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Media Decoder: One-Upmanship Continues After Publicis-Omnicom Deal

August 13, 2013 by

A big acquisition by WPP was always swiftly matched by Publicis. And vice versa. Usually with a “take that” kind of rejoinder.

So it was only a matter of time before Mr. Sorrell responded to the recent megadeal between Publicis, the third-biggest advertising company in the world, and Omnicom Group, the second-largest, to create a new No.1 that leapfrogged past WPP in revenue.

Mr. Lévy and Omnicom’s chief executive, John Wren, explained their merger as a play on “big data,” the trove of information that Internet companies hold about their users.

The riposte from Mr. Sorrell has been a flurry of smaller deals for agencies involved in digital marketing and, yes, big data. Since the Publicis-Omnicom deal last month, WPP has announced at least five acquisitions or investments — in Africa, Asia, Europe and Latin America.

And Mr. Sorrell had another trick up his sleeve: He joined LinkedIn, the social network for professionals. No, he does not appear to be job-hunting. Instead, he is using the platform to sound off, as one of LinkedIn’s “Influencers” —the network of business leaders and experts who write for the site.

Sure enough, Mr. Sorrell used his first post on Tuesday to take a swipe at Publicis and Omnicom.

“Others in our industry may take strategic leaps backwards for various odd or inconsistent or contradictory reasons,” he wrote. “We’ll remain focused, actually even more focused, on our long-established and consistent strategy, on future developments and on accelerating implementation.

“That’s how we’ll really add value to our clients’ businesses — while others find themselves distracted by internal stresses and strains.”

Mr. Sorrell said he was raising WPP’s five-year targets for revenue from fast-growing emerging markets and digital businesses to 40 to 45 percent each, from current ranges of 35 to 40 percent. New media and emerging markets each produce about one-third of WPP revenue now, he wrote.

He also had a nice line on the news of the acquisition of The Washington Post by Jeff Bezos, the chief executive of Amazon, referring to the paper as “The Washington Kindle” — a reference to Amazon’s e-reader.

Oh, and one other thing: Mr. Sorrell said WPP was hiring.

Article source: http://www.nytimes.com/2013/08/14/business/media/wpp-one-upmanship-continues-after-publicis-omnicom-deal.html?partner=rss&emc=rss

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You’re the Boss Blog: One Social Media Start-Up Rises From the Ashes of Another

May 9, 2013 by Leave a Comment

Start

The adventure of new ventures.

One of the hardest things for an entrepreneur to do is to admit defeat. But in the case of Apu Gupta and Nick Shiftan, failure was likely the best thing that could have happened to them.

In 2011, Mr. Gupta, 37, and Mr. Shiftan, 31, founded Storably, a company they billed as Airbnb for storage space. Anyone with spare space — in their basement, driveway, garage, closet — could rent it out to those in need. Storably facilitated the transaction, provided insurance and allowed users to post reviews.

Mr. Gupta and Mr. Shiftan raised $750,000 from the venture capital firms NEA and First Round Capital and introduced Storably in September 2011. Two months later, they knew it wasn’t working. The site was getting barely 3,000 visitors a month. “That’s the equivalent of opening a retail store and having crickets show up,” Mr. Gupta said. “It’s abysmal. By the time we shut down, only 23 people had used the site for a transaction.”

At that point, Mr. Gupta and Mr. Shiftan had burned through 25 percent of their money and felt they had two options, which they presented to their investors. “We said we can give 75 percent of your investment back and liquidate the company, or we can figure something else out,” Mr. Gupta said. “And they told us, ‘We didn’t invest in the idea, we invested in you guys. We don’t want our money back, so go figure something else out.’ It was an amazing thing to hear.”

After two months, Apu Gupta (left) and Nick Shiftan knew Storability was not working.Courtesy of Curalator After two months, Apu Gupta (left) and Nick Shiftan knew Storability was not working.

The pair — along with their first employee, Brendan Lowry — brainstormed for about a month, coming up with three or four ideas apiece each day. At the end of the month, they had about 70 ideas, seven of which they deemed promising. They tested a few, including DrinkedIn, an application for LinkedIn that would match users and send them to a bar to have a drink and network.

