Tag Archives: Google

EU Regulators Focus On Desk Chairs While The Titanic Sinks.

I love it. Europe is quickly falling into the financial crapper of a lifetime, and instead of focusing on ways to revive their economies and develop a central governing body, they are focused on things like this:


EU regulators, investigating Google for alleged anti-competitive behavior, want the internet search giant to offer concessions that cover all platforms, including computers, tablets and mobile devices, two people familiar with the issue said on Friday. What concessions?

If Google is not able to provide satisfactory concessions, it will face charges and potentially severe fines, the EU’s competition commissioner, Joaquin Almunia, has said.

Almunia wants remedies for all computing devices that have access to the Internet and provide a search capability, one of the people said. Remedies? For what? Where’s the damages?

Earlier this month, the world’s most popular search engine proposed concessions in a bid to settle an 18-month long investigation fueled by complaints from rivals including Microsoft. Neither Google nor the EU have said what those concessions were. Ahh, yes.

The European Commission is now examining the offer. The EU watchdog has said Google may unfairly favor other Google services over rivals and may have copied material from other websites, such as travel and restaurant reviews without permission. Then sue them.

It is also concerned that Google’s advertising deals may exclude third parties from concluding similar deals with rivals while contractual restrictions on software developers may prevent advertisers from transferring their online campaigns to rival search engines. And, what? Google should be punished for making a good deal with advertisers? These people ARE crazy.

This smells to me like a complete red herring and a way for Europe to extort some sheckles from the Googs to help with their sovereign defaults. Don’t give in, Googs. This one will go away.




The Wrong Day to Quit Sniffing Glue or to Make Your IPO Debut.

And now, with permission from my buddy Dara Albright, Founder of NowStreet Journal, we have her insight to the FB IPO:

Some call it a cultural phenomenon. Others label it a colossal waste of time. No matter the sentiment, all attention was on Facebook’s IPO entrance on Friday. Well, except for NASDAQ, who was too focused on repairing its malfunctioning technology, oh, and the European Union, who was busy worrying about its looming financial collapse.

Instead of skyrocketing, as was widely predicted among analysts on the Street, Facebook closed up a mere $0.23 cents, not even gaining 1%. News circulated during the day that even Facebook’s bankers had to jump in and support the stock from breaking its offering price. A far cry from LinkedIn’s IPO entrance, almost exactly one year ago, which nearly tripled its offering price during its first trading day.

The most anticipated IPO of the decade and largest technology offering in history had a less than stellar IPO debut. Yikes. What does this say about America’s capital markets? What does this mean for its economic future?

If we’ve learned anything today, it’s that timing is everything and no one, not even Wall Street’s finest, can predict the ideal day to go public. Sometimes you just “pick the wrong day to quit amphetamines”. But, bankers can sometimes price an offering correctly. And this was one of those times. Had Facebook’s stock price shot through the roof, Friday’s headlines would have read something like, “Once Again Wall Street Bankers Underprice a Deal & Screw the Issuer”.

Facebook’s underwriters should be commended. But I do not want to give them too much praise for fear it will go to their heads and result in the creation of yet another destructive derivatives product. “There’s no reason to become alarmed, and we hope you’ll enjoy the rest of your flight. By the way, is there anyone on board who knows how to fly a plane?” Sorry, once you start quoting the movie, “Airplane”, it is almost impossible to stop.

Facebook’s lackluster IPO performance also affirmed what we all know but most don’t like to confront – the public markets are significantly broken. It is challenging for companies to thrive in a trader-centric marketplace where fundamentals are rendered practically meaningless and company stock prices are at the mercy of extraneous events. Last week, Europe sneezed and Facebook caught the flu.

Unfortunately for Facebook, not too many traders came to the realization that Europe’s bleak financial future and rising unemployment actually benefit Facebook’s business. Look how many more jobless people will now have time for Facebooking. Does anyone see the irony here?

