anyone have any more insights?

8. The world will learn what “synthetic biology” is, because of a major breakthrough in the field.

Well, given I’m not steeped in current research, I better ask my friend David Kong if this is true yet. David? Hopefully it will be by year’s end!

All in all, I think the predictions are faring well halfway through the year. What did I miss?

 

Mary’s Annual Internet Trends

By - June 02, 2013

Waaay back in the late 1990s, I started a conference called the Internet Summit. My co-producers were Bill Gurley, who remains one of the giants in venture over at Benchmark, and Mary Meeker, who was at that point the best analyst in the Internet space, at Morgan Stanley. The Internet Summit had its last event in July of 2001, and the space was taken over by Kara Swisher and Walt Mossberg, who went on to launch All Things Digital, which has thrived to this day. I went on to launch the Web 2 Summit in 2004, and it was at that event that Mary started presenting her annual Internet Trends deck. I put her in one of my typical “High Order Bit” slots, ten minutes max, and each year Mary would lobby for more time, and cram more and more data and insights into her alloted time (by the last time Mary did it with me, it was 15 minutes and about 90 slides).

I stopped doing Web 2 in 2011 (OpenCo is the new black, natch), and Mary migrated her job to Kleiner Perkins and her presentation to All Things Digital, both great moves. Last week she unveiled her latest work, and I notice it’s gotten up to 117 slides. I missed All Things D due to a client event at P&G, but I bet she got more than 15 minutes to present it!

This deck is always worth the time to review. You can download it on KPCB’s site, and I’ve embedded it below.

Yahoo! And Tumblr: It’s About Display, Streams & Native at Scale

By - May 19, 2013

The world is atwitter about Tumblr’s big exit to Yahoo!, and from what I can tell it seems this one is going to really happen (ATD is covering it well).   There are plenty of smart and appropriate takes on why this move makes sense (see GigaOm) but I think a lot of it boils down to the trends driving Yahoo’s massive display business.

If there’s one thing we all know, it’s that a new form of native advertising is spreading throughout the Internet. It started with Google and AdWords, it spread to Twitter and its Promoted Tweets, and Facebook quickly followed with Sponsored Stories. At FMP, we have sponsored posts and our Native Conversationalist suite, which we are scaling now across the “rest of the web” – the smaller but super influential independent sites that we believe are major suppliers of  ”the oxygen of the Internet” – the content that drives true engagement. Other companies are adopting similar strategies – Buzzfeed is building a content marketing network, and Sharethrough has moved past its “wrap a YouTube ad in a player and call it native” phase and into more truly native units as well.

The reason native works is because the advertising is treated as a unit of content on the platform where it lives. That may seem obvious, but it’s an important observation. When a brands’s content competes on equal footing alongside a publisher’s content, everyone wins. Those search ads – they win if they are contextually relevant and add value to the consumer’s search results. Those promoted tweets only get promoted if people respond to them – a signal of relevance and value.  The same is true for all truly “native” ad products. If the native ad content is good, it will get engagement. The industry is evolving toward rewarding advertising that doesn’t interrupt and is relevant and value additive. That’s a good thing.

Left out of this evolution, until now, has been Yahoo!. When you break it down, Yahoo! is a Very Large Display Advertising business, with a hefty side of search and a bit of this and that on top. And that display advertising business is going through a wrenching shift, as buyers move to more efficient programmatic channels (for a visualization, see my last post). CPMs (cost per thousand, the unit of value for display advertising) are rapidly declining for “standard display” units – the boxes and rectangles that built Yahoo! and much of the rest of the web.

It will take a couple of years for those ads to A/evolve into new forms that are standardized and B/be driven by data and real-time programmatic rules in ways that brands can really trust (it’s already working for direct response, but that’s not the end game). Display will always be around, but as I said, it’s in a significant evolutionary phase, and the short to mid term reality is this: CPMs are dropping, and Yahoo! has a massive display business.

At the same time, we’re all shifting our attention to mobile devices, and we’ve adopted the “stream” as our preferred method of content discovery and consumption. That stream doesn’t work so well with standard display. But it’s great for native units.

Yahoo! is already shifting its home page and other content sections to a stream like interface. Tumblr offers only native ad units (founder David Karp lifted his strategy pretty much wholesale from Twitter’s “the ad is the tweet” philosophy). And Tumblr was built from the ground up as an activity stream.

I’ll write another time about how I believe that display and native will eventually merge – via the programmatic exchange. For now, Yahoo’s move gives it an asset that its branded display sales force can sell as sexy: native, content-driven advertising at scale. A good move.

