I've got a deal for you

How do we value businesses?

.

The normal parameters are book value + rate of growth in expected future earnings + Market price of fixed assets/investments owned by the company not directly used by the business (net of liabilities) + other assets like Goodwill, brand value etc. In that context, it will be very difficult to arrive at a valuation for Facebook. It has no significant cash earnings, still burning cash in millions, no net fixed assets, but has enormous brand recall and could be of great strategic potential to a Google or Microsoft.

So what’s left? Price offered by the first few bidders? At this moment, it looks like exactly two, or maybe four, parties have determined that number, and they're all in business together -- the Facebook board; Microsoft, which says that its $240 million investment got it 1.6 percent of the company; and reportedly two unnamed hedge funds that each put in about the same amount as Microsoft for the same percentage. It's the financial equivalent of Humpty Dumpty's take on language: "When I use a word, it means just what I choose it to mean, neither more nor less."

Nick Carr calls BS, and rightly so. "First, the investment is part of a broader deal, the details of which are unknown," he writes. "Clearly, Facebook needs cash to support its growth, and the cash payment was a price Microsoft had to pay to nail down the partnership. It has to be seen in that light, not as a market-cap marker. Second, and more important, Microsoft's investment is not financial but strategic. The company is currently engaged in a multi-front competitive battle under conditions of great uncertainty. Facebook forms one of the fronts, and partnering with the company is far more about gaining future strategic options and blocking the advance of a competitor (Google) than about making a financial gain through the appreciation of Facebook stock."

.

That gives it a universal appeal. Hey, I’ve got a deal for you. I need one person to send me $10 in exchange for a 0.000001 percent interest in Sequel Ventures, my sole proprietorship business, a closely held consulting outfit that helps businesses needing PE / VC / Debt funding and helping brokerages secure wealthy Foreign Investor client relationships. Voila -- we are partners in a $1 billion company….

.

"They've got other fish to fry"

That’s what Omar Hamoui, founder CEO of Admob, - a mobile Ad network that allows independent mobile websites to run Ads on their sites - said when he was asked why haven’t Google focused on an Adsense like stuff for mobile.

The Admob advantage for Advertisers is that you can target the audience and device you want, offers flexibility to select where your ad will run, you don’t need to have a mobile page (you can create quick and easy mobile landing pages) and the benefits of advanced reporting and analytics.

For the publishers, while it allows you to monetize your mobile traffic, you have full control over the ads displayed and of complete reportage of published inventory and revenue streams.

Here’s a nice interview that K@W had with Omar Hamoui of AdMob.

Don’t ever confuse it with internet Ads since Mobile Web is a silo of its own. In fact, that’s a challenge. Admob would love it if it could find an ad network to fill their inventory with existing online advertising. They simply can’t because those ads would link to web pages that wouldn’t render on the mobile device.

But I am sure they must be working at it…

.

Email Renaissance

Just how much has email evolved over the years? Or has it? Aside of some cosmetic brush up here, a touch up there, in terms of utility and features, not much really. Oh yes, some like hotmail and Yahoo! have recast its user interface and improved free storage from 10mb to 2 GB (more under pressure from Gmail that offered close to 4 GB to its users, free).

Four new startups, all of which came out of secrecy this year, point toward a bright new future for email. Or do they? These oddly-named saviors — Fuser, Orgoo, Xobni and Xoopit — have a simple goal. They want to centralize communication, and they want to give it structure and meaning. Locally, I have written about a refreshingly new app Colayer here.

The question is, just how painful is existing consumer email? The majority of us are lazy, and we’ll put up with a lot before learning a new system. Sure, our Yahoo Mail may be clunky at times, but it’s “good enough,” right? But as Chris Morrison sees it, If they only appeal to a tiny sub-set of users, it looks more like all four startups are doomed to failure.

Here’s Chris Morrison’s nice coverage from Venturebeat, for those interested in email renaissance…

.

