I was already impressed with WordPress but after having lunch with Matt Mullenweg today, I'm even more so. Within all the hype surrounding Web 2.0 and blogs, Mullenweg has insight, intelligence and perspective that belie the fact he's 22-years-old. Our chat, which included a sun-drenched walk down Yonge St., touched on a variety of topics, ranging from WordPress's strategic plans and why Microsoft isn't evil to the future of newspapers and why software should be free. I'll post more on Friday when my column in the National Post appears. Maybe we can get him to participate in our mesh conference?
Tags: WordPress, Matt Mullenweb
Internet Adoption Losing Steam
According to new Ipsos Insight study, the global online population climbed just 5% in 2005, compared with a 20% jump in 2004 - while expections for 2006 are, at best, modest. While some markets are still seeing robust growth, Ipsos believes adoption in Canada and the U.S. (72% and 71% regular usage respectively) may have plateaued. For high-speed service providers in North America, the Ipsos report suggests they need to migrate dial-up users, convince non-Internet users to venture into cyberspace and/or drive more sales of value-added services such as anti-virus and anti-spam. At the same time, it may provide the anti-net neutrality forces with more ammunition they need other sources of revenue such as downstream tollgates to remain viable if the number of subscribers isn't expected to climb.
The Timing of the Deal
Has Facebook missed the M&A boat? An executive with the social-networking service apparently told BusinessWeek the company is seeking a $2-billion takeover deal after turning down a $750 million offer earlier. Of course, you can ask for the stars and the moon but it's a mute point if no one makes the right offer. Facebook's apparent desire for the pot of gold at the end of the rainbow does put the spotlight on the fine art of timing a deal. Skype (Niklas Zennstrom and Tim Draper) played the market perfectly by putting out the message the was company was for sale, setting a quasi-public price ($1-billion) and waiting for the suckers…er, I mean…buyers to emerge. It was a masterpiece performance. Vonage, on the other hand, has probably blown it. In a ideal world, it would have done an IPO when VoIP was red-hot a year or so ago. Instead – large losses, soft capital markets, etc. – Vonage waited. As a result, a $600-million IPO has turned into a $250-million S-1 filing that has mysteriously been collecting dust at the SEC. Does this mean Facebook isn't going to get $2-billion? Probably, but it depends on various factors: is there a buyer willing to pay the price, how does Myspace.com's growing success influence Facebook's value, etc. At the very least, the fact Facebook has tipped its hand in BusinessWeek means it wants a large audience to deliver its message or, as rumoured, it's been on the block for awhile and needed a new way to incite interest. It looks like they should have given Tim Draper a call before they hatched their exit plan.
Facebook's plans are being picked apart in the blogosphere. Om Malik cites flat page views, reach and traffic trends while B2Day point holes at the $2-billion price-tag after doing some rough back of the napkin math. Michael Arrington, on the other hand, does not dismiss Facebook's desired valuation.
Web 2.0: Post-Newsweek Thoughts, Facebook
In light of Newsweek's discovery of Web 2.0, I had an "enlightening" chat with one of Kijiji's Canadian managers yesterday. It went something like this:
Me: "So what's Kijiji's business model? How does it make money?"
Them: "We don't have a business model. Everything on the site is free."
Me: "Oh, then I guess Kijiji is a real Web 2.0 company."
For months, I've been ranting about how the lack of viable business models within all these cool Web 2.0 services/applications is a huge and troubling problem. How can you create a business if the service is given away free? – and I'm not talking about jumping on the AdSense bandwagon. If, like me, you have a thing about revenue and profits, the vast majority of Web 2.0 ventures make no sense other than being vanity/make-work projects or hobbies for smart developers.
  But maybe I'm taking a totally wrong approach. Maybe Web 2.0 isn't about creating businesses but, instead, a tool to show off the true power of the Web as a communication, collaboration, entertainment and e-commerce engine. Perhaps the Web is going through an important, but necessary, stage focused on showing how easy it is create new services and start new companies. This contrasts with the dot-com boom where it looked expensive to start and establish a company online. Perhaps what happens next is all the lessons from the dot-com boom and all the lessons from the current "development boom" will be used to create a new formula that provides a path for the establishment of innovative, low-cost, money-making businesses. Maybe this is what I've been missing for the past six months. Then, I could be wrong.
Update: BusinessWeek has a story that Facebook.com – a classic Web 2.0 company – is looking to be acquired for as much as $2-billion. The social-networking company was started two years ago by Mark Zuckerman, now 22, at Harvard University. It raised $500,000 in an angel round from Peter Thiel in September 2004, and pull in another $12.7-million last May from Accel Partners. Mathew Ingram weighs in on Facebook's prospects.
Update: Fred Wilson has a new Web 2.0 business model description called Fremium whereby a company provides a service for free to attract as many users as possible. Then, it rolls out premium services to generate revenue. The challenge with this model is whether users balk at paying for something they've been getting for free.
Jimmy Wales Reels in Some Cash
Jimmy Wales, who either founded Wikipedia or co-founded Wikipedia or simply jumped on someone else's idea, has pulled in $4-million for Wikia Inc., which used to be known as Wikicities. The money comes from Bessemer Venture Partners (an early Skype investor), Pierre Omidyar's Omidyar Network and some high-profile angel investors: Dan Gillmor, LinkedIn CEO Reid Hoffman, Joichi Ito, Marc Andreessen and Mitch Kapor. If you're not aware of Wikia, it's a very smart offshoot of Wikipedia. Wikia provides anyone looking to set up a Wiki with a Web-based platform – whether they want to create a community events site or an online forum to talk about sports. Wikia makes money from selling relevant ads on theses sites (currently from Google). The magic behind Wikia is scale. The more Wikis created – there are more than 1,000 already – the more the company's platform is leveraged. Wikia could also be a good vehicle for Wales to back away from Wikipedia – a move that could defuse criticism that he's too much of a micro-manager for the open-source, volunteer-based encyclopedia. Another intriguing part of Wikia is Gillmore's involvement. In the past six months, he has joined FON as an advisor (who could be compensated if the Wi-Fi network takes off), backed off on accepting more venture capital for Bayosphere, and now invested in Wikia. It seems Gillmore is creating interesting – and potentially lucrative – post-journalism career, which should be encouraging news for all us hacks out there still toiling away for the man!
Zennstrom Live!
Amid the furor of Skype, Niklas Zennstrom and Janus Friis being sued under RICO (Andy Abramson scored the scoop), Zennstrom's appearance next Tuesday at VON Canada should be fascinating. On the schedule, he's slated to offer an “Industry Perspective”, which likely involved how wonderful the $4.1-billion Skype-eBay deal was working out and how Skype was thriving amid growing VoIP competition. While Zennstrom could still touch upon these topics, you have to believe the media (bring your passports, U.S. reporters!) will descend on him for some dirt on the lawsuit. Given there's some confusion/mystery about why Zennstrom doesn't travel to the U.S. (it was always believed he didn't want to be served with legal papers), he has been a frequent visitor to Canada and the VON show. Given the growing buzz about the lawsuit now, I wonder if Zennstrom will bail on VON and decide that staying in London is a safer legal option.
Tags: Niklas Zennstrom, Skype
