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Archive for May, 2008

Weekly Round-Up: TGIF!

Friday, May 30th, 2008

-Interested in investing in online dating? We’ve got a cougar site with your name all over it (provided you’re male and under 30).

-We answered reader Phin’s question about which sections you should include in a business plan and dispelled the rumor that we’ve got a webcam set-up.

-The economy is so bad that soon we’ll all be reduced to eating Spam.

-Web 2.0 businesses apparently don’t make money, which must explain why Facebook’s Mark Zuckerberg is still sleeping on a mattress on the floor.

-OMG the Sex and the City movie comes out nationwide tonight—and one small business is banking on a mention in the film to rake in the big bucks. We’re keeping tabs on how that one goes.

RIP: This Week’s Business Closures

Friday, May 30th, 2008

This week Akimbo, Bear Stearns, and Silverjet wound up in the graveyard of big-ideas-gone-bad and burned investment dollars.

-The biggest story on Wall Street this week was the sale of 85-year-old brokerage firm Bear Stearns to JPMorgan. Bear’s sale came after its monumental collapse, one of the biggest in Wall Street history. For those of you who enjoy reveling in this sort of thing, you can actually purchase Bear Sterns knick-knacks here on eBay. The bidding appears specially hot for baseball hats and the, um, stress balls.

-First the airline industry stripped us of space, and now they’re taking our peanuts and luxury airlines! Silverjet, the business-class only airline that launched 16 months ago, crashed and burned this week after failing to secure $5 million in emergency funding. For those of us who fly coach anyway, US Airways announced that they’re no longer serving snacks.

-Video set-top box company Akimbo bit it this week only months after securing $4 million in new funding.

Prof Says You Can Have A Life And Make Money. Stop Laughing.

Friday, May 30th, 2008

Did anyone else catch this story in the NY Times small business section about Wharton Business School prof Stewart Friedman? He teaches MBA students how to better integrate their personal life with their career. It’s an incredibly attractive philosophy in many ways, considering that the concept of having a career while maintaining a personal life is a paradox for most entrepreneurs and Wall Street-types. Given that, the idea that it’s actually possible is revolutionary.

But is it a possibility? As unfortunate as it is, launching or working at a start-up, or even at a bigger company translates into long hours—and little time outside that for anything else. To be clear—I’m talking about the entrepreneur, the CEO, or the high level executive actually running the show. I realize that there’s movement afoot to give employees more autonomy, which has been highly successful (but that’s for another blog post).

That said, ask yourself, would Google be where it is today if Larry Page and Sergey Brin had spent five nights a week beer-bonging at Stanford instead of whipping up algorithms? The same goes for multiple start-ups—while there’s probably some exceptions—there’s no way around the work-life conflict. Sure once you reach success there becomes more time for jetting off to St. Tropez, but I’d say that there are few successful entrepreneurs or business people who were doing much other than working at critical points in their career.

Friedman’s got a long list of devotees, according to The Times, so there must be something to his idea beyond collegiate dreaming and enthusiasm. What do you think? Am a being old-fashioned in thinking that entrepreneurial success is the result of hard work and long hours?

You Can Take Our Dignity, But, Please, Not Our Snacks!

Friday, May 30th, 2008

What is going on with the airline industry? I get it—yes, oil costs are up and the economy’s down, but seriously, they can’t afford peanuts anymore? That’s right, yesterday US Airways announced that they’ll no longer be handing out free snacks during flight. This comes on the heels of American Airlines’ decision to now charge passengers $15 for each checked bag. What’s next? Compressing us more tightly in the airplane cabin? Putting old people and babies down in the cargo hold to make more room? Raising the price tag on mini bottles of vodka?!

In related news, tough times have even befallen the creme de la creme of the airplane industry—including luxury start-ups. Silverjet, the British business-class only air carrier, announced that it’s permanently grounded after its first take-off 16 months ago, according to DealBreaker. They failed to secure the $5 million in emergency funded they need to stay aloft. In total, the industry has had losses totaling $40 billion this year. One solution? The Wall Street Journal asks this week why airlines don’t hedge more to keep fuel costs in check.

So About That $1.3 Billion Deal….

Friday, May 30th, 2008

Yesterday we posted that an “unnamed investor” was offering $1.3 billion dollars—yep, you read it right—for women’s online advertising network Glam Media. Not only was the dollar amount extraordinary, but so was the news that Glam wasn’t taking the deal.

Shockingly, it turns out that the whole thing may have been made up, Valleywag reports this morning. Let’s use their words, though:

“Did anyone actually offer to buy Glam Media for $1.3 billion? We asked sources familiar with the company and its publishing partners. The one-word answer: No. The two-word answer: No way. The non-verbal answer: giggles.”

