Microsoft and Facebook: Mark Zukerberg gets his way

Microsoft buys stake in facebook It is confirmed, Microsoft is in, Google is out. As we mentioned yesterday, Microsoft has announced that it is investing $240 million in Facebook, at a valuation of $15 billion!

This puts the current Microsoft stake in Facebook at 1.6% which is much less than the 5% stake that Microsoft was initially considering. We had written on September 24th, that Facebook CEO Mark Zuckerberg was “pushing for a whopping 15 billion valuation” for the Facebook site. Looks like this round has gone to Mark!

So Mark Zukerberg got his $15 billion valuation for Facebook, but it is not clear if Microsoft reduced the amount that they had planned to invest in the company or whether the 15% share that they had planned on acquiring was based on a lower valuation of $1.6 B. If that were the case, then indeed, Facebook got a a very good deal.

There has been much said about Mark “Zuke” Zukerberg’s spurning of lucrative offers for Facebook, but certainly a lot of credit has to be given for the fact that he has managed to grow the company into the 5th largest Internet presence, right behind the likes of Google, Ebay, Yahoo and Amazon.

Microsoft will begin serving targeted ads to Facebook’s 20 million active users (their user base has been growing by 3% a month). While Google has been spurned by Facebook, they will probably not be sitting still for long. They already have an advertising network deal signed with MySpaces’ parent company Fox Interactive Media, to serve ads to the 100 million MySpace members. One wonders if there is are any ownership discussions in the offing….

Technorati Tags: Microsoft, Google, Facebook, Myspace, ad network, social network

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GCommerce raises $500k from Agility Capital

Agility Capital has announced that it has closed a $500,000 financing to GCommerce, Inc. The debt facility is in the form of a tiered bridge loan, according to Jeff Carmody at Agility Capital.

GCommerce provides cost-effective, web-based software solutions designed to streamline and improve supply chain operations for manufacturers, distributors, buying groups, and retailers of goods and services. The company is based in Des Moines, Iowa.

Agility Capital provides debt solutions to Venture Capital backed private companies and Small Cap public companies in the technology/communications/medical device and branded consumer products markets.

Agility’s focus is to provide short term loans to technology companies, with a quick turn around through a simplified process that provides entrepreneurs with access to debt capital when they need it. Companies can use the financing to get to the next level, such as a private equity investment, the sale of the company, or a public offering. Agility has offices in Santa Barbara and Menlo Park, California.

Technorati Tags: Agility Capital, GCommerce, debt financing, bridge loan, short term loan

The Digg Effect: The Avalanche hits!

 On October 18th the BizOrigin site got Dugg! We went through it all, the sudden “swarm” of traffic on the site, the almost inevitable server crash, some quick maneuvering to keep on top of the blizzard, and then the final post game analysis.

Every day of this week, we will dedicate one post to “The Digg effect”. We put together some information on the Digg effect, how to recognize it, what you can do ahead of time to keep from your server from crashing, and what you can do to Digg yourself out, if you do go under - wish we knew all this before the storm hit!

The sequence of Digg events:

1. We posted a story around noon, on the 18th. It seems to have gotten onto Digg at around 2 pm. We saw a steady stream of visitors for an hour. The number of Diggs on the post was about 40.

Technorati Tags: bizorigin, digg


2. At 4 pm the avalanche hit. At peak, the number of visitors was about 200 times the normal hourly rate.

3. An hour into it the storm, the server crashed. The number of Diggs was around 120.

Someone set up a mirror site for the post. The serious diggers appeared to be going to this site. Some traffic was recorded on the mirror site. The graph shows the actual activity along with a curve depicting the likely traffic if the server were up. It is possible the traffic would have even gone higher but we assumed that it started to ebb at the time the server went down. 

4. At 6pm the Bizorigin server was still down with the ominous message “This server has been suspended”. We changed it (once we realized what was going on) to the somewhat cooler - “The server is down. Could be Digg effect“. A couple of folks called us to High-Five us over the crashed server!

5. At about 8 pm, with our site still down, we redirected the domain to the mirror page that had been set up (on a mirror page, the original post can be viewed but the rest of the site cannot be accessed).

6. At 9 pm, the server folks had our domain back up. We pointed the Bizorigin site back to our server. We considerably “lightened” the post page, reduced image sizes, and cashed the page to minimize the impact on the server - see forthcoming post for “What to do to digg yourself out”.

7. 36 hours later we were still seeing a constant flow of traffic, about 5 times the pre-digg level. The number of Diggs had by now settled to about 280. 3 days past the event, there is still a long tail of traffic which is higher than the original level.

Digg is quite an interesting phenomenon in itself - the swarm effect and the underlying group dynamics.

In our follow up posts we will look at the following:

How to recognize that the Digg storm is coming
How to Digg yourself out from under the avalanche
How to keep from going under when you get Dugg

Layoffs at AOL - Advertising gold rush continues

Some bad news at AOL - they are laying off 2000 of its 10,000 employees. CEO Randy Falco sent out a letter this morning, explaining the reasons behind the cutback. Kara Swisher at All Things Digital, published the layoff letter.

Dear AOL colleague,

Just over a year ago, AOL embarked on an incredibly complex and significant transformation as we fundamentally shifted our business model from a subscription-based ISP to an advertising-supported Web company.

We aggressively expanded our advertising capabilities, building on the strength of and our premium ad sales force.

Clearly, the big gold rush for the major online companies are the ad dollars, and shoring up the advertising networks has become priority #1. Google has a clear lead in the ad race with 56% of all searches in the US, followed by Yahoo at 23%, and Microsoft with 11%. AOL is bringing up the rear with 5%.

Google, acquired DoubleClick earlier this year, for a resounding $1.3 billion. Google is also making definite forays into the mobile advertising market.

Microsoft bought aQuantive, a digital marketing company for $6 billion, making aQuantive the largest acquisition for Microsoft. AQuantive is the parent of Razorfish, the marketing company that was the darling of the last boom, along with DRIVEpm and Atlas.

On the heels of Google’s acquisition of DoubleClick, Yahoo acquired Right media for $680 million.

AOL acquired a controlling stake in the German ad company, ADTECH AG.

From the AOL layoff letter:

We aggressively expanded our advertising capabilities, building on the strength of and our premium ad sales force. We acquired three leading-edge advertising companies–ADTECH, Third Screen Media and TACODA–and formed Platform-A. AOL now has one of the largest and most sophisticated ad networks in the world, and we’re well positioned to compete where the ad market is heading.

AOL’s current strategy will be geared towards “three core areas–Platform-A, Publishing and Access” according to CEO Randy Falco. Platform-A will enable AOL to serve ads over their own as well as third party sites. Content (publishing) sites provide the basis for the ad network, which the Access platform (AOL’s traditional and highly profitable ISP business) will provide the cash to build the other businesses.

In spite of the impending layoffs, some credit should go to AOL for building, and articulating a clear vision of where it sees itself in the future.

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