But the idea that rose to the top was a platform that allows companies to measure the impact of Pinterest and other visual social media. They called the company Curalate, and they introduced it in beta in March 2012 and for real two months later. Mr. Gupta said the rise of Pinterest last year looked similar to Twitter’s early days with brands “falling over themselves to get on board but reluctant to commit until they had some way to measure their presence on the platform.”

Enter Curalate, which created a way to listen and measure visual conversations. The company’s algorithm recognizes images using pixels and then matches it to a brand. “The platform tells companies the conversations people are having about their product,” Mr. Gupta said.

He told the story of a shoe offered by the department store HM. The company’s Web site displayed the shoe in a bright neon color, but the shoe customers were “pinning” and describing in loving terms was a combination of beige and pink. “So there was a big discrepancy between what the brand thought people wanted versus what people actually wanted,” Mr. Gupta said. “And that’s the whole point behind what we’re doing. We reveal, by looking at their imagery, what consumers really care about.”

Here’s where the company stands now, roughly a year after its introduction.

Employees: 15

Location: Philadelphia

Pitch: “We are trying to help brands form meaningful relationships with their customers,” Mr. Gupta said. “You have to be able to understand your customers and if they speak to you visually, you need a platform for that. It’s not just about Pinterest, but a fundamental shift in consumer behavior. Consumers increasingly talk about brands using pictures rather than words. Even Facebook has become a more visual medium. We pin and reblog and Instagram our lives.”

Challenges: Finding the right talent — salespeople, developers and designers — has been an ongoing challenge. A more perplexing challenge, Mr. Gupta said, is staying focused. Curalate’s space is so wide open that the company can try just about anything, and that freedom has caused them to sometimes lose direction. “When a space is new, it’s easy to feel pulled in different directions by clients,” he said. “It’s easy to lose your own point of view. So we really have to figure out a road map. And sometimes that means we need to say, ‘this is what we build and it’s not right for everyone’ and we may have to turn some clients away.”

Traction: Mr. Gupta said Curalate was now used by 350 brands that paid a monthly fee for its software as a service, which included a suite of marketing tools in addition to analytics. The company recently added the ability to analyze Instagram images to its platform. “Pinterest is about the things people aspire to buy, the things they want,” Mr. Gupta said. “Instagram is people celebrating what they bought.”

Revenue: The company declined to discuss its revenue, but the typical brand spends about $1,500 a month for Curalate’s services.

Financing: After going through what was left of the original $750,000, the company raised another $3 million late last year from the same investors.

Competition: Repinly, Piquor and PinReach are a few companies operating in the space, but none of them “is doing anything across platforms or using image recognition,” Mr. Gupta said.

What’s Next? “We want to broaden the number of platforms we get insights from,” Mr. Gupta said. “Companies also want us to build things that encourage consumers to communicate visually more often.”

What do you think? Have Mr. Gupta and Mr. Shiftan hit upon the right idea this time?

You can follow Eilene Zimmerman on Twitter.

Article source: http://boss.blogs.nytimes.com/2013/05/09/one-social-media-start-up-rises-from-the-ashes-of-another/?partner=rss&emc=rss

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LinkedIn’s Fourth Quarter Reinforces Its Strengths

February 8, 2013 by Leave a Comment

This is the seventh consecutive quarter since LinkedIn’s initial public offering in May 2011 that the company has pulled that off. The run of pleasant surprises is one of the reasons that LinkedIn’s stock has tripled from its I.P.O. price of $45. After LinkedIn reported its fourth-quarter results, its shares surged $11.36, or 9.15 percent, to $135.45 in after-hours trading.

Besides a 66 percent increase in earnings from the previous year, the latest quarter was highlighted by an influx of 15 million accounts to propel LinkedIn’s total membership beyond 200 million. Visitors to LinkedIn’s Web site also viewed 67 percent more pages than the previous year, an indication that the company’s efforts to add more business news and career tips from top business executives are paying off.

LinkedIn earned $11.5 million, or 10 cents a share, during the final three months of last year. That compared to $6.9 million, or 6 cents a share, a year earlier.