Listen to this music

I give something away for free. Still would you come to steal it?

That's one of the surprising discoveries to come out of an experiment by the British band Radiohead last week. On Thursday, the group made its latest album, In Rainbows, available for direct downloading from the Web at an unusual price: whatever fans feel like paying. Downloaders who want to pay nothing can enter "zero" in the site's price field and download the album for free.

But for hard-core music pirates, even free hasn’t been enough of a draw. According to music industry analysts, hundreds of thousands of Web users who frequent copyright-infringing file-sharing sites, including The Pirate Bay and TorrentSpy, have chosen to download In Rainbows illegally, distributing their contraband around the Internet just as they might with any other pirated album.

It’s not economics anymore; it’s got to do with habits.

.

Kagermann endorsing Ellison !

For some like Larry Ellison of Oracle, acquisitions are a disease; or call it ethos, if you spot a pattern. How did Ellison resist his urge to go shopping for such a long while? Before we could hear a contented belch emitting from him after gobbling up Seibel systems and PeopleSoft, here he goes again, out to get BEA Systems - maker of "middleware," software that integrates Net applications with databases. Ellison is making an offer @ $17 a share in cash, valuing BEA at $6.7 billion.

Founded in 1995, BEA is considered a valuable asset largely because it has about 15,000 customers that generate more than $600 million in annual revenue for software maintenance and upgrades. Activist investor Carl Icahn owns a 13.2% stake in BEA and is angling for more bidders – Oracle rivals SAP, HP and IBM not ruled out.

SAP initially derided Oracle's acquisition strategy as misguided, but earlier this week signaled it is ready to go on the prowl too by agreeing to pay $7 billion for Business Objects SA, a maker of software that helps companies analyze their internal data. That deal countered Oracle's $3.3 billion purchase of Hyperion Solutions earlier this year.

.

I would say that’s how Kagermann endorses the Ellison brand.

.

Proximic IS different....

From amongst the long list of Google look-alikes (eventual train wrecks, shall we say?), Proximic looks refreshingly different. It’s home page announces “no keywords, no typing, no tagging” – bingo! (Currently restricted to Firefox browsers)

Thomas Nitsche's program matches Web pages with relevant advertising. That's what Google's AdSense network also does. But Nitsche and his partner, Philipp Pieper, CEO of Proximic, believe they do it better. People who have played with their program say that seems to be true.

While Google looks at the words on a Web page, Proximic looks for patterns of characters. That means Proximic's approach is completely language-independent, so it works as well with German and Chinese as it does with English.

So should Google founders Larry Page and Sergey Brin be losing sleep about a tiny German company called Proximic?

While the notion may at first seem ridiculous, given Google's strengths and cash hoard, computer scientists at some of Silicon Valley's biggest Internet companies have been struck by the firm's promising new search technology.

.

I would second that. Gladly.

.

Nokia does a Google

Is Nokia doing a Google? Paying obscene valuations for technologies that look good?

.

Agreed. In a mobile, connected world, maps are becoming a hugely strategic asset. All kinds of burgeoning digital revenue streams are being created on the backs of maps: local search, friend finders, family tracking, location-aware advertising and turn-by-turn navigation. If you control the map, you control the game.

In July, the industry woke up to just how valuable maps could be when TomTom, the Dutch manufacturer of personal global positioning system navigation devices, said it would buy Belgian mapmaker Tele Atlas for approximately $2.7 billion.

But look what Nokia is doing… offers $8.1 b for NavTeq a digital mapping company with an earnings of $200 MM ! You can just imagine the Fins sitting around some big table wearing their Viking helmets and tucking into some reindeer steaks and saying, We must do something! Now! What can we buy?

For 8 billion, I'd be willing to go map everything for the poor Fins. I sympathize that they are basically aquatic animals, and are sort of wobbly on dry ground, so they need someone to do the mapping for them, but that's a lot of moolah for the job.

What do you think…?

.