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Dan Ramsden
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Dan Ramsden has been active in finance, markets and strategy, at global institutions as well as boutique firms, for over twenty years. He has covered the media and technology segments, through their transformations and transitions, since the mid-‘90s, and has been involved in private and public,... More
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  • A deal surge in media, which is actually commerce

    Upon the report of a major Facebook financing, registering third after Groupon and Twitter had also announced spectacular funding rounds in the space of one month, the question was asked: What about Zynga and LinkedIn? Where are they in this spectacle? Such a question implies that there might be an indiscriminate craze for the best names in media, and that the popular names absent from festivities may soon arrive upon the scene as well. This could certainly be the case, and perhaps even beyond Zynga and LinkedIn there are other spectacular rounds being planned as we speak, some of which may well provide the “bubble” chatter with all sorts of additional nourishment. There is, however, a different way to see recent events, so that the particular selection of three names – Facebook, Groupon, Twitter, (in size order) – no longer seems incomplete but rather very particular. And by the same token, the absence of Zynga and LinkedIn and others would come across as less of a lapse than a different grouping entirely – one that does not belong in the pattern at all.

    Putting size order aside for the time being, and forgetting relative valuations and the appropriateness or inappropriateness thereof, the key to the question is one of definition. Because Facebook’s is the largest and most recent of the three deals, we may be inclined to see it as the defining event, the anchor transaction by which the other two are to be taken in. By that standard, the three deals are milestones in social media involving the most outstanding names in the field, and by that standard it is correct to wonder where the others are, (for example, Zynga and LinkedIn). But what if the defining event, the anchor transaction, is not Facebook at all but instead Groupon? Seen in this light, from the special angle of what sets Groupon apart, then the trio of situations is not anything like popular media at large, or particularly even social, but three unique platforms that facilitate retail and online commerce in specific ways, and that may find themselves at the start of a massive industry evolution. Seen in this light, Zynga and LinkedIn simply don’t belong, but Yelp or Foursquare or Gilt well might.

    From such a perspective, the eye-popping surge of Facebook, Twitter and Groupon in the world of private investing, may have fewer public market parallels at, say, Google, Microsoft, Aol, or even Apple, than they might at Amazon and eBay. Out of the first-mentioned group, Apple (also surging) is closest to e-commerce (ref. iTunes and the app store), and Google is, for a variety of competitive reasons, most anxious to get in. (I note, by way of evidence, the effort made by Google to acquire Groupon, and I suggest, by extension, that Twitter may not be a terrible second choice.) This being neither here nor there, I would nevertheless put forth, and with confidence, that the notion of Apple, Google and Facebook dividing the world between them – a notion that among industry observers has for some time become a standard rule of thumb – is a flawed and antiquated notion. We should not rule out the commerce plays: Increasingly the distinction between commerce and media is being blurred. (I note, by way of evidence, that Groupon has begun to direct much attention to editorial quality and is providing organized training to its copywriters, as though it were a real content shop.) 

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jan 04 8:30 PM | Link | Comment!
  • As execution begins to trump invention, we should be ready

    For entrepreneurs and ventures in digital media and technology, 2011 will be a year for execution. While it is true that every year should be that way – because execution should never be a unique or passing trend – the distinction for 2011 will be particularly one of contrast. Execution will begin to trump invention as the first order of business, and we may have already begun to see indications – direct or merely suggestive – that a shift in focus is happening. Some examples:

    Twitter has appointed a new CEO, who according to reports will be purposefully attentive to revenue production. One of Twitter’s earliest investors, a group recognized for its skill in identifying new web trends and emerging media innovation, is reportedly raising a new fund that is notably not dedicated to startups but to late-stage investing. (To be clear, late-stage investing is about execution and professional development, not new sensations.) And speaking of sensations, the talk of the funding circuit these days is not Facebook but Groupon, a company that perhaps more than any symbolizes efficiency of execution. In two years, Groupon has grown from nothing to billions of dollars in revenues and worldwide operations, and the source of its new $950 million financing includes late-stage funds more prominent for IPOs than venture capital. On the subject of funds, while 2010 showed a mild decline in overall fundraising, there was a concurrent uptick in money raised for mezzanine and restructuring activities: Again, the theme is execution, operations, more than novelty.