If not for the costs of employee stock compensation and certain other charges, LinkedIn said it would have earned 35 cents a share. That was far above the average estimates of 19 cents per share among analysts surveyed by FactSet.

Revenue soared 81 percent from the previous year to $304 million — about $24 million above analyst forecasts.

LinkedIn’s revenue outlook for the current quarter and all of 2013 were roughly in line with analyst estimates, setting the stage for the company to clear those financial hurdles once again.

Management’s forecast for annual revenue of $1.4 billion this year appears conservative, given that it would translate into an increase of about 45 percent from last year. In 2012, LinkedIn’s annual revenue rose 86 percent.

“We are trying to utilize a prudent approach to year-over-year growth,” Steve Sordello, LinkedIn’s chief financial officer, told analysts in a conference call.

Article source: http://www.nytimes.com/2013/02/08/business/linkedins-fourth-quarter-reinforces-its-strengths.html?partner=rss&emc=rss

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I.H.T. Special: Social Media Firms Move to Capitalize on Popularity in Middle East

February 6, 2013 by Leave a Comment

The use of social media exploded during the Arab Spring as people turned to cyberspace to express themselves. On the back of that, social media networks, including Twitter, Facebook and LinkedIn, have moved into the region commercially, setting up offices to sell advertising products to companies like Mobily, which has over 200,000 Twitter followers, to capitalize on the growing audience.

“In Saudi, social media gets everyone talking to everyone, which is something we just don’t have in the streets here,” said Muna AbuSulayman, a Saudi development consultant and formerly a popular television talk show host, who has over 100,000 followers on Twitter.

“It’s a unique opportunity that lets people have conversations in a boundary-less way that wasn’t possible before,” Ms. AbuSulayman said. “In addition to promoting social and political discussion, it carries a powerful economic incentive for businesses, too.”

The rise of social media in the Arab world is changing the game for regional advertisers, pushing growth in digital advertising in a part of the world where traditional methods like television and print advertising have so far remained dominant.

Digital advertising in the Middle East and North Africa accounts for only about 4 percent of the region’s total advertising spending, at a value of $200 million, according to the most recent available estimate, but it has become the fastest-growing media platform in the region, said a study by the business services firm Deloitte Touche Tohmatsu, published in 2011. Deloitte’s Arab Media Outlook projected growth in digital advertising spending in the region of 35 percent a year over the next three years, generating about $580 million across the region by 2015.

“The fact is that consumers are online, so brands need to be online,” said Reda Raad, chief operating officer of TBWARaad, the Middle East arm of the global advertising agency TWBA. “The use of digital channels has continued to increase dramatically after the Arab Spring and advertising on social media has become a highly targeted, cost-efficient way of communicating with consumers.”

Major brands, including Pepsi Arabia, are taking note. Saudi Arabia has the highest number of Twitter users in the Arab world, holding 38 percent of the region’s two million users, according to a report by the Dubai School of Government’s Arab Social Media Report released in June. In the past year alone, the number of Twitter users in the Arab world tripled, according to Shailesh Rao, Twitter’s vice president for international operations.

Thanks to the platform’s popularity in Saudi Arabia, Egypt, Kuwait and the United Arab Emirates, Arabic is now the fastest-growing language on the Twitter platform.

“We prioritized a list of regions where we wanted to have a business presence, and the Mideast rises toward the top because the region’s user base is one of the fastest-growing in the world,” Mr. Rao said during an interview. “This represents a huge opportunity for brands looking for a large audience that is rapidly growing.”

Twitter has formed a partnership with the Egyptian digital advertising company Connect Ads to market and sell advertising services across the Middle East and North Africa region. Connect Ads will offer brand managers and marketers Twitter’s products, which include promoted tweets, promoted accounts and promoted trends.

Through these, a brand can reach broad Twitter audiences or more narrowly defined geographic or demographic segments. They can even target users of specific smartphone brands, like iPhones. Brands that have signed up so far include Mobily, Pepsi Arabia, the resort company Atlantis The Palm, and the events portal Dubai Calendar.

