Advice, and a request

If you register a domain name because you plan to build a website with that domain name later, something to watch out for: if you plan to host your site elsewhere, but your domain registrar parks your domain on a "coming soon" page first, it can impede your search engine optimization later. That appears to be the case with ShortScreen.com, which is taking some time to get indexed by search engines (this has also held up Google Adwords/Microsoft adCenter keyword ads). If you have your own site, and wouldn't mind posting a link to ShortScreen ( http://shortscreen.com/ ) in a post there, I'd be grateful, as my developers tell me that will help with the search engine indexing. Thanks a lot.

To head this issue off for the next site (which is currently in development), my developers moved the domain from the registrar early, and put up a quick one page site for the domain hosted on their servers.

Blogging like it's 1999

One of the reasons I like reading venture capitalist Fred Wilson's blog is that it reminds me of 1999. Remember when the economy was booming, unemployment was at ~4%, the stock market was hitting new highs, and Internet businesses were focused more on gaining users than generating revenues? That last part, at least, is still the case with some of the ventures Fred writes about, and it makes me a little nostalgic for the good old days. Here was Fred blogging about one of his portfolio companies, Foursquare yesterday:

I was having breakfast at Pastis with a friend today. The "mayor" of that restaurant, Mark Ghuneim, walks in and goes to the bar to order his morning coffee to go. I said to my friend, "watch this, he's going to pull out his phone and then look up and and try to locate me in this restaurant". My friend, who is not on foursquare, says to me "how do you know?" I said "trust me". Sure enough, Mark starts looking around the restaurant and spots us and comes over and has a ten minute conversation about web music stuff (and foursquare).

When I checked in this morning at Pastis, I added a shout that said "getting a demo of a hot new web music service". The CEO of Targetspot, Eyal Goldwerger, saw that on his phone and jumped in a subway to come down and see the demo too. Sadly, we had left by the time he got there.

But both anecdotes are examples of why foursquare has such potential. It seems like such a simple and whimsical service. You just checkin to places via your phone. But the data that it creates and the way it is published out to your social graph is powerful. I expect we'll see a lot more of this sort of thing as the user base on foursquare hits six figures and hopefully seven figures in the coming months.

A commenter of his named Greg responded:

I don't think Foursquare is going to grow. Fred, your position is unique -- you're a micro-celebrity, people want to see you because they want to grovel for your money. The average person, though, has only 10-20 friends, and random people aren't checking to see them at all hours of the day. Checking in, then, quickly becomes a lonely and pointless experience; the virtual badges get old fast, there are no great anecdotes of people visiting you, and the deals businesses offer for mayors are sparse and easily gamed.

Foursquare is a case-study in the tech industry hype-machine. Because it's useful for micro-celebrities, you have exactly those people hyping it up: MG Siegler, yourself, etc.

Greg makes a similar point to the one I speculated about in this post, Social Media: the new Public Access TV?.

37 Signals Satirizes Freeconomics

37 Signals founder Jason Fried's take on the current wave of venture capital interest in Internet-based companies that aren't making money, "PRESS RELEASE: 37SIGNALS VALUATION TOPS $100 BILLION AFTER BOLD VC INVESTMENT". Excerpts:

CHICAGO—September 24, 2009—37signals is now a $100 billion dollar company, according to a group of investors who have agreed to purchase 0.000000001% of the company in exchange for $1.

Founder Jason Fried informed his employees about the new deal at a recent company-wide meeting. The financing round was led by Yardstick Capital and Institutionalized Venture Partners.

In order to increase the value of the company, 37signals has decided to stop generating revenues. “When it comes to valuation, making money is a real obstacle. Our profitability has been a real drag on our valuation,” said Mr. Fried. “Once you have profits, it’s impossible to just make stuff up. That’s why we’re switching to a ‘freeconomics’ model. We’ll give away everything for free and let the market speculate about how much money we could make if we wanted to make money.

[...]

A $100 billion value for 37signals is “not outlandish,” says Aanandamayee Bhatnagar, a finance professor and valuation guru at Grenada State’s Schnook School of Business. Bhatnagar points to a leaked, confidential corporate strategy plan that projects 37signals will attract twelve billion users by the end of 2013.

How will the company overcome the fact that there are only 6.8 billion people alive today? “Why limit users to people?” said Bhatnagar.