Behind the Banner, A Visualization of the Adtech Ecosystem

By - May 13, 2013

I’m very proud to announce “Behind the Banner“, a visualization I’ve been producing with Jer Thorp and his team from The Office for Creative Research, underwritten by Adobe as part of the upcoming CM Summit next week. You can read more about it in this release, but the real story of this project starts with my own quest to understand the world of programmatic trading of advertising inventory – a world that at times feels rather like a hot mess, and at other times, like the future of not only all media, but all data-driven experiences we’ll have as a society, period.

I’m a fan of Terry Kawaja and his Lumascapes – Terry was an advisory to us as we iterated this project. But I’ve always been a bit mystified by those diagrams – you have to be pretty well steeped in the world of adtech to grok how all those companies work together. My goal with Behind the Banner was to demystify the 200 or so milliseconds driving each ad impression – to break down the steps, identify the players, make it a living thing. I think this first crack goes a long way toward doing that – like every producer, I’m not entirely satisfied with it, but damn, it’s the best thing I’ve seen out there so far.

I am deeply grateful to all the folks who helped us make this happen, in particular Jared Cook at Adobe, and a legion of leaders in the industry who reviewed early versions, including Walter Knapp, Bill Demas, Ned Brody, Brian O’Kelley, Ann Lewnes, and dozens more who helped me research and imagine what this might end up looking like.

So take a look and tell me what you think. It’s far too complex to embed here, so we have it running over on the CM Summit site. If nothing else, it should get folks talking, and I hope you’ll help us make it better by leaving a comment here, or sending me mail with your thoughts.

Oh, and while you are at the site, check out the conference lineup. We are almost sold out of tickets, and it’s going to be one heckuva conversation, so please join us!

On Google Glass and OpenCo NYC

By - May 09, 2013

In case you have any interest, here’s a short clip of me opining on Google Glass and the upcoming OpenCoNYC, which is going to be HOT. More on that soon.

We’ve Seen This Movie Before…On Traffic of Good Intent

By - April 26, 2013

(image) Back in 2005 I whipped off a post with a title that has recently become relevant again – “Traffic of Good Intent.” That post keyed off  a major issue in the burgeoning search industry – click fraud. In the early days of search, click fraud was a huge problem (that link is from 2002!). Pundits (like me) claimed that because everyone was getting paid from fraud, it was “something of a whistling-past-the-graveyard issue for the entire (industry).” Cnet ran a story in 2004 identifying bad actors who created fake content, then ran robots over AdSense links on those pages. It blamed the open nature of the Web as fueling the fraudsters, and it noted that Google could not comment, because  it was in its quiet period before an IPO.

But once public, Google did respond, suing bad actors and posting extensive explanations of its anti-fraud practices. Conversely, a major fraud-based class action lawsuit was filed against all of the major search engines. Subsequent research suggested that as much as 30% of commercial clicks were fraudulent  - remember, this was after Google had gone public, and after the issue had been well-documented and endlessly discussed in the business and industry press. The major players in search finally banded together to fight the problem – understanding full well that without a united front and open communication, trust would never be established.

Think about that little history lesson – a massive, emerging new industry, one that was upending the entire marketing ecosystem, was operating under a constant cloud of “fraud” which may have been poisoning nearly a third of the revenues in the space. Yet billions in revenue and hundreds of billions in market value was still created. And after several years of lawsuits, negative press, and lord-knows-how-much-fraud, the clickfraud story has pretty much been forgotten.

Sound familiar?

It should. Because the same movie is once again playing, but this time the problem has migrated to the open ecosystem of programmatic display. As anyone who’s studied the LUMAscape knows, we now have a VC-fueled industry worth billions, with many players primed to go public in the coming year or so. And the original search players – Google in particular, but also Microsoft and Yahoo! – are also major actors in this new industry.

My post from January of this year - It’s Time To Call Out Fraud In The Adtech Ecosystem - summarized the new breed of fraud in our industry, and recently, many publications  have intensified their coverage of the topic. In late February, I invited a handful of adtech CEOs to a lunch where we discussed the issue, and everyone at the table – from AppNexus to Google, OpenX to MediaOcean – agreed that it was time to address the problem head on.

And that’s how we got to the news  this past week that the IAB is standing up a task force on “Traffic of Good Intent.” I’m proud to be a co-chair of the group (and yes, the name does come from that 2005 post in these pages). This time around, there are many more players, a much larger industry, and a far more complicated ecosystem. But it’s worth remembering that bad actors always take advantage of open systems. It’s up to us to unite and drive them back. We should all be trading in traffic of good intent – real human beings, engaged with real content and services across the Internet. Our customers, partners, investors, and our good company names depend on it.

I look forward to the work.