Castro's Blog

Microsoft to Provide and Sell Ads on Facebook

The New York Times is reporting that Microsoft has reached a 3 year agreement with FaceBook to provide advertising on the social networking site popular with college students.

Microsoft has recently lost out to Google on several opportunities, AOL and MySpace, to provide advertising on high profile sites. These types of deals are critical to Microsoft's ability to create a viable alternative to Google's AdSense. They need high quality and high volume advertising slot to attract advertising to their ad platform. It's a chicken and egg problem.

I actually think this is a great win for Microsoft. FaceBook seems a lot 'smarter' than MySpace, e.g., FaceBook provides APIs shortly after MySpace screws the eco-system. Smart. Very Smart. Overall, I think FaceBook will continue to grow.

Here is some coverage from elsewhere in the blogosphere:

Inside Microsoft

"Microsoft and Facebook say that talks only picked up in the last week, no doubt taking on an air of importance after the MySpace deal. In fact, Facebook’s entire business strategy seems to be to point to MySpace and say, “Hey, we deserve that, too!” After MySpace was bought for $500 million and started to look like a bargain, Facebook reportedly pointed to that and claimed it deserved no less than $2 billion. Of course, thanks to this ad deal, Facebook might not need to be bought by anyone anymore (and MySpace is looking mighty stupid for selling out as early as it did)."

Don Doge on The Next Big Thing

"Financial details were not disclosed but Microsoft VP Steve Berkowitz said “not comparable to the MySpace deal because we focused on the right economics for both parties.’’

FaceBook COO said Owen Van Natta said Facebook chose Microsoft because the company’s technology and approach are a better fit. 'We think they have a real understanding of the need to take a fresh approach to advertising and social media.'"

Gmail encourages users to reduce PC's security

This has got to be one of the strangest error messages I've ever come across. I was using Gmail the other day and the page didn't load correctly. I then noticed this error message that suggested I disable my firewall software.

For windows users that are struggling against all sorts of security vulnerabilities this seems like a very irresponsible thing to say. Furthermore, I simply can't understand why a web mail service would require my firewall to be disabled.

Seattle Mind Camp : Start-up 101

This session was focused on the experiences of BillMonk founders, Gaurav Oberoi and Chuck Groom. BillMonk is an online service that helps friends track debts and stuff (e.g. CDs, DVDs). It is a rather clever and unique service that solves a real world problem. The BillMonk founders are ex-Amazonians who are applying the lessons they learned at the e-tailing giant to new areas.

Gaurav and Chuck currently work out of their respective apartments, which are conveniently located in the same apartment building, and are not currently accepting outside investments. Gaurav and Chuck are a few years out of undergrad and have the luxury of having few living expenses and responsibilities (e.g. no mortgage, no children, etc.). I certainly appreciate their super boot-strap approach to building their business; however, Pluggd is in a slightly different situation in that we're a bit older and have some of these "responsibilities" to take care of. That said, we're about as boot strap as BillMonk, but not quite as much.

Like Pluggd, BillMonk went with Ruby on Rails. They are using Debian Linux as their OS. They initially looked at MySQL, but ultimately concluded that Postgress would be a better fit for their needs. This interested me, because Pluggd went with MySQL. The two reasons Gaurav gave for selecting Postgress over MySQL were:

1. Better documentation
2. More mature support for transactions.

Because Pluggd doesn't deal with money, we don't have the same need for transaction support, but better MySQL documentation is something we've wished for. Ultimately, we've found that there were enough books and additional sources of MySQL support on the Internet due to its larger installed based.

Bill Monk also uses Pound as a software load balancer, which I thought was pretty interesting. Certainly, hardware based solutions like F5's Big IP offer both performance and feature advantages over Pound. However, free is pretty hard to beat. On this topic Gaurav admitted that they may have over engineered a bit due their time at Amazon, where scaling is always a big issue, and that they don't really need the load balancer given their current user base. Still, Pound is free and simple to set-up, so it seems like a reasonable decision on their part. I bet they will end-up needing it pretty soon anyway.

I was impressed with the founders and the service and wish BillMonk all the best. After they were done with their presentation a few of the other start-up founders, such as myself and the founder of AskMe, shares their experiences. I will provide more details in my next post.

Seattle Mind Camp 2.0: Search Marketing Podcast

Here is the podcast of the Search Marketing Session from Seattle Mind Camp 2.0. The audio could be a little better, but for the most part, you can clearly hear the discussion from the session. If you thought my brief summary in my last post was interesting then listening to the whole session is probably worth your time.

Download seattlemind_search_marketing.m4a

Seattle Mind Camp 2.0: Search Marketing Session

I'm blogging from Seattle Mind Camp 2.0. The first session I intended involved Search Marketing. It was pretty informative, there was a good mix of people who wanted to drive traffic to their site (e.g. PixPulse), people with experience providing Search Marketing Solutions (e.g. Larry Sivitz at SearchWrite), along with a Product Manager from MSN adCenter.

The founder of PixPulse, an MySpace/Flickr mobile photo sharing service had a lot of interesting experiences to share around his use of PPC to drive user acquisition. He claimed that he was able to acquire users for as low as $.60 a user, which is quite good. He also indicated that content based ads, e.g., AdSense, were far less efficient than search based ags, e.g. AdWords, in his experience. He blamed link farms and click fraud as the major reason for this.

An employee from HelpShare, an online question & answer community, talked about how making their database of previously answered questions available for free has actually driven more business value. This theme of opening up as a way to drive more value was echoed other, such as, a local Seattle Real Estate blogger.