Even better, it turns out that it may have been Glam’s CEO Samir Arora who fabricated the story to “puff himself up.” That’s right, if the rumors are true Glam’s CEO spread around a ridiculous story to make himself look cool(?). The irony of course is that if he was the one circulating the bogus tale, he ended up making himself and Glam look foolish—after all, who turns down a $1.3 billion dollar deal? While it’s all gossip and hearsay right now, should it be true, here’s my advice to Arora—make up a more believable tale next time that actually does the job of stroking your ego.

RIP, Bear Stearns

Thursday, May 29th, 2008

Bear Stearns’ sale to JPMorgan was finalized hours ago, wrapping up a saga that culminated with the collapse of the 85-year-old brokerage firm. It was one of the largest flops in Wall Street history.

But enough doom and gloom. Instead check out this awesome video of CNBC Mad Money host/annoying loud mouth Jim Cramer from March 11, 2008. This is why you can’t believe cable talking heads, people:

Nobody Gets It Right All The Time.

Thursday, May 29th, 2008

Ever been turned down for start-up funding? Go ahead then and savor a moment of schaudenfreude courtesy Inside CRM. They’ve compiled their list of the 20 worst venture capital investments of all time, and it’s a veritable wasteland of big dreams and billions in squandered investment. Here are a couple of the biggest debacles. Hey, nobody’s perfect.

-Amp’d Mobile: Amp’d Mobile takes the crown for money-burning, with $360 million that ended in bankruptcy. The company’s major problem was its customers’ ability to pay. Apparently 80,000 of the company’s 175,000 customers were unable to pay their bills. Shouldn’t it have occurred to someone that this was kind of a big deal?

-Webvan: Webvan was a grocery-delivery business. Once valued at $1.2 billion, the company went bankrupt in 2001. While at one time they’d raised $800 million in venture capital, they ended up with $830 million in losses.

-Optiva: Optiva, a nanotech company that laminated flat-screen TV sets, belly flopped after running out of money. It initially secured, and blew through, $41.5 million. The problem? It took too long to release its product, which was obsolete by the time it came to market. Ouch.

Yoo-hoo Google!

Thursday, May 29th, 2008

Yes, we all know that Google is the greatest search engine in the world and the neatest thing since sliced bread. YAWN. Personally, I don’t think Google gets enough flack. Despite all the Google hullabaloo, they still screw up.

To wit: since we launched Brass Tacks @ businessplan.com a couple weeks ago we’ve been creeping up the organic search rankings for terms related to our blog, such as business plan (rank #35) and business plans. It makes sense that we’d move up, given our url and site’s content.

Or that’s what you’d think. Kicking logic to the curb, Google has ranked sites like Florida Division of Emergency Management and AT&T Premiere iPhone rate plans above ours for a search of the keyword “business plans.” I know it sounds like sour grapes, but seriously Google?

Would You Turn Down A $1.6 Billion Offer?

Thursday, May 29th, 2008

There’s not many businesses that are worth $1.6 billion dollars. I know I’m stating the obvious here, but that’s a lot of cash. Yet that’s excactly how much an unnamed investor is offering for Glam Media, a women’s advertising network that shills its ad content to a myriad of websites and blogs. What’s interesting about the proposed deal is not only that sources say Glam’s going to turn it down, according to VentureBeat, but that Glam apparently has been tightening its belt, and has had some troubles. According to TechCrunch: “Last year the company lost $3.7 million on $21 million in revenue….If Glam is on target, a $1.3 Billion acquisition would be 8.7 times revenues and 32.5 times estimated profits.”

So why would an investor propose the deal in the first place – and why would Glam turn it down!? Here’s one possibility: yesterday we wrote about the struggle many Web 2.0 companies are having monetizing their sites (despite the fact that VCS continue to throw cash at them). Glam is at the forefront of web marketing, and is actually the fast-growing online advertiser. This week they announced a new video offering intended to make it easier to monetize videos. If Glam is actually biting on ways to rake in more online revenues, a $1.6 billion investment makes sense. Sort of. What’s still surprising is that Glam thinks it’s worth more than that. Sounds like they may be mistakenly tearing a page out of Yahoo’s playbook.

Glam

Things So Bad That Spam Is Good.

Thursday, May 29th, 2008

Are times really that tough? Okay, maybe if you work for Bearn Stearns. But the AP is reporting this morning that sales of Spam are up by nearly 11% over the past 12 weeks. Food costs and inflation are on the rise, and says Dealbreaker: “It is, as an economist would suspect, an inferior substitute good, the demand for which rises when the established good gets too expensive.” Maybe they’re referring to this? Anyone got an ideas for cheap food products that don’t involve compressed meat in a can?

SPAM

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