Growth5 Blog

Monday, December 20, 2010

Google TV Delayed

From today's NY Times: "Google TV has just enacted its first programming cancellation." Next month at the Consumer Electronics Show in Vegas, Google was to unveil its tv software inside Toshiba, LG Electronics and Sharp tv systems (Sony has already shipped its earlier version). Google has asked for more time to refine their software, "which has received a lukewarm reception."

Google is known for launching all sorts of different projects online and then refining them as they go. This strategy works well for them, however with Google TV, now that they have partners who "place big, well-timed bets to attract holiday buyers, say, or back-to-school shoppers," these partnerships are off to a rocky start.

It reminds me of the Microsoft strategy of partnering with anyone and everyone that would put their operating system in their boxes and having mixed results which ultimately damaged their brand. Who would've ever guessed that with operating software running on 83.8 percent of the world's computers vs. Apple's 8.3 percent - TEN TIMES MORE - Microsoft's value today ($238.72 billion) would trail Apple's ($294.1 billion).

There are a lot of reasons for Apple's higher value than Microsoft, but what Google should take away from this is that owning search (like Microsoft owns the OS space) does not a great retail electronics expert make. Google knows they can't sit still and just be a search giant, but it's surprising that one of the features that Google TV isn't ready to launch is the search functionality. How can that be possible?

Apple is not by any means perfect, but one of the strategies that's worked really well for them is getting into spaces/products they can dominate and control on their own (mostly). Even though the iPhone has dominated the mobile space for the past several years, the one big problem with it has been that they chose to partner with the worst network, AT&T. But I guess if you make the products fantastic enough, people like me won't care that I can't use the iPhone as a phone everywhere because of AT&T. It works so well with everything else it does, I don't stop using it as a result.

I doubt Google will be afforded the same "slack for greatness" with their Google TV software, so holding off until it's great is probably a good idea.

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Friday, December 17, 2010

Kleiner Perkins Stays in "Green" Space by Giving Twitter a Pile of Money

John Doerr / Kleiner Perkins just led a $200mm round of financing for Twitter that now values the company at $3.7 billion. Four thoughts on this move:

1. Kleiner Perkins is coming back to the web. This investment in Twitter and their recent $250mm fund for entrepreneurs who are developing social apps and services sends a clear signal that John Doerr's recent focus in the green space may be taking a back seat to the digital world again.

2. This move represents a vote of confidence for online firms. As recently as 2008, KPCB introduced the $500mm Green Growth Fund and other vc firms looked like they were sprinting towards alternative energy. KPCB's $200mm investment in Twitter, the $250mm "social" fund and their recent investments in game developer Zynga, online book renter Chegg and mobile-gaming company Ngmoco indicate the digital space is taking the lead at KPCB in actual $ invested and focus again as well. Great news for entrepreneurs who are developing in this space.

3. Twitter needs to monetize their business. They need to hire people that can execute around their "publishing / in-stream ad" strategy vs. their search strategy. They've dabbled with a few ideas, including the recently launched "Promoted Tweets" to allow for advertising. More ideas are forthcoming.

If they can't work out the business side, they can always look in Google's direction. Sources say Google already made an offer earlier this year at $4 billion. Will be interesting to see how that plays out considering Doerr is on the Google board.

4. With 200 million Twitter users expected by year's end, the current $3.7 billion valuation yields a per user value of $18.50. With Facebook's 500 million users and a secondary market valuation of $52 billion, each Facebook user is currently worth $104.00 to the company. The difference per user? Twitter's 2010 estimated revenue per user: $0.40. Facebook's estimated revenue per user: $4.00. As usual, cash is king.

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