Facebook, say goodbye to the autonomy of the private markets. Now, instead of being valued on your own merits, you’ll be assessed based on the accomplishments and failures of those who have nothing to do with you, subject to the second-by-second mood swings of those judging you. Welcome to public market hell where you will now be viewed as a ticker symbol as opposed to the global innovator you are.

Don’t worry, “FB”, many considered the IPO of “GOOG” to have been a great disappointment too. Contrary to “GOOG”, at least you were not forced to slash the price and size of your offering. And remember Webvan’s hot IPO? Its stock price more than doubled during its first trading day. Perspective.

So just where was Facebook’s aftermarket love on Friday? This leads me to the final and most important lesson of the day. Even the most grandiose of companies have trouble thriving in a marketplace that lacks the aftermarket support derived from long-term investors who are more interested in funding companies rather than trading tickers. These long-term investors are a company’s clients, its customers, its users, its partners and its supporters. In Facebook’s case, they are the 900 million across the globe sharing updates, photos and videos every day. If each user bought just one share of FB, it would equate to $34.2 billion in pent up demand.

I don’t doubt that Facebook will ultimately achieve success in the public markets. It is one of maybe a handful of companies on the planet, including AAPL and GOOG, who can provide its own aftermarket support by harnessing the crowd. According to Gene Massey, CEO of MediaShares and leading expert in Direct Registration methods, “Once Facebook has been public for 12 months, it can offer a direct stock purchase option to its massive user base. By doing so, it will not only gain stock support, but Facebook will also add valuable shareholder demographics to its existing database enabling it to become the world’s most powerful marketing and fulfillment company in history.”

Unfortunately, the vast majority of companies entering the treacherous public markets do not have a support group of 900 million. Unless something is done to fix the aftermarket deficit, more and more publicly traded companies will find themselves dying a slow painful death. This will only result in additional long-term investors fleeing the public markets in search of greater stock appreciation.

The fact is the mass exodus has already begun. The fastest growing companies no longer reside on NASDAQ. They are found in the rapidly expanding marketplace for private company stock (PCM).

Facebook has inspired a new generation of social businesses poised to capitalize off its extraordinary media platform. Many of these micro and small cap companies are already enjoying spectacular revenue growth. Historically, most of these companies would have been public at this point in their life cycle, creating wealth for public market investors. However, it makes no fiscal sense for these companies to be public today.

These private companies are all thriving, in part, because their investors consist of long-term shareholders who believe in their products, their businesses and their visions. Don’t all companies deserve the right to attract investors whose interests are more aligned with their own? Shouldn’t all investors have the opportunity to invest prior to a company’s greatest growth spurt? Shouldn’t all investors have the freedom to invest their own money as they see fit?

224 days, 16 hours, 38 minutes, 16 seconds until the democratization of the US capital markets.

You Say You Want A Revolution?

The JOBS Act – what it really means for the future of Crowdfunding.

So, my assumption here is that you already know about Crowdfunding, either because you have been following my blog or just because. But, maybe everyone on the planet doesn’t know. In case that’s true, let me explain. Crowdfunding is a mechanism that takes advantage of the reach of the Internet to offer opportunities to invest in startup enterprises to anyone with Internet access and a credit card or a PayPal account.

The whole idea is to bring the world of startup investments to ordinary citizens who would like to gamble some of their money on what might become the next Google. In addition, it provides a simple platform for entrepreneurs to post their business plans and raise money to launch their businesses. The JOBS Act is legislation that was passed recently in the U.S to kick-off a startup economy. The Securities and Exchange Commission has 270 days to examine and propose regulations that will support this legislation when it becomes law in February of 2013. The JOBS Act will have thrown 80 years of SEC laws relating to securities under the bus, so the SEC needs this time to temper the Congressional zeal for this passage.