    Now, it is in no way being suggested here that invention will be frowned upon and cease. According to strict dictionary definition, this very article is a form of invention, as are hundreds of millions of other items created every day. But the question is one of pace, magnitude, influence, and such relative variables, where this article lies at one extreme and the invention of the mobile phone, for example, at the other. In between, there is the iPad, introducing a set of new features to a previously perfected technology. Groupon, by the same token, did not invent email, did not invent retail discounts, did not even invent direct customer-calling. And even Facebook’s most dazzling breakthroughs of the past year have been a “like” button and a new form of messaging that is pretty much like IM. The point being that, in 2010, some fifteen years into the introduction of the popular web and its assortment of gadgetry, we can’t reasonably expect the refresh to be continuous.

    What’s more, a slower pace is a good thing when this occurs at the end of an explosive innovation cycle, because we really need to take stock of what we have. Consumers need to establish habits, investors need to realize exits, entrepreneurs need to let their concepts season: In short, substance needs time to form. The skills and perspectives necessary to execute, rather than strictly invent, and the attributes picked up along our rapid evolution, now need to mature and come into their own. Two decades into a massive transformation of media and related technologies, we should be ready. 

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: Internet, Media
    Dec 30 2:32 PM | Link | Comment!
  • Resolutions for a fresh perspective

    In an uplifting time, light things are lifted up, and it’s easy to confuse the lightness as well as the lifting for something that is substantial. From the mid-80s through the next fifteen years, the markets experienced an unprecedented bull run that caused many of its participants to consider such a trend normal, on one hand, and their own investment acumen noteworthy, on the other. A two-year correction followed, but that was quickly brushed aside because the next five years seemed like a continuation of the previous pattern. Setting temporal boundaries is an arbitrary exercise, and we commonly think in terms of beginnings and ends of decades as though such milestones would hold concrete significance, as though generations begin and end around periods marked by ’0s on calendars. On that basis the past ten years have been referred to as a “lost decade” – a term that wittingly or unwittingly echoes the “lost generation“ between world wars – and in such lost periods people allegedly learn lessons, presumably in humility. If only.

    We are reminded about the generation (and the way of thought) that still determines markets when we see headlines about bullish sentiment registering all-time highs. In an era that holds witness to unemployment not seen since the Great Depression, deficits and national debt not seen ever, and economic growth that is barely pushed along by an accounting quirk and (unsustainable) government spending, the bull and bear cases should at the very least be debatable. That bullish sentiment is as widespread as it is can only really be explained by generational factors described: Markets go up, corrections happen, markets bounce back, acumen comes easy. We are the generation of investors born out of Gordon Gekko chic, when finance was all the rage and Wall Street was even cooler than entrepreneurship.

    There was a chance, during the past two years, for a different lesson to be learned and, perhaps, for a new generation of thought to emerge. Had markets run their natural course, undoubtedly this would have happened. But markets were manipulated – which is not an inflammatory observation but merely a statement of public policy – and these actions created outcomes that reinforced our set ways of thinking: Markets go up, corrections happen, markets bounce back, acumen comes easy. Who knows but this is the new reality of things. Maybe analysis, dissection of line items, scrubbing data, scouring the fundamentals, are all exercises that miss the mark completely when the only variable that matters is QE2 and its assortment of international cousins. But maybe, on the other hand, the reason that economic disruption does happen, and the reason that markets don’t only go up, is that fundamentals do matter. These can be glossed over, but not altogether escaped.

    Heading into the new year, and this being a time for resolutions, I resolve to do as follows, and any who care to join me are welcome to tag along: I will make an effort to remember that the world did not begin in 1984, nor 2007, but is a continuum that began quite awhile back. I will scrutinize economic results and financial announcements beyond the headlines, as these may be contradictory and headlines are meant to manipulate attention. I will assume that money is not of unlimited supply because it can be printed, debited, credited, or wired, and that even outside of a gold standard money and the economy have to be rooted in something. I will remember that information exists and is available. I will remember that boundaries around market eras are artificial and that bull markets, bear markets, corrections, are matters of arbitrary perspective. Most of all, I will remember that during my own generation there have been enormous economic, social, and technological changes worldwide, and there are always occurrences that were once unimaginable. 

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Tags: Markets, economy
    Dec 26 11:15 AM | Link | Comment!
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