“Companies can learn a few things about their customers by optimizing for country and targeting those with specific interests,” said Mohamed El Mehairy, managing director of Connect Ads.

“They can probably uncover this type of information through market research,” he added, but it would come “at a higher expense and with more time and effort.”

Article source: http://www.nytimes.com/2013/02/07/world/middleeast/social-media-firms-move-to-capitalize-on-popularity-in-middle-east.html?partner=rss&emc=rss

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Digital Domain: BranchOut and BeKnown Vie for LinkedIn’s Reach

January 7, 2012 by Leave a Comment

That distinction has given it staying power as Facebook’s predecessors have dropped away and as Facebook has grown to dwarf other sites. By keeping professional identity pristinely separate from the personal and the messy, LinkedIn, which is now publicly traded, has grown to more than 135 million members in 200 countries.

But challengers have arrived, in the form of apps. Rather than starting from scratch, independent software developers are trying to add a professional layer to Facebook — and are hoping that users will accept a less-than-complete separation of the professional and the personal.

“LinkedIn likes to say, ‘Facebook is for fun and LinkedIn is for professional purposes.’ What I like to argue is that’s no longer correct,” says Rick Marini, the chief executive of BranchOut, a start-up that offers a Facebook app for job-related networking.

“I get asked for introductions to my LinkedIn connections all the time.” Mr. Marini says. “The problem is, these are people I’ve met for five minutes at a conference and I don’t feel comfortable vouching for them. My Facebook friends are all my real friends.” (The gregarious Mr. Marini has an impressive number of “real friends”: 1,800 Facebook friends, he says.)

When users join BranchOut, the software pulls information from Facebook about their education, current employer and job title, leaving out everything else.

Excluding things like indiscreet photos, however, doesn’t necessarily make Facebook an excellent basis for a professional identity. BranchOut shows prospective employers a person’s network of Facebook friends. These aren’t likely to have been assembled the way they are at LinkedIn, with the idea that one’s connections will be reviewed by strangers checking on professional qualifications.

“There are some people I’d prefer not to interact with in my professional career, but I’m still good friends with,” says Tom Chevalier, global product manager at Monster Worldwide. Mr. Chevalier oversees Monster’s BeKnown, a Facebook app that competes directly with BranchOut.

BeKnown pulls more information from Facebook than BranchOut does, but it lists friends specifically chosen by the user, and only if those friends consent to be included. BeKnown’s design suggests that users must be careful about what parts of their Facebook identities should be imported into their professional profile.

Why not invest the same amount of time building a profile over at LinkedIn? Mr. Chevalier points to the fact that the average Facebook user visits the Web site more than 30 times a month, and he contends that convenience is important. “By having this proximity to Facebook,” he says, “we can help users think about their career more frequently.”

Applicants, of course, want to go where the most prospective employers are found; and employers, where the most candidates are. In both cases, this works in LinkedIn’s favor.

LinkedIn’s single largest business is selling access to information about its members. They are treated as “passive” job candidates: they aren’t necessarily seeking a job but have signaled their receptivity to new professional possibilities by joining LinkedIn and providing details about work experiences and skills.

David Hahn, vice president for product management at LinkedIn, says his company’s business clients “do not have to put up a ‘Help Wanted’ sign in the window and see who comes in.” He adds: “They can instead proactively go after the right person by looking over the professional experiences and skills of our 135 million-plus members.”

The company says 75 of the Fortune 100 companies are clients.

LinkedIn receives an average of 95 million unique monthly visitors, according to comScore data for November 2011. The Facebook apps are lagging far behind. BranchOut, founded in July 2010, is drawing about one million unique monthly visitors, occupying 298th place last week on AppData.com’s leader board for Facebook apps; BeKnown, introduced in July 2011, has only 170,000.

MR. MARINI concedes that LinkedIn has command of the professions, but he says that leaves ample opportunity for BranchOut to serve others. LinkedIn does a good job addressing the smaller part of the work force considered to be “white collar/managerial,” he says. The remainder, he adds, tends to be on Facebook — “blue-collar, hourly, temporary, cashiers, clerks, construction workers, returning military.”

