Shades of 1999:
A fine collection of analysts’ comments from around the web at China Net Investor:
Consider that CBS Marketwatch cited a IDC report as saying the entire China online ad market was $130 million in 2004. Now I think Baidu may surpass a $1.3 billion market cap by the end of first day of trading (China Net Investor: Baidu now has a market capitalization of $3.92 billion!), and if that happens, then I must say that I don’t know of that many other companies that trade at 10x INDUSTRY revenues, even if the industry happens to be growing real fast.
“Baidu.com’s P-E ratio is sick”
and Bill Bishop (via Silicon Beat):
“Who in the world doesn’t now think Baidu is China’s Google, even though Google is still really China’s Google?”
and from a comment to the same post:
I watched the stock price like watching a movie. A fantastic show for traders. There are 4 million shares outstanding and the trading volume is 22 million. This means every share has been traded 5 times. It is absolutely not long term investment. it is a toy for traders only.
Good news: It’s a real company, with a real market.
Bad news: Retail investors want to buy shares because they have a feeling it’s like Google. It’s not.
See also: link, link
Intermix Media, which is mostly MySpace.com (plus assorted spyware), was purchased by News Corp for $580MM yesterday.
A look at how the investors (VantagePoint and Redpoint) did by Bill Burnham:
For VCs, this sale is significant because it represents the first real payday in the social networking space, a space that to date has seen lots of VC hype but very little returns. Just how big a payday was it for VC’s? Thanks to the fact that Intermix was a public company it’s possible to take very educated guesses at how the VCs made out. There were two main VCs involved in MySpace/Intermix. VantagePoint had been involved with the parent company for some time, while Redpoint recently invested in MySpace itself.
Paul Kedrosky notes:
Oh my, but the MySpace.com acquisition for more than half-a-billion dollars is going to cause a VC-driven content train wreck. We already had startups falling out of trees making MySpace comparisons, now they’re going to be thick on the ground, with the “MySpace of X” and the “MySpace of Y”, and the “MySpace crossed with Google”, etc. etc. I shudder to think how many VCs will fund MySpace-alikes through a thought process like the following…
MySpace is an interesting phenomenon for many reasons. It’s wildly popular among the teen-to-mid30′s bracket, and is also largely invisible to people outside that group (i.e. 35+). It’s not quite a dating service, although this is clearly one of the core attractions of the site, along with music, gossip, classifieds, and blogging. It fills a lifestyle niche in a way that echoes the boom days of America Online, but rather than chat rooms, message boards, and a first glimpse of the internet, MySpace is drawing in many new users for their first experience with blogging, social software, and Web 2.0. It also draws some of the same criticism, of being insecure, hacked together, and technically lacking. Despite this, they’ve grown to a massive level of traffic and corresponding ad revenue in a short period of time. I don’t generally get how to make money on social web sites, but ad revenue on 7.5 billion page views (more than Google) I understand. All this while being virtually unknown to at least half the people I talk to.
Paul Kedrosky points out a fun bit of candor from the folks at Bessemer Venture Partners:
Most venture firms have mental lists of deals that they shoulda/coulda done, but didn’t, and yet only a vanishingly small number of such firms will ever list the deals that got away. After all, it makes you look intermittently dumb and human and risk-averse, and gunslinging venture sorts could never concede any of those things to be true.
Trust the iconoclasts at Bessemer, however, to maintain at least a partial public list — they call it their “anti-portfolio” — of the deals that got away:
Among the gems on the reject list: Google, eBay, FedEx, Intel, Intuit, Lotus, and Compaq.
To keep things in perspective, Bessemer has a track record of nearly 100 years of successful investments, starting out in 1911, with funds raised from the sale of Carnegie Steel. I’d be pretty pleased to be around long enough to have such a spectacular reject list…
I have liked the Sipura products since they first came out a few years ago. The SPA products are widely used by VoIP service providers (Vonage, etc) for their feature set, flexibility, and low cost. We have been testing out Sipura adapters on the Kuppam network for the past few months, with good results, and I just received a new SPA-3000 the other day which I haven’t gotten around to setting up for use with Asterisk yet.
Yesterday Cisco announced they will also acquire Sipura, which will be merged into Linksys.
SAN JOSE, Calif., April 26, 2005 – Cisco Systems® today announced a definitive agreement to acquire privately-held Sipura Technology, Inc. This represents Cisco’s first acquisition for its Linksys division, the leading provider of wireless and networking hardware for home, Small Office/Home Office (SOHO) and small business environments. Sipura is a leader in consumer voice over internet protocol (VoIP) technology and is a key technology provider for Linksys’ current line of VoIP networking devices. In addition to Sipura’s valuable technology and customer relationships, their experienced team with extensive VoIP expertise will help build a foundation for Linksys’ internal research and development capabilities in voice, video and other markets.
Under the terms of the agreement, Cisco will pay approximately $68 million in cash and options for Sipura. The acquisition is subject to various standard closing conditions, including applicable regulatory approvals, and is expected to close in the fourth quarter of Cisco’s fiscal year 2005 ending July 30, 2005.
The Cisco/Linksys VoIP router/firewalls already use Sipura technology. Hopefully, this won’t slow down product innovation by the Sipura team, and also leave them a path forward as VoIP capability becomes an embedded feature of other products rather than being a standalone product itself.
The founders, Jan Fandrianto (CEO), and Sam Sin (VP Engineering), sold their previous company, Komodo Technology to Cisco, which became the Cisco’s ATA-186 VoIP adapter.
More at Voxilla, Om Malik
Corante has a podcast interview with the founders of Zopa. The idea is to build an eBay-style marketplace for individuals to participate in lending and borrowing, using eBay-style reputation scoring.
Some of this seems like a good idea, possibly in matching up people who want to provide funds to communities that don’t have a pool of loans available to them, but would otherwise be a reasonable credit risk. (Something like Grameen Bank’s microcredit program.)
For other situations, this seems likely to end up with many of the same reputation-gaming problems that turned up on eBay. From a risk-management viewpoint, it might be useful to find a way to build credit pools rather than individual loans. This is essentially what the banks do already, but the reputation scoring system might allow a better handle on the creditworthiness of the borrowers, and turn the individual loans into a portfolio, so a bad loan doesn’t become a disaster for the creditor.
There does seem to be a need for something in this space. The ongoing consolidation of banks in the US has generally eliminated local control of most banks, meaning that individual branches don’t usually know their customers well enough to know if they would be a good credit, other than looking at a credit score, and don’t usually have the discretion or interest in making a loan to someone that doesn’t exactly fit their loan profile. If you want to do something creative, you probably need to work with a private banker, or have wealthy friends.
This might also provide a mechanism to form relatively small pools of capital for niche markets. An eBay-style model implies a huge amount of effort on the part of the participants, compared with what consumer banks would typically do. This might make smaller loans more interesting. Otherwise, why not stick with writing super jumbo mortgages at $1 million each for the same amount of work.