The original driving energy really came from the credit markets that are still broken and would appear set to remain that way for a long time to come, and the regulatory requirements governing most businesses, which usually come later in the lifeline of a startup project. Congress seems to have wanted to find a way to reduce the regulatory oversight while still offering a modicum of risk management by establishing rules that govern the offerings of startup businesses on these Internet platforms. In early discussions, the SEC seems focused on education and not so much on risk warnings. In fact, the JOBS Act turned out to be the result of a conflation of six separate bills, all trying to put forward the same rough objectives.

Congress did what Congress always does, and ended up with a compromise bill that reduces the burden of some of the regulations found in the Sarbanes-Oxley act while still inffusing the new act with some form of  regulatory relief. As is always the case, we never get a pure solution to a simple problem from these guys. It isn’t in their DNA.

The main issues are around education, risk management and the scope of these offerings. Congress tried to reduce the reporting requirements and corral the size of individual and overall investments in a single project, by suggesting some limits for investors and some basic reporting requirements by the businesses. Presumably, the Obama administration and the SEC will take the narrowest possible interpretation of the reporting requirements, so it doesn’t become another source of opaque business practices of the sort that led us into the worst recession since the 1930s. I mean, really sophisticated investors clearly had no idea what they were buying when they purchased the top-trench of a collateralized CDO in the mortgage market, yet they were heavily vetted and qualified as to their level of “sophistication”. We know where that led. So, the SEC argument to focus on the education component of these investments rather than the risk disclosures seems silly, and I hope they see the light before they implement something that failed so miserably on Wall Street only five years ago.

If anything, the financial advice the SEC should require should be along the lines of “Do you understand that most startups fail and that you could lose all of your investment?” And, “It is a really good idea to spread your investment across a broad portfolio of startups, so that if a few fail, you are protected by the one or two that might succeed.”

One of the cool things that has happened in the CrowdFunding space as (I believe) an unintended consequence of the Kickstarter phenomenon, has been this notion of aggregating a built-in customer base WHILE one is in the process of creating product, and the result, which is often squeezing out the failed attempts through the initial market response inherent in the project funding. So, in other words, if your project gets over-subscribed, there is probably a market for what you are trying to produce, and if everyone hates the end-result, you get instant market feedback long before you have committed lots of capital to a failed design.

And, to be clear, Kickstarter is NOT a CrowdFunding platform, even though at first glance it may appear as such. Kickstarter helps aggregate donations for projects. If in return for your donation, you get a coffee mug or an invitation to a film party, then cool. It does not raise money for people to build companies. That indie film is not being produced in a distribution environment. Kickstarter is very careful about which projects it approves. And, it may never choose to participate in the SEC-regulated Crowdfunding space next March. If it ain’t broke, don’t fix it and who wants the SEC breathing down your back?

So, at the end of the day, I think the SEC will err on the side of education vs. risk management, there will be far greater funding restrictions than the JOBS Act intended, the Crowdfunding space will look really different in 24 months than we envision it today, with perhaps far more entertainment related endeavors (games, music, video, films, TV pilots) getting funded in much the same way as the music business became more indie in the last 10 years, and the venture capital community will basically remain unaffected one way or another, as entrepreneurs learn how difficult it is to round up all the devils in all the details.

There is a unique opportunity for the VC community to form an incubation-like support structure to provide infrastructure nourishment for all these startups, but I would be surprised if that happens. It seems more likely to me that the platforms themselves will look to provide these sorts of services as part of their service suite. There is also an opportunity to form a “Startup University” to prepare young entrepreneurs for this new “industry” in much the same way as MIT prepared young software engineering students for the computer technology evolution.

And, lastly, the nascent industry’s attempts at self-governance, while really well-intentioned will likely have little or no real impact on the space. People tend to do what they want.

Whatever forms all of this takes, I think we will have lots of job creation, a new rapid-development technology revolution, and the beginnings of an expansive and exciting world of commerce within the U.S. economy. And, it is really cool!

How To Reach Me.