Mr. Hahn of LinkedIn says his company “welcomes anyone who thinks in terms of a career instead of a job.” Using a broad definition of “professional” adopted by the International Labor Organization, LinkedIn says there are an estimated 640 million professionals out of a global work force of approximately 3.3 billion, leaving plenty of room for the site to grow.

Mr. Hahn notes that Facebook users clearly love games like CityVille and Texas HoldEm Poker, which draw millions of users. But the relatively minuscule use of the Facebook apps that venture into professional profiles or networking, he says, is “evidence that users clearly want to keep their professional lives separate.”

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail: stross@nytimes.com.

Article source: http://feeds.nytimes.com/click.phdo?i=0027a647bef68fff54160fe2f5d2773a

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DealBook: Bain Capital Seeks to Cash Out of LinkedIn

November 16, 2011 by Leave a Comment

The start of LinkedIn's first day of trading.Michael Nagle/Bloomberg NewsThe start of LinkedIn’s first day of trading.

With LinkedIn‘s shares still flying high six months after their debut, one of the company’s early backers is cashing out.

Bain Capital plans to sell its entire stake, about 3.7 million shares, as part of a secondary stock sale that LinkedIn announced late on Monday. The investment firm took a piece of LinkedIn when it led a $53 million financing round for the social networking company in 2008.

Two other venture capital firms backing the company, Greylock Partners and Bessemer Ventures, plan to sell smaller amounts of stock.

All told, insiders will sell more than 6.2 million shares in LinkedIn. Other selling shareholders include LinkedIn’s chief executive, Jeff Weiner; its chief financial officer, Steven Sordello; and a director, David Sze. All are selling about 10 percent of their holdings.

LinkedIn’s co-founder, Reid Hoffman, isn’t selling any shares.

The insider sales will come after the expiration of a six-month lockup instituted when LinkedIn went public in May at $45 a share. Since then, the company’s stock has risen 62 percent, though its shares fell about 7 percent by midday on Tuesday.

LinkedIn itself will also sell nearly 1.3 million shares, but could sell up to 1.2 million additional shares if there’s strong investor demand. Proceeds from the new company-issued stock will go toward general corporate purposes.

Article source: http://feeds.nytimes.com/click.phdo?i=3854c29543edcd2318b1a03238cfd56c

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Media Decoder: With Sale Of MySpace, Some Relief

June 30, 2011 by Leave a Comment

DESCRIPTIONJin Lee/Bloomberg

8:14 p.m. | Updated MySpace, the long-suffering Web site that the News Corporation bought six years ago for $580 million, was sold Wednesday to the advertising network Specific Media for roughly $35 million.

The News Corporation, which is controlled by Rupert Murdoch, had been trying since last winter to rid itself of the unprofitable unit, which was a casualty of changing tastes and may be a cautionary tale for social companies like Zynga and LinkedIn that are currently enjoying sky-high valuations.

Relief over the sale was palpable on Wednesday, and not just at the News Corporation. Wall Street “just wanted it done, because it’s been a real drag on growth,” said Michael Nathanson, a media sector analyst for Nomura Securities.

Terms of the deal were not disclosed, but the News Corporation said that it would retain a minority stake. Specific Media said it had brought on board the artist Justin Timberlake as a part owner and an active player in MySpace’s future, but said little else about how the site would change.

The sale closes a complex chapter in the history of the Internet and of the News Corporation, which was widely envied by other media companies when it acquired MySpace in 2005. At that time, MySpace was the world’s fastest-growing social network, with 20 million unique visitors each month in the United States. That figure soon soared to 70 million, but the network could not keep pace with Facebook, which overtook MySpace two years ago.

As users fled MySpace, so, too, did advertisers. The market research firm eMarketer estimates that the site will earn about $183 million in worldwide ad revenue this year, down from $605 million at its peak, when the site introduced many Web users and many advertisers to the concept of social networking.

“It’s a shame that MySpace’s value has diminished so severely since the acquisition; MySpace’s pioneering of social networking (now referred to as social media) will always be revered as igniting a new medium,” Richard Rosenblatt, the chairman of MySpace at the time of the sale to the News Corporation, said in an e-mail.

