Google’s next blowout quarter, Spotify’s tough future, and an AdBlock Turnabout

Gowalla Update: Talent Acquisitions and Fiduciary Responsibility

Last week’s Gowalla acquisition illustrated another weird facet of talent acquisitions: the potential conflict that arises when a talent acquisition gives founders a good job, and investors a low payout. A Gowalla investor chimes in to say that, basically, he’s not upset enough to do anything about it.

This kind of conflict of interest is best solved through cultural norms. In principle, it’s not that different than the conflict of interest between a startup CEO who wants to get home early enough to have dinner with his family, and investors who want him working all the time. (The solution, of course, is to fund the young and socially-awkward.)

AdBlock Plus will Un-Block “Acceptable Ads”

AdBlock Plus’s lead developer has announced that the next version of the popular extension will allow “non-instrusive advertising.” From an earlier post (Via RandomWalker on Hacker News):

As I stated many times before, my goal with Adblock Plus isn’t to destroy the advertising industry. … So the idea is to give control back to the users by allowing them to block annoying ads. Since the non-intrusive ads would be blocked less often it would encourage webmasters to use such ads, balance restored.

Of course, people who use AdBlock and similar products aren’t likely to buy things they see in banner ads, regardless. The overall effect will be marginally higher pageviews and even-more-marginally higher revenue for advertisers as a whole.

Can Spotify Ever Win?

Micheal Robertson, founder of MP3tunes (and former founder of mp3.com) illustrates the relentless economics of the digital music industry. The contracts are brutal, ever label is a monopolist in miniature, and each label uses cartel-like behavior to extract concessions through “Most favored nation” status (i.e. if a competitor gets a better deal, the original label gets that deal, too).

But it’s an odd kind of cartel, since it implies that the labels are, in effect, individually conspiring to destroy the industry’s best viable alternative to piracy. So it’s a cartel that has collectively agreed to a strategy that makes sense only with a very high discount rate. A unwieldly approach to short-term fixes; in their current form, they won’t last long.

On Analysts and Specialization

Hunter at Distressed Debt Investing has an interesting take on how the decline of expert networks, among other things, affects analysts. One way to restate his conclusion: every analyst will end up being the hub of a tiny, hyper-focused expert network. By reducing the complexity of the arrangement, they can minimize the possibility (or appearance) of insider trading.

Google Updates

• Those headlines about plummeting Google+ usage may be due to a now-fixed Chrome bug. Their new game exclusive won’t hurt, either.
• Google’s revenue is diverging towards Google Sites and away from Partner Sites (though this blog post is dubious, inasmuch as it refers to 18-20% year-over-year gains as “a massive drop”).
• Meanwhile, Zenith Optimedia claims that Google is about 44% of the online ad market.
• Kantar Media estimates Google’s largest advertisers. IAC is #1, with spending of $174mm. The usual suspects—brick and click alike—are well-represented.
• Mozilla is still negotiating with Google over its search deal.
• Rimm-Kaufman has some half-hearted suggestions for getting back recently-encrypted Google referrer data.
• And SearchQuant gathers a long list of PPC software and service providers expecting Google to have a great quarter

Baidu Will “Train 100,000 search marketing professionals”

Baidu has announced a $470mm four-year investment in getting more Chinese small businesses online. They may have discovered the same two dynamics Google has so profitably exploited:

1. If you own enough of every marginal dollar spent online, it can pay off to do things that broadly benefit the local Internet economy, even if their direct payoff is hard to measure, and;
2. If you don’t coopt search engine optimizers, they will destroy a search engine. But coopting them just means making white-hat SEO the path of least resistance.

Fab.com Raises $40mm

We once profiled Fab as one of several companies entirely dependent on Facebook’s privacy rules being hard to parse. They’ve since pivoted to flash sales for well-designed products, and their latest round sports a $200mm valuation. Design on the web used to be a massive timesink with no monetization (the number of blogs that constantly repost the same ostensibly clever designs is pretty staggering). If Fab can use them as an advertising platform, their next year’s growth plan writes itself.

Twitter Finally Launches Brand Pages

Twitter’s most recent extra features slavishly mimick Facebook; their brand pages are not too different. As on Facebook, brand pages don’t really fit—on Facebook, the fundamental unit is the person; on Twitter, it’s the tweet. So this move takes them away from using their unique features (promoted tweets people actually click) and towards their big weakness (that they’re a half-done Facebook clone, plus a risk-free way for Facebook to see how new features will work before FB implements them).

Facebook Updates

• Facebook once again offers conversion tracking to some advertisers.
• An academic enumerates the social cost of Facebook. The benefits—cheaper social grooming, solving the addressbook problem, better ads, etc. etc. etc. go largely unmentioned.
• Facebook is building their own sort of Feedburner.

Boring Business Model Update

The BRIC investment thesis is best understood as a for-profit version of the Marshall Plan; combine lots of capital with a generation or more of hard-won wisdom about what doesn’t work, and you can build some great infrastructure from scratch. The model works online, too.

“This Is The Public Financing Of Twelve Years Ago”

As we’ve argued, big pre-IPO rounds are exactly what you’d expect from a world with Sarbanes-Oxley and SecondMarket. Add a vote from Michael Moritz, now that one of his portfolio companies has raised a $155mm round.

It’s Not the Demand Media, It’s the Demand Message

Demand Media’s CEO argues that the company can profit from its content in many different venues. Could be true—and it’s more capital-efficient to add filler content to third-party sites, which is a particularly relevant concern given how expensive it would be for Demand to raise more money right now.

“I know a guy” as a Business Model

Insidr is a startup that sells the ability to short-curcuit customer service scripts. Like plenty of other developments on the web, it’s not so much a revolution as a codification of the way things work: some people are in a great position to do other people favors, and cash just lubricates the transaction.

Groupon Gets Granular

Groupon’s stock popped on Wednesday when they announced Groupon Scheduler, which is exactly what it sounds like. This handily solves one problem with Groupons: getting a coupon for someone who’s way overbooked and can’t get a handle on their schedule. But even better, it gets lots of small businesses in the habit of using Groupon software for something other than customer acquisition and painfully expensive working capital. If this product works, it’s a good reason to rethink Groupon entirely: the coupon side of the business could just be a way to get lots of sales reps in touch with lots and lots of small businesses. If scheduling software works, why not CRM packages? Or real-world ad space? Why not business cards? Groupon has scale, ambition, and nearly a hundred thousand merchants who will pick up the phone if Groupon gives them a call. No wonder investors are excited again.