MySpace downturn

I opined on this in a post last month, but looks like others are catching on. Washington Post had an artcile about the downturn in MySpace usage by, yes, the fickle teen market.

Don't bet on teen products... bet on teen companies. Big difference.

At least Google was smart and put performance numbers behind it. And, YouTube is not a teen fad product.


Google and Youtube

Ok, as a blogger I'm obligated to opine about Youtube and Google. After all, everyone else is.

Wow, $1.65B for a 65 person company, less than a year old, with lawsuit written all over it, no profits, little revenue, and lots of customers.

Like most of the rest of the world, I’ve scratched my head on this one. A deal between Youtube and Google makes sense. Buying them? Huh? What did Google really buy, a brand? Maybe, but for $1.65B? Sheesh.

As I’ve blogged before, déjà vu all over again. I’m seeing the same mistakes made 10 years ago during the irrational exhuberance phase of the Internet. But one thing did occur to me… Google could have paid cash for Youtube. And that’s the difference.

When AT&T bought TCI for $70B (yes, B), and then sold it for $47B, it was “well, they can afford that kind of mistake.” Welcome to Web 2.0. Maybe this is what Web 2.0 is really about. Companies that leverage the web to create real, significant cash flow. Google can spend $1.6B and not bat an eye. They will cover that in the next two quarters. It's 1% of their market cap. Heck, the traffic uptick last week alone might have been worth it.


The two dimensions of risk

I was hiking in Tiger Mountain Saturday, crossing a log that served as a bridge over the stream 10 feet below. The log had carved "X" notches in it for traction, and was a consistent size end-to-end. The log protruded about three feet past the edges of the embankment for the stream. I noticed that my anxiety (I was carrying Garrett on my back, and I am always careful when others around... like when I drive... but I digress) lessened once I had crossed the chasm, but was still on the log. My risk of falling hadn't lessened, but my risk of injury (to me or Garrett) had lessened.

Ok, not earth shattering (yes you may now address me as Captain Obvious), but it did remind me of the two dimensions of risk. That is:
1. What is the probablity an event will occur?
2. What level of damage can happen if it does occur?

Rarely, when risk is discussed, do people talk about each axis independent of each other. And I rarely do as well. Instead, we lump them together and address. Last year, on my first product at Amazon, I actually broke my risk list into the two dimensions, and thoroughly confused the hell out of everyone, even after I explained what I was doing :) That was kind of strange for a company that loves data.

What's interesting to me is the relationship for #2 between damage and brand strength. One of the key reasons big companies cannot move as quickly as startups is that there is more at stake to lose when a big company screws up. The brand (which carries significant value) can be damaged, deeper pockets means bigger targer for lawyers, etc. As such, for large companies each decision carries a bigger risk component, and in turn more risk mitigation. This notion is often lost on those who have worked for a company during the time a company has grown from a small business into a Fortune 500 company. But it's a valid rationale - there is more at stake for large companies.