500 Million isn’t enough.

Why?

Mobile Search/Maps + Local Reviews = Mobile Killer App. Mobile is the next great search frontier and credible local information is what people want when they’re mobile. A Yelp acquisition with proper intergration into mobile map application leapfrogs an acquiring company light years ahead everyone one else in the industry trying to become the ‘Google of Local/Mobile Search’, Google included.

Yelp may have turned down Google for now, but it’s just a tactic to get a higher exit valuation. Whatever company loses the bidding war (Microsoft, Google or AOL) is going to be hard pressed to compete against a Yelp Powered Local Search application.

Despite their shortcomings (prone to abuse, strong signals become fuzzy as law of averages kicks in, etc) I’m a firm believer crowd sourced product and service reviews. As a member of Yelp I’ve turned to its crowd sourced ratings to help make a decision or two on where to dine. I often look at product ratings on Amazon to help affirm a product purchase, and have seen first hand how my clients eCommerce conversion rates and revenues are strongly correlated with how they’ve been trending on resellerratings and other eCommerce review sites. It’s very clear that there is some value to hearing what other people have to say about a product or service.

At the end of the day it’s up to review platform figure out the best way to provide a clear signal for its users. Whether that means simply assigning less value to older reviews or doing something more clever like leveraging a social graph or purchasing behavior to weight reviews that come from people who are close to you socially or behaviorally, I feel there is still a ton of room improvement as far as recommendation engines go, with Yelp and Trip Advisor barely scratching the surface, Netflix and Amazon’s ‘recommended for you’ doing a little more, but no company really nailing it.

If a company has the ability to purchase a site like yelp, it’s probably fair to assume that they have the resources throw some dollars against trying to improve what gets served up, using crowd sourced ratings as baseline. Even if, say in the worse case scenario, they can’t improve what’s already out there and consumers turn away from crowd sourced reviews five years from now, the money and edge that the acquiring company gets from throwing yelp ratings into a map application probably would justify a nine figure purchase especially if you believe local/mobile is the next big search frontier as  I’m sure google does .

With that said it wouldn’t surprise me to see a Yelp acquisition in 2010 at 1.5 to 2.5 times what Google has initially offered. Should be interesting to see how everything pans out as the story develops

-N

Here are odds to win ESPN’s Streak for cash if you pick games at a certain percentage. Simply put 1 over the number the corresponding number below

Percentage Picked At    Odds of winning (1/x)
1%    999,999,999,994,598,000,000,000,000,000,000,000,000,000,000,000,000,000

Fed aims to become counterparty in commercial paper market…. Necessary to normalize short term business lending during crisis, But introduces undesirable government control and intervention during non-crisis periods. This is *very* interesting. Bernanke power grab?

The TED spread is probably the most telling *leading* publicly available metric to measure how significant the impact of the Wall Street crisis will be on Main Street. The TED spread measures the difference between risk-free short term US Treasuries Bills and the rate that banks lend to one another (LIBOR).

LIBOR is also used as a basis for the rate businesses can raise short term capital (issue commercial paper). As an intern in the Treasury of CHW, I’d sit in on the semi-weekly calls that the company did to get or issue short term financing from it’s market makers. Historically it has been the cheapest place a large corporation can raise short term capital.

Anyway the current crisis has increased LIBOR 350+ percent from the historical average effectively increasing the cost of capital to all borrowers, making it more efficient to use business lines of credits and other more expensive lending facilities increasing the cost of capital across the board for all corporations that rely on commercial paper to smooth cash flow. Increased borrowing costs introduce increased margin pressure as companies cut back both on both employee and corporate spending to deal with the new cost of doing business.

Instead of buying today they buy tomorrow which shifts buying in the future reducing growth today. This shift is transmitted to smaller companies (even ones that don’t directly participate in the credit markets) through delayed or canceled purchases of their services or products which introduces margin pressure to the bottom lines of those companies. The cycle repeats until the entire economy has adjusted to the new cost of of doing business.

Consumer spending slows because there is less money for employees to spend (by way of decreased raises, decreased hours or layoffs). The growth of online consumer spending determined by the growth of all consumer spending. So yes, the Fed stepping in as a counterparty in the commercial paper market has an impact on the growth of consumer spending …

The 12 percent drop in the TED spread today after the Fed plan was revealed serves as evidence that the credit market agrees with the move. This is the largest downward move of LIBOR since the Lehman collapse. What remains to be seen/determined is if the Fed will become a permanent market maker in this market

I have a bone to pick with valley entrepreneurs. If you’re working on a project/startup and it hasn’t been announced to the public and you wish to keep said project or startup under wraps

I’ve had too many conversations at conferences/meet-ups that have gone like this
Me: Ahh, so what are you working on these days
Them: New concept/start up, we’re in stealth mode
Me: (with eye brow raised) Really?
Them: Yes… um, we’re really looking the business network space
Me: *brain asplodes*

Let’s look up the definition of a couple words

stealth  –noun
1.    secret, clandestine, or surreptitious procedure.

mode –noun
1.    a manner of acting or doing; method; way:

So ’stealth mode’ must mean doing something in a secret or clandestine way… So then WHY are you telling me anything about your startup. Are you trying to warn me? Should I be on the look out for stealth missles?