Instead of envy, the News Corporation’s bet on MySpace now provokes punch lines. Tom Freston, who was fired as the chief executive of Viacom in part for failing to buy MySpace, joked in an interview with CNBC earlier this year that “I’m still waiting for a thank-you note” from the Viacom chairman, Sumner M. Redstone.

Mr. Freston, who was in Iceland on Wednesday and said he was smiling at the news of an impending MySpace sale, declined to comment.

News Corporation executives declined interview requests on Wednesday.

It is not clear whether MySpace itself was profitable for the company. The division that houses MySpace and other digital properties has turned a profit only once in the last six years. An advertising deal with Google helped the company to recoup what it spent on MySpace in the first place, but the site became a burden on the company’s earnings; by last year executives were calling the losses unacceptable. Mr. Nathanson called the site a “headache.”

What doomed the site? Lee Brenner, the former director of MySpace’s Impact section who is now the publisher of HyperVocal, wrote in a blog post Tuesday, “I’m sure most employees (former or current) will argue that it was poor management, or a need to hit revenue targets once News Corp. took over, or a bottleneck in the technology department, or lack of resources given to their division, or a poor public relations effort, etc., that set the course of MySpace’s downfall.

“Any number of these could be true,” he continued. “I suppose we’ll never know for sure. It is most likely a combination of these factors, along with a ‘low attention span’ public. It probably didn’t help to be doing business, and trying to grow, along with all of these issues, in the midst of a global economic crisis.”

MySpace has tried to reboot itself several times, most recently as a social destination for music, movies and other media. It has not been abandoned altogether: it still has 35 million visitors a month in the United States, according to the measurement company comScore. Facebook has 157 million visitors a month in the United States.

“It’s still one of the biggest pockets of traffic on the Internet, for the price,” said a former MySpace executive who insisted on anonymity to maintain friendships and business relationships with the News Corporation.

Mr. Timberlake said in a statement about the sale that MySpace still had the potential to be the place on the Web where “fans can go to interact with their favorite entertainers, listen to music, watch videos, share and discover cool stuff and just connect.”

Many of the current and former MySpace users who reacted to Wednesday’s sale thought differently. Many compared MySpace to Friendster, a social network that was left for dead years ago.

In preparation for the change in ownership, many of MySpace’s roughly 400 employees were dismissed on Wednesday. Mike Jones, the Web site’s chief executive, said in an internal memorandum that he would depart in the next two months.

“Today should be a day,” Sean Percival, a vice president at MySpace, wrote on Twitter Wednesday morning, before the sale announcement.

He followed up later in the day, telling his online followers that Wednesday would be his last day at the company. Seemingly referring to the site’s rise and fall, he wrote: “It was a unique moment in time and an impossible problem to solve. Was proud to be a part of it.”

Article source: http://feeds.nytimes.com/click.phdo?i=111d5a2194791b1872769652fe7ff9d7

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Charity Goes Mobile to Appeal to Young

June 25, 2011 by Leave a Comment

Never one to miss a party, Ms. Lublin stepped outside to learn that minutes earlier, the staff had sent a simple text message to 500 teenagers — “Santa Cause says run a food drive in ur community 4 Tackle Hunger” — an annual food collection that benefits the network of local food pantries affiliated with Feeding America.

The messages went to teenagers who were more or less “defunct,” meaning that her organization, Do Something, had not heard from them in some time. For this appeal via text, some 20 percent returned to the fold in nine minutes. “It was nuts,” Ms. Lublin said.

Right then and there, she decided Do Something, a national nonprofit group that works to involve teenagers in civic activities, had to go mobile. No longer could it rely on its Web site to motivate young people to take part in social activism. Instead, it would rely on mobile technology in the hopes of substantially increasing its reach and impact.

“I want us to be the AARP for the 13- to 18-year-old set,” she said recently.

The goal is to use mobile technology to sign up 3.8 million members by 2014, up from 1.2 million in 2010 who were involved in at least one of the more than 50 “campaigns” Do Something runs each year. Recently, for instance, teenagers ran drives that collected roughly two million books that are being donated to public schools in New Orleans. “It has to be things that don’t require money, an adult or a car,” Ms. Lublin said.