A product manager from MSN adCenter outlined the advantages of adCenter over Google AdWord/AdSense. I was impressed with the added flexibility that adCenter provided. For example, adCenter gives you the ability to pay a premium to reach a targeted demographic and run your ads during certain times of the day. Very powerful and cool.

Google Analytics isn't well regarded based on the comments of people who attended the session. Primarily because GA tends to slow down page download times significantly.

I hope to post a podcast of the this session later today.

Alexa is web 2.0 enemy #1

Over the past month, I've begun to spend more of my time on raising capital for Pluggd, and have learned how important Alexa is in the fund raising process.

Here is a dirty little secret, on Sand Hill road, they use Alexa to determine if your site is gaining market traction. There are a number of reasons for this. For one, Alexa has historically been a pretty good source of usage. Alexa is free and easily available. These are certainly the two main reasons why I've always been an Alexa fan. So, if you are site doesn't have a nice hockey stick graph, then obtaining funding is going to be a challenge.

So what's wrong with this? Why does this mean Alexa is a threat to innovative Web 2.0 start-ups? Well, the recent post by Mike Davidson, CEO and Founder of Newsvine, about MySpace as a useless click factory gives us part of the answer. If sites like MySpace, that do not take advantage of modern user experience conventions and technology are perceived as more successful because of the additional page views they generate, then start-ups that attempt to create better user experiences will actually be penalized because of few page views.

But wait, it gets worse. Not only do investors look at Alexa, but members of the press do as well. For example, a recent article comparing two different sites used Alexa information to determine which start-up is better. This create a downward spiral, where an innovative start-up doesn't receive any press or doesn't receive favorable press, which negates the most accessible form of marketing for a small innovative company - buzz, press, etc. This compounds the pain for start-ups that don't optimize for page views. You will have to work that much hard to attract users, because each user you attract doesn't count as much as a user on a site that inflates page views.

Now, if you're site is even less dependent on pages views. Let's say you are a digital media oriented site, where you have some flash based player that delivers media to users, then you are in even more trouble. That's right - consuming content via a web based flash player results in even fewer page views even if users happen to be using the site for a long time.

Now, this isn't some evil plan on the part of the folks at Alexa. It simply means that the landscape on the web has changed in such a way that the mechanisms Alexa uses for measurement no longer make as much sense and plenty of analysts, press, and investors have yet to realize this. So if you're a web 2.0 start-up, you need to figure out some other way to help prospective investors, members of the press, etc., that your site is engaging users.

Perhaps there is an opportunity out there for a web 2.0 start-up that takes a different approach to measuring web site usage that isn't as dependent on a browser toolbar install and page views.

Beam me up Scottie

I guess this was only a matter of time since Microsoft and Sun agreed to play nice together. Scott just didn't see much reason to come to work without having MS to take shots at:

I've realized the passion is gone. Since we've signed an agreement with Microsoft to work together in the best interest of our customers, it didn't seem appropriate to continue to call Steve a "butthead." Opportunities like that, and calling Windows a "hairball", were a big reason why I got out of bed in the morning.

Bye Steve...we'll miss you. The entertainment value was high, even thought Sun hasn't done much of interest lately. That silly deal you guys did with Google doesn't count.

Confess online - i4giveu launches

i4giveu is a new start-up (based in Tel Aviv) that allows you to anonymously post confessions and seek forgiveness from the community. I am fascinated by how willing people are to share their personal goals on sites like 43things and now their deepest secrets.

Here is a little blurb from i4giveu's website:

Welcome to the biggest Confession room in the world
You have the opportunity to confess on every sin you ever committed and be judged by the community if you’re worthy of Forgiveness or Not. Every Confession is ranked with the Forgiven or No forgive ranking. Your reputation will be judged from Angel to devil upon your confession ranking , The higher the score the closer to Angel status you get and vise versa . Rank each confession after you truly decided on the sinners fate, The higher the score the closer to forgiveness. simple. What are you waiting for?

Apple's (AAPL) hot streak continues

Apple sold 8.5 million iPods in the most recent quarter, a 69-percent increase over last year. iPod sales accounted for $1.7 billion of Apple’s $4.36 billion revenues. The iTunes Store and iPod-related accessories accounted for $485 million, up 125 percent over last year. Combined, iTunes and iPod products account for more than half of Apple’s revenues with $2.199 billion. This is more thank the  $1.7 billion Apple brings in from sales of it's computer hardware. Apple’s earnings rose by 41 percent to $410 million, on revenue of $4.36 billion from $290 million, on revenue of $3.24 billion the previous year.

Maybe John Dvorak is right and they should open source OS X. I know the folks at MS think Apple's move to Intel hardware means Apple is going to defocus themselves from the OS X product. I don't know about that...perhaps wishful thinking by my old friends in Redmond.

Akimbo deal points to IPTV's future

I have never believed in the IPTV strategy pushed by the telcos and cabler operators. Don't get me wrong, I do blieve in content and interactive programming becing delivered to your TV via TCP/IP. I just don't think that telcos and cable companies are going about it the right way.

What is the point of building this seperate closed network on all these great open standards? We already have a network - it's called the Internet. So the cable companies are spending billions trying to build out these fancy IPTV services when in the end it will be the Internet that delivers content and interactivity to your TV.

It has gotten so much easier over the last few years to connect your TV to a computer. Heck, most of the time you don't even realize it is connected to a computer (e.g. TiVO, DVRs). Sometimes, like Microsoft's Media Center it is obvious your TV is connected to a computer. In any event, the creativity and selection of content on the Internet will blow away anything a single cable company will dream up. I expect some of the services they offer to resonate, but I do believe tens of millions of people will consume content via their TVs via a computer (doesn't have to be a PC form factor) controlled connection to the Internet.