In order to determine the valuation of companies, Bhatnagar typically applies the following formula: [(Twitter followers x Facebook fans) + (# of employees x 1000)] x (RSS subscribers + daily page views) + (monthly burn rate x Google’s stock price)2 and then doubles if it they use Ruby on Rails^[1] or if the CEO has run a business into the ground before.

I wonder if Fred Wilson, venture capitalist investor in Twitter, among other Internet businesses, will respond to this on his blog. If so, it should lead to a spirited discussion in the comments.

^[1]Ruby on Rails, the web framework my developers use, was created by one of the partners in 37 Signals. My web developers mentioned this to me when I asked them if they had read the book Getting Real by 37 Signals, which I had first heard about from this video blog post from Tim Ferriss's site.

Another Take on Social Media

Via the Un-Marketing Blog:



David Silver agrees with the point about product sales being driven by recommender communities versus advertising, but I imagine if he saw this video he'd reiterate that all the big numbers for the general-purpose social media sites haven't translated into profits.

The Economics of Blogging

A Wall Street Journal column last week by the Democratic Political consultant Mark Penn, "America's Newest Profession: Bloggers for Hire", alleged that 452,000 Americans made their living by blogging. One professional blogger, Megan McCardle, explained on her Atlantic blog why this estimate was "addled" ("Blogging for Big Bucks"):

The estimates of professional bloggers seem wildly inflated--if you help update the company blog once a week as part of your marketing internship, you are not a paid professional blogger. And the numbers they themselves link to tell a much different tale from the article: most blogs bring in pitiful amounts of money for their owners.

This seems to follow the model of Mark Penn's book: find some bizarre number and mindlessly extrapolate it to an absurd conclusion. Yet I still don't understand why common sense did not keep him from publishing this article. Anecdotal evidence would suggest that almost all of us know many more computer programmers than professional bloggers--this is true of me even though I am a professional blogger, as are half my friends. Or he might have called some professional bloggers, who would have (sorrowfully) told him that no one is making $75K a year off of 100,000 pageviews a month, that being about how much traffic I pulled when I was starting up in 2002. Or, hell, he might have noticed that in the very BLS survey so nicely transformed into a table for his article, there is not entry for "blogger"--but that if you add up every writer, reporter, editor, PR person, technical writer, or "media and communications worker, other", there are only 499,890. Since Penn says that there are 452,000 paid bloggers, this implies that 9 out of every 10 communications workers are professional bloggers.

There may be one guy with some incredible niche--or moronic employer--making a ton of money with a modestely well-trafficked blog. But the plural of "anecdote" is not data.

Believe me, I'd love to think that blogging is a surefire path to riches and job security--but I'm afraid all most people get out of their blogs is the satisfaction of a job well done.

Coincidentally, a few days after reading Megan's post, I discovered the newest blog by Daniel Wahl, The Nearby Pen ("helps you live a happier and more productive life by sharing good art, reviewing good books, and explaining good thoughts") which included a post ("AdSense Pennies Make Dollars") that unintentionally supported Megan's point about the paucity of bloggers who make significant money from their blogs. In his post, Daniel mentioned the revenues he had generated from his three blogs over the last few months:

Not only will I not be making loads of money with Adsense, but at this stage of the game I should not expect to.

So why use Adsense? Quite simply, because--as the title suggests--pennies make dollars. Or to put it differently, a little bit of money adds up, even if little by little. And who knows, perhaps those pennies will grow faster with traffic at each site. In my view, it pays (at least a little) to learn more about how advertising on one's blog works while the blog is growing. I also think it is interesting. Here's the data for my first three months:

January...........4,291 page impressions...........$1.97 earned
February..........4,242 page impressions..........$3.62 earned
March.............4,411 page impressions..........$11.15 earned

This is no knock on Daniel -- I'm sure if I were using Google AdSense my ad revenues would be as low or lower (which is one reason why I never signed up for them) -- but it underlines Megan's point about why Mark Penn's estimates seem dubious. As for Daniel's point that pennies make dollars: sure, but time equals money, and, for most of us, there are much more remunerative uses of our time than blogging. So why do it? I mentioned one reason in my first post: to attract a few commenters I could get feedback from and bounce ideas off of. Another reason is the same reason most callers call talk radio stations, or letter writers write letters to the editor of newspapers: to express opinions. I have gotten a couple of ideas from writing this blog (or, more accurately, from observing the responses to a handful of posts), and one or two of those ideas could lead to a business opportunity down the road, so, in that sense, this blogging might end up being profitable as a form of brainstorming, but that remains to be seen.