Teenagers become members by completing a project suggested by Do Something or one they have created themselves and uploading photos or other evidence of their efforts to the organization’s Web site.

“Teens receive, on average, over 3,300 texts a month, and their phones are part of their social tissue,” said Reid Hoffman, the founder of LinkedIn and a new member of Do Something’s board. “I’m convinced this is the best way to move teen philanthropic action to a new level in terms of scale and effectiveness.”

Many nonprofit groups are testing ways of using mobile technology to advance their mission. In the developing world, organizations have used it in hopes of improving health care, agriculture and finance.

Several charities here have used text messaging to rally people for demonstrations, protests, town hall meetings and other activities, but most nonprofit groups see it primarily as a fund-raising tool. “I don’t think very many social change organizations, even the well-funded, sophisticated ones, are paying nearly enough attention to the technology available for engaging support and enhancing their missions,” said Alberto Ibargüen, chief executive of the John S. and James L. Knight Foundation, which made a $1.5 million grant to Do Something to support its mobile strategy.

Do Something does not raise money from its members — it does not even collect information on the sex of its members — and Ms. Lublin insists it will never sell its membership list the way that charities sell the names and addresses they have collected for direct-mail solicitation to one another. “Never, never, never,” Ms. Lublin said. “It makes my skin crawl.”

Although many schools around the country require students to devote a specific number of hours to a community service project, Ms. Lublin said Do Something members did not seem to be volunteering because of an educational mandate.

“We want to be more like shopping at the mall with your friends or playing soccer, something you choose to do, something you love, something that doesn’t involve your teacher telling you to do it,” she said.

As for the teenagers themselves, texting does not feel invasive as it sometimes does when adult donors receive messages from charities.

Article source: http://feeds.nytimes.com/click.phdo?i=65add4026105427089b4f5d607630f4c

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Bucks: Investing Should Be Dull

June 21, 2011 by Leave a Comment

Carl Richards

Carl Richards is a certified financial planner in Park City, Utah. His sketches are archived here on the Bucks blog and on his personal Web site, BehaviorGap.com.

The last few weeks, we’ve seen multiple headlines about initial public offerings. Chatter around LinkedIn, Groupon, Pandora and even Facebook has made people excited about the potential of getting in at the beginning of what might be the next Google.

At the same time there’s been debate about whether we’re in another tech bubble. But it seems to me that everyone is skipping over the biggest question that tripped us up the last time I.P.O.’s were on everybody’s mind: what’s the actual value of the investment?

Let’s be clear from the beginning: real investing is about understanding the value of your investment. And frankly, sorting that out is about as much fun as watching grass grow.

Doing that work is not sexy, and it doesn’t generate big headlines. It’s much more fun to stand around at the neighborhood barbeque and talk about what everyone else is talking about, which happens to be I.P.O.’s right now.

But they can be tricky. Much of what helps you determine the value of an investment is history. And while every company has to file a report with the Securities and Exchange Commission before going public, wading through that report can be time consuming.

I often joke that the only way to get people to read the reports that companies produce is to print them and stick them in envelopes marked “Top Secret.” But instead of taking the time to read the report, people often jump on an I.P.O. because everyone else is doing it.

But come on now. Really? We used that excuse as children. If you end up buying any investment, let alone an I.P.O., just because your neighbor or friend happens to, you’re assuming that at some point you’ll find a bigger fool who also hasn’t done the math yet.

Failing to do the math trips up even the most enthusiastic investor. Just look at what happened to Pandora last week. Now, Pandora may ultimately prove to be a great investment, but here are just a few things that may have contributed to Pandora’s not so positive I.P.O. results:

  • Pandora loses money on every transaction
  • Pandora has no assurance that it can negotiate better terms when its current music royalties agreement expires in 2015
  • Pandora’s revenue growth is slowing

Understanding how issues like these affect the value of your potential investment is critical. But we have a bad habit of pretending that we’re investing when in reality we’re speculating. Remember: investing is about value, while speculating is about price. Pandora did come out strong price-wise, but by the second day of trading, its stock price had dropped below the initial public offering price.