In my mind stealth mode means, “I’m working on something maybe by myself, maybe with other people but we don’t have anything tangible to show for it so I’m going to tell people I’m working in stealth mode so I don’t seem like a slacker.”

I’ve got news for you buddy, you’re not fooling anyone. If you’re in stealth mode, you’re frankly off my radar. Talk to me when you have an beta or even an alpha that you can show. Hell, I’ll settle for some screenshots. Let your product/service/innovation/concept/white paper speak for themselves, otherwise you’re peddling the startup version of vaporware.

Question is not if, it’s when… Don’t believe me? Let’s look at some charts

NASDAQ

Housing

Oil

My prediction? We’ll be seeing sub 90 dollar a barrel oil by the end of the year sub 3 dollar a gallon gas by the end of 2010 if not sooner.

-N

To be honest, I rarely have an opportunity organize non-CPC thoughts into conveniently. If you really need a fix check out my Twitter.

“The inevitable has happened”

Gabe Cheng’s famous words are eerily relevant amidst the current economic slow down.

With mainstream media widely reporting that the American economy has entered a recession, inflation at its highest level in years, the Bush administration calling for an extension of it’s tax cuts and the Fed heavily rumored to cut interest rates for the 3rd time it really does look the inevitable has happened. The question remains, however, what course of action is prudent to insure that the slow down isn’t further exasperated by poor fiscal and monetary policies.

Let me preface what I’m going to say with the following:

I’m not, and do not profess to be an economist, but much like the rabid fantasy football player, I know enough to be ‘dangerous’ and like the Vegas handicapper, I’m confident enough to put my money where my mouth is.

I’d like to say the worst action the Fed can take is inaction, but that is not the case. A rate cut is probably the worst thing the fed could di.

What we’re experiencing is a credit crunch induced slow down. Confidence in credit markets is shaken and decreasing the cost of has does little to incite additional borrowing because insecurities about the entire system’s health are running high. Couple the slow down with rising inflation and you’re facing a situation similar to that of 70’s stagflation, in a scenario where deficit spending is not possible to break us out of its grips due to the large debt we’re already carrying.

Instead, I’d suggest a strong fiscal injection through significant and immediate tax breaks for 2007 individual taxes for people making 150k or less who have a higher propensity to spend their money then those with higher incomes to boost consumption at the retail level coupled with accelerated depreciation tax credit for businesses making capital expenditures during the current year (2008). Additionally moving forward I’d like to see the Bush Tax expired and replaced by a windfall tax on windfall earnings whose proceeds will be diverted into tax breaks for middle income Americans. wholesale tax cuts to low to upper middle class Americans combined with an acceleration of depreciation credit to businesses is the best way to buoy consumption and investment as the housing market decreases the wealth effect induced spending experienced over the last decade and a half.

Cliffs – Inflation is a major concern, and cutting interest rates has to date done little to reassure markets amidst waves of bad loan write-offs keep interest steady bail out banks that are ‘too big to fail’, but allow market forces to punish those who practiced ‘irrational exuberance’ during the housing bubble. Keep interest rates flat at recognize fiscal policy must be used to incite consumption in 2008.

2009 and Beyond - Windfall Tax Trap on hedge funds, PE Firms, and others who have windfall earnings (Think Alternative Minimum Tax for the new Millennium). Divert this money into tax breaks to middle income Americans to bolster consumption. Allow Bush Tax cuts to expire, focus these revenues on paying down debt.

For those of you that read my blog, you’ve probably already seen the doc… but in case you haven’t here’s a hot link.
Warning, contents are *hot*
http://www.youtube.com/watch?v=iGTSXdXS15U

We’ve gotten some attention, most notably Mashable and Valleywag… we’ll see what else pans out…

Already moving on to the next NMM project…

Oh and if you blog, hook it up with a post =)

Earlier today Apple’s Steve Jobs announced a strategic partnership with EMI to release DRM-Free Music through it’s successful itunes electronic music distribution channel.

Too little, too late? I often wonder what would have happened if the music industry would have accepted the changing music paradigm instead of fighting it. Digital music, for all intent and purposes is a public good

That said, what if the music industry would have partnered w/ Napster instead of suing it into oblivion opting instead to charge 5 dollars a user a month for drm free, unlimited access, to music in 2000?

Would file sharing with have evolved to its current decentralized and unstoppable state if the market leader would have been legitimized through partnership? Would we have as quickly embarked on the slippery slope of rampant privacy and declining record industry revenue?

You can read more about the laptop at wikipedia
http://en.wikipedia.org/wiki/Olpc

Thanks Tony for reminding me that the Browser Wars event was today!