You can always follow me on Twitter @sking1145 or e-mail me at: sking1145@yahoo.com or on Facebook at iSellerFINANCE. 

The Crowdfunding Market Nearly Quadrupled in a Year.

$123 Million Year-over-year, Report Says

Earlier last week I posted with enthusiasm that the Senate passed a version of the House bill HR2930, but that we still had some work to do to get it passed. Since then, I have seen some pretty remarkable numbers related to the growth of Crowdfunding, and it isn’t even “legal” yet.

A report was published recently by the Daily Crowdsource that was based on an evaluation of eight reward-based crowdfunding platforms (where a donor receives a reward of value in exchange for a cash contribution) and six investment-based platforms (where investors receive equity or interest on their investment). All platforms evaluated in the latter category were based outside of the US, where they are in fact legal today. The rewards-based platforms evaluated are all US companies and are legal, as long as they don’t offer investors an equity or interest based position in the outcome, and include the popular fundraisers Kickstarter, RocketHub, and WeFund.

In 2011, crowdfunded businesses and projects raised $102 million on rewards-based platforms, including $85.4 million raised by projects that reached their total funding goal. Over 2010 figures, “this signifies a 266 percent increase in the total amount donated and a 263 percent increase in the amount donated to projects that received their full funding,” according to the authors.

They attribute the explosion to the “increase in the number of projects that are being posted online.” More than 31,000 projects sought crowdfunded donations in 2011, up from just under 12,000 in 2010.  The Daily Crowdsource reports that not only are more projects being launched, but the number of projects achieving their full funding goal is also increasing, “indicating the market is becoming more efficient at allocating resources.” The Daily Crowdsource says its research on the nascent crowdfunding industry was conducted over three years, and is based on data collection and interviews with leadership at all 14 crowdfunding platforms evaluated.

Investment-based crowdfunded projects raised a collective $20.5 million in 2011 – five times more than was raised the previous year. And, these aren’t projects that would have ever seen the light of day in front of traditional venture investors. These are projects like Duality of Bell, a short film about Bell, a teenage girl struggling to preserve her youthful innocence with some new-found whatevers, or Build a Greener Block (BABG), a community of Las Vegans looking to take over an empty block in downtown Las Vegas on April 28th and 29th, and for this one weekend they’re transforming the block into a living community, where instead of empty stores there will be a restaurant offering healthy food, a boutique, a café, a flower shop.  Well, you get the idea.

Can you imagine what this space will look like once Congress get’s this bill approved? How about Pandora, which was turned down 300 times by some super-smart Venture Capitalists? Or, Skype. Turned down 40 times before getting funded and going on to a massive exit.

Or, better yet, a little company in Mountain View, that in the early months of 1999, its founders Sergey and Larry, still students at Stanford University at the time, wanted to sell the project they named Google and focus on education. They approached George Bell, the CEO of Excite for a $1 Million buyout. This was rejected by George. There were a number of negotiations that almost led to a $750,000 buyout offer. This was rejected by Sergey and Larry and, according to George Bell (circa 1999) they asked for an investment instead. George said that he rejected the counter offers and let the idea drop. About five months and 22 venture presentations later, Kleiner Perkins Caufield & Byers and Sequoia Capital invested $25 million in Google, and the rest is as they say, history.

I don’t know about you all, but I can hardly wait to get my hands on the next Google, or Facebook, and I am convinced that our buddies in Congress are going to pave the way to make that happen. Of course (shameless plug) iPeopleFINANCE will be the platform on which the next Facebook will promote its first raise, and get funded. A whole new, on-line Silicon Valley for start-ups, funding innovation and creating real jobs. Truly exciting!  

England: Online P2P Lenders Could Replace Banks.

Andy Haldane, Head of Policy at the Bank of England said in a speech in New York yesterday that: “small peer-to-peer lenders like Zopa and Funding Circle could in time replace high street banks”.