While Pandora is just the most recent example of what can happen if you choose to skip the details, it won’t be the last, nor is the risk limited to I.P.O.’s.

So are you prepared to gamble on whether someone will be a bigger fool after you and buy the investment you didn’t check out carefully? It’s much better to be bored than it is to be broke. The next time you feel the urge to invest, think long and hard, and ask yourself if the math adds up.

Article source: http://feeds.nytimes.com/click.phdo?i=d9e25ca13430ab0aee0c6d7385cfa500

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In Tech We Trust: Investors Provide Millions to Risky Start-Ups

June 20, 2011 by Leave a Comment

In March, Color unveiled its photo-sharing cellphone application — and revealed that it had raised $41 million from investors before the app had a single user. Despite the company’s riches, the app landed with a thud, attracting few users and many complaints from those who did try it.

“It would be pointless even if I managed to understand how it works,” one reviewer wrote in the Apple App Store.

Since then, Color has become a warning sign for investors, entrepreneurs and analysts who fear there is a bubble in start-up investing. They say it shows that venture capitalists, desperate to invest in the next Facebook or LinkedIn, are blindly throwing money at start-ups that have not shown they can build something useful, much less a business that can provide decent returns on investment.

Color, which says it is overhauling its app, is just one of the start-ups that have set tongues wagging about bubbly excess in Silicon Valley. The Melt plans to sell grilled-cheese sandwiches and soup that people can order from their mobile phones. It raised about $15 million from Sequoia Capital, which also invested in Color.

Airbnb, which helps people rent rooms in their homes, is raising venture capital that would value it at a billion dollars. Scoopon, a kind of Groupon for Australians, raised $80 million; Juice in the City, a Groupon for mothers, raised $6 million; and Scvngr, which started a Groupon for gamers, raised $15 million. These could, of course, turn out to be successful businesses. The worry, investors say, is the prices.

They say they have paid two to three times more for their stakes in such start-ups over the past year. According to the National Venture Capital Association, venture capitalists invested $5.9 billion in the first three months of the year, up 14 percent from the period a year earlier, but they invested in 51 fewer companies, indicating they were funneling more money into fewer start-ups.

“The big success stories — Facebook, Zynga and Twitter — are leading to investing in ideas on a napkin, because no one wants to miss out on the next big thing,” said Eric Lefkofsky, a founder of Groupon who also runs Lightbank, a Chicago-based venture fund with a $100 million coffer.

A decade ago, in the first surge of Internet investing, it was not unusual for tech start-ups to raise tens of millions of dollars before they had revenue, a product or users. But venture capitalists became more cautious after the bubble burst and the 2008 recession paralyzed Silicon Valley.

Meanwhile, it now costs less than ever to build a Web site or mobile app. So this time around the general philosophy has been to start small.

“By starting out lean, you have the chance to know if you’re on to something,” said Mark Suster, a managing director at GRP Partners. “If you start fat and the product concept doesn’t work, inherently the company will lose a lot of money.”

Two of Color’s photo-sharing competitors, Instagram and PicPlz, exemplify the lean start-up ethos. They started with $500,000 and $350,000, respectively, and teams of just a few people. As they have introduced successful products and attracted users, they have slowly raised more money and hired engineers.

Color, meanwhile, spent $350,000 to buy the Web address color.com, and an additional $75,000 to buy colour.com. It rents a cavernous office in downtown Palo Alto, where 38 employees work in a space with room for 160, amid beanbag chairs, tents for napping and a hand-built half-pipe skateboard ramp.

Bill Nguyen, Color’s always-smiling founder, has hired a team of expensive engineers, like D. J. Patil, a former chief scientist at LinkedIn.

“If I knew a better way of doing it, I would, but that’s what my cost structure is,” Mr. Nguyen said in an interview last week.

Michael Krupka, a managing director at Bain Capital Ventures and one of Color’s investors, said Color needed to raise a lot of money because it planned to do much more than photo-sharing.

Jenna Wortham contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=5837ec24f47fbdbb31c3fb49350b2916

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