This comment reflects just how seriously the Bank of England is taking the new and rapidly growing peer-to-peer finance sector.  

Mr Haldane said the impact of these firms could be revolutionary, saying:

“At present, these companies are tiny. But so, a decade and a half ago, was Google. If eBay can solve the lemons problem in the second-hand sales market, it can be done in the market for loans”.

In response, Giles Andrews, cofounder and CEO of Zopa – the world’s first online peer-to-peer lender – said:

“Andy Haldane’s comments are very welcome as further evidence of how far this new force for good in finance has come over recent years.  As we have said for a long time, it is innovative new alternatives such as Zopa that are going to shake up the banking sector far more effectively than just adding more banks doing the same old things.”

“Complete replacement of high street banks is probably unlikely, as there might be some things no one else can do better. But Zopa has proven that as far as personal loans and savings are concerned, peer-to-peer finance offers a better solution – by design.  And there are other parts of what banks do that peer-to-peer providers could do better. Even mortgages.”

Pinterest Becomes Top Traffic Driver for Women’s Magazines.

In just a few short months!

Pinterest hasn’t just become a significant source of referral traffic for retailers; it’s also becoming a top traffic driver for women’s lifestyle, home decor and cooking magazines, some of which are seeing bigger referral numbers from the image-collecting service than from major portals like Facebook andYahoo.

Beginning this summer, Pinterest became the top social referrer for marthastewartweddings.com andmarthastewart.com, sending more traffic to both properties than Facebook and Twitter combined. Pinterest is on track to become the second highest traffic driver (after Google) to Cooking Light‘s website, up 6,000% from just six months ago. The social bookmarking site already drives three times the amount of traffic to Cooking Light compared to Facebook.

Elsewhere, Pinterest is the fourth largest source of traffic for Country Living, up 150% from August to the end of January, and accounts for 3% of all referrals. It was the ninth largest traffic source for both Elle Decor andHouse Beautiful last month, both of which have seen triple-digit percentage increases in referrals over the last six months, and was among the top 10 referral sites for Self magazine.

In most cases, the traffic began organically. Style, home decor, weddings and food are among the most popular pinning categories among the site’s more than 10 million registered users, the majority of whom are women. Pinterest users turned to the websites of lifestyle magazines early on for material, and many publishers moved quickly to harness Pinterest’s potential as a traffic driver by creating their own branded accounts.

Multiple editors contribute to Country Living’s Pinterest page.

Instead of assigning the account to a community or social media manager, Country Living has divvied up its boards among editors. The crafts editor, for instance, posts to the crafts board; the photo editor posts to aboard of inspiring images; and three market editors manage the shoppingstyle, and Etsy boards. An editors’ faves board contains repins from staffers’ personal boards. Much of the content is derived from Country Living‘s own evergreen and season-specific material, but content is also pinned and repinned from favorite bloggers, designers, stylemakers and photographers, Allison Mezzafonte, director of Hearst Digital Media’s Shelter Network, tells us.

“Creating Pinterest pages [for our magazines] allows us to share what we see around the web, and not just our own content. [Our audience] wants to know what we see, what we like, and what’s inspiring us beyond the beautiful images seen in the pages of our magazines,” Mezzafonte explains.

To build awareness of Country Living‘s Pinterest presence, the magazine also cross-posts some of its pins to Facebook and Twitter. Mezzafonte also monitors Country Living’s source page to track, Like and comment on what is being pinned from the site. “I think it makes [users] happy to know that we’re paying attention to what they’re pinning and what they like,” Mezzafonte says. “It’s also a very visual way for me, as the web editor, to see what people are looking at on our site… [To see] the images, projects and recipes that resonate most with our readers.”

It’s not just legacy print publications that are reaping the Pinterest boom, however. Pinterest recently passed Yahoo to become the number-four referral source to MyRecipes.com, accounting for roughly 6% of traffic in January. Referrals are up 246% from October, and up a whopping 2500% from July. A spokesperson for the MyRecipes.com noted that the site has its own frequently updated brand pages, but that the majority of the traffic is coming from users who pin recipes directly from the sites, and from the viral activity that happens organically on Pinterest.

Martha Stewart Weddings has added pin buttons to its site.

In some cases, publishers are also adding pin buttons to their sites, reminding readers to save their content to Pinterest. Martha Stewart Weddings recently added a pin button to its social toolbar, in between the Facebook Like and Google +1 buttons.

While publishers and retailers are both reaping the rewards of traffic increases, it’s still not clear whether they’ll be able to monetize that traffic further. Can magazines turn Pinterest referrals into subscribers? Can retailers turn Pinterest users into customers? The platform certainly has the potential to do both, meaning that the network could become even more central to their marketing efforts than it is at present. I think the better question should be, “Can the magazines and retailers reinvent themselves to capture this traffic, and forget about monetizing it until they have loyal followers?” That’s the way the social web has always worked.

Some Interesting Social Age WebSites.

Inbed.Me: Meeting People On Your Travels Before You Even Arrive

They say that travel is more about the people you meet than the places you see.  That philosophy is alive and well at Inbed.me, a new website that helps users find and interact with fellow travelers – before they even board a plane.

Inbed.me, which was created in June 2011 during Startup Weekend in New York City, is a new extension of social media to the world of hostel travel.  Unlike CouchSurfer.com, inbed.me is less about finding a cheap place to stay than it is about pairing travelers with other site users who are going to the same destination.  It’s intended to make users’ vacations more social and ensure that, before they even take off, people already have a set of friends they can explore with and get to know.  The site has already received positive press and won second place out of 20 startups during Startup Weekend.

“We believe that online travel planning should take advantage of the beauty of the social web,” Diego Saez-Gil, CEO of InBed.me, toldMashable. “By connecting with other travelers with similar interests going to the same destinations, travelers will be able to get tips and plan activities together.”
Inbed.me is novel and interactive but it’s clearly not for everyone.  The site is primarily for hostel and inn travelers (aka college kids and aging hippies), which suggests it appeals to a niche clientele of visitors who are already looking for a cheap and social travel experience.  Travelers to hotels, people already part of large groups, and families are not part of the sites’ target market.  So, if you are travelling to New York and staying at the Four Seasons, inbed.me ain’t for you.

But for those travelers who are looking for a uniquely social experience in budget accommodations, it offers a new way to check both the safety and sociability of a potential hostel.  Is it the kind of place where you want to stay?  Are the other visitors there interested in interacting with you on their vacation?  Before now, there was absolutely no way to answer those sorts of questions, which was what made travel the adventurous crapshoot it has always been.  Inbed.me offers the potential to answer those questions and completely change travel experience of its users.

YoBucko: Practical (Financial) Magic

You’re 24-years-old and a recent college graduate – now you can breathe easy! Wrong. You may be done with that god-awful class, your lab partner with B.O., and living in a broom closet with four other people, but now you get to pay off those student loans. And did I mention? You know nothing about finance or money, except, of course, how to spend it.

Not to worry, though, because that’s what Eric Bell expected, which is why he founded YoBucko, a free, online personal finance guide targeted at 20-something-year-olds who are just starting out. The platform consists of two primary features: a social support network and an online marketplace.

The website is so simple that at first glance it seems like the only thing they offer is articles related to a variety of topics: loans, education, taxes, jobs, credit, and budgeting, among other issues. But you can find all that on your own with Google. Continue clicking around, though, and you can find a veritable minefield of information. Across the top of the site are multiple tabs such as “Learn: where you can find the articles by topic, “Ask YoBucko”, which includes FAQ’s and the option to ask specific questions of your own, the option to sign up for their newsletter and even “Tools”, which offers users topic specific worksheets and financial calculators. One particular strength is the “Shop” option (no, sadly, it’s not t-shirts with the pig on them). The shop function brings to financial services and products what websites like BizRate and NexTag offer for other products, allowing you to compare prices on credit cards, student loans, different types of insurance, software and more.

The marketplace compiles product reviews from thousands of users and experts, then generates a percentage score that enables users of the website to quickly locate only the top three solutions in each product category. That, essentially, is why YoBucko seems to be better than just uselessly fishing for solutions on Google, since it does the sifting for you. Also available are multiple support groups and forums where you can connect with financial experts and others just like you.

There are some other websites, like FeeFighters, that appear to be competition for YoBucko. But FeeFighters only helps users compare prices and fees for various credit cards. YoBucko, conversely, integrates information services like articles and videos, interactive forums and practical real-world help across a range of topics, which you need to in order achieve your financial goals. Maybe now you can finally move on from your Ramen-noodles-every-night diet and be a real grown-up.

Pinterest: The Visual Way To Share

Social media’s pervasive touch gives individuals numerous ways to share information. Between FacebookLinkedInGoogle+, and Twitter, users get constant updates on their contacts’ interests and activities. But social media lags in terms of promoting safe visual media sharing with people outside of your friend zone. Meet Pinterest: one of the hottest social media websites and the best way to share photos you have taken or found with everyone out there in the world.

Pinterest is genuinely new: it provides an easy-to-use, intuitive way to share images and it lets users share them with everyone. Previously, sharing visual media was much more difficult than sharing information or updates. Photos on Facebook or Twitter often look small and too many of them will make your whole profile appear crowded and messy. More important, other social media is geared at letting you share your social media with your friends for personal reasons.  Pinterest is different: it is about sharing images that interest you with strangers who may share your taste.  It’s a new form of social media sharing, one that is safe, artistic, visual, and impersonal, which explains its instant appeal to a large demographic of web users.

The site appeals to a very large set of users but it has targeted a narrower demographic than most existing social media: 97-percent of Pinterest’s Facebook fans are women. But, considering it appeals to a wide demographic range of women, that is not much of a limitation and the site has taken off since its inception.  It has already reached the 10 million unique visitors per month mark and continues to grow exponentially.

Pinterest will survive because it offers a totally different model for social media engagement.  It’s not “look at me,” it’s “look at this,” which appeals to web users who want an outlet to share visual ideas that may not be directly connected to their own lives. In its own way, Pinterest is a reaction against the constant personal crowing of social media, a rebellion against the non-stop endless influx of personal information about the individuals in our lives.  Because it is very simple to use – users simply join the community, upload content, and share it – and it lacks the overused ‘personal touch’ of Facebook and Twitter, it is unique and should have staying power in the social media world.

With Facebook IPO, Some California Lawmakers Hope For a Tax Windfall to Benefit Treasury and Schools.

My buddy, Gov. Jerry Brown and state lawmakers on Wednesday hailed Facebook’s much-anticipated plans for a public stock offering as a potential windfall for California’s cash-strapped treasury, while some already say the extra revenue should go to preventing cutbacks to public schools.

“If it is as big as it is being billed, then on behalf of a grateful state, I will go to Mark Zuckerberg’s house and either wash his windows or mow his lawn,” said Brown’s finance spokesman, H.D. Palmer. Brown himself offered to make Mark’s lunch for a year. Although, since I have eaten lunch with Jerry, I would recommend Mark do his own thing.

In a regulatory filing Wednesday with the Securities and Exchange Commission, the Menlo Park social networking giant indicated it hopes to raise $5 billion in its IPO. That would be the most for an Internet IPO since Google Inc.and its early backers raised $1.9 billion in 2004.California’s nonpartisan legislative analyst’s office estimates the state stands to reap hundreds of millions of dollars — perhaps more than $1 billion — in the near term from Facebook investors and employees profiting from stock transactions.

That could bring a much-needed windfall to a state government facing a $9.2 billion deficit.

Republican minority leaders Bob Huff and Connie Conway issued a statement Wednesday saying the state should use tax revenues related to Facebook’s IPO to pay for classroom needs. Under Brown’s budget proposal, the state will cut nearly $5 billion to public education if voters reject the governor’s plan to raise taxes in the fall.

“We should use this added revenue to protect our public school students from the governor’s trigger cuts and pay down the state’s debt service,” according to a joint statement by Huff and Conway.

Senate President Pro Tem Darrell Steinberg, a Democrat from Sacramento, cautioned that it’s unclear when tax revenue from those reaping the benefits of Facebook shares will reach state coffers. Democrats are, however, using the so-called Facebook effect to delay the governor’s proposed cuts to social programs.

California’s general fund relies heavily on income tax and capital gains taxes, which are sure to see a bump with the wealth to be made off Facebook stock sales.

The wealthy are essential to funding California state government: The top 1 percent of income earners pay about 40 percent of all income tax, the dominant source for the state’s general fund.

The Facebook IPO could help California reach its revenue targets for the year because the state did not assume that Facebook would go public.

Brown estimates the state will raise $56 billion from personal income taxes for the fiscal year that starts July 1. The analyst’s office gave a more conservative estimate at $53.1 billion for the same period.

While Facebook isn’t the state’s first IPO windfall, it could be its biggest.

Taxes from Google executives began flowing into state coffers in 2006, two years after the company went public. After cashing in more than 9 million shares valued at $3.7 billion that year, 16 Google insiders owed the state as much as $380 million in taxes. At the time, that was enough to cover the salaries of more than 3,000 state workers.

Facebook’s offering could be four times as large as Google’s IPO. Google’s market capitalization after its first day of public trading in 2004 was $27 billion. There has been widespread speculation that Facebook’s IPO might value the company at more than $100 billion.

Facebook to Reach 1B Active Users in August, That’s 14% of the World!!!


Facebook Growth

Facebook is soon to have 14 percent of the world’s population all to itself. A new study says the social network will hit one billion users this year.

Gregory Lyons, a senior analyst at digital marketing firm iCrossing, ran the numbers based on Facebook’s past growth and found that Facebook will probably hit the milestone in August 2012. Currently, it has 800,000 users. He found that Facebook initially grew at an exponential rate, but then went through a slow down in progress, which caused it to grow more linearly. The slow down was a result of the United States and the United Kingdom tapping out at 49 and 47 percent of the population respectively. New signups from those countries have “slowed or stopped”.

Google+ Growth


It seems that Facebook’s Googleadversary, Google+, is still in exponential growth mode, reaching the 62 million mark in six months, according to statistician Paul Allen. It took Google+ only 2 months to reach 10 million users, a milestone that took Facebook 38 months. However, Google+ has been born in the age of social. It’s not creating anything new by way of industries. Facebook still remains the ultimate social player outside of Silicon Valley.

Allen suspects that Google+ will hit nearly 400 million users by the end of 2012, due to accelerated Android sign-ups. However, according to a recent study by analyst firm Nielsen, Facebook’s application is the most popular on Android devices, falling second only to the Android Marketplace. The study takes into account users from 18-44 years of age and found that roughly 80 percent of these people are using Facebook’s app more than any other app on the device.

The push to one billion active users will come from developing countries, according to Lyons. Specifically countries such as India and Brazil, which are poking their heads out as late adopters. In the last nine months, India has grown from 22 million users to 36 million. Brazil is following close behind at 30 million, up from 13 million nine months ago.

The growth is just more support for Facebook’s potential 2012 debut as a public company, which some are saying will be a $10 billion IPO. Only three other US companies have had $10 billion or more IPOsAT&T at $10.6 billion, GM at $18.1 billion and Visa at $19.7.

The timing of the offering is still up in the air, though an August projection is starting to look pretty good.