Sunday 4 March 2012

A classic startup horror story: the M&A bait and switch

The founder was home in his kitchen cooking dinner when the call came. It was one of those moments when the color seems to drain out of the food in front of you. The voice on the other line was the contact at the company that has been trying to acquire his small startup for several months. “Our engineers looked at what you showed us during the due diligence and told our CEO, ‘It doesn’t look so hard, we can build it ourselves.’”
His thoughts flashed to the NDA the two companies had signed. He tried to focus on not exploding in a stream of curses. What about the fancy dinner with the top brass? The handshake deal not to shop his company around to any other bidders? The 12-month roadmap he had laid out for the board? The quickly dwindling cash reserves in his own bank account?
In today’s startup industry, mergers and acquisitions are the fastest growing exit for venture-backed companies. According to the most recent study by Ernst and Young, the value and volume of M&A in the technology space surged 41 percent in the last year, reaching levels not seen since the dot-com boom. The dangers for startups in the delicate dance of being pursued and purchased by a big corporate entity are many. It requires them to reveal their most intimate details — everything from their financial health to the lines of code that make their products run.
In the world of corporate mergers, AT&T and T-Mobile for example, the parties arrange an expensive break-up fee, like the $4 billion T-Mobile got when the deal fell through. Startups aren’t so lucky.
“Hearing this guy’s story, it’s just brutal, it makes you sick to your stomach,” said Ben Lerer, CEO of Thrillist, who has acquired companies and is an active venture capitalist. “That’s why it’s so important to find seasoned investors. Entrepreneurs have the energy and the passion to stay up all night every night working on the product. A great VC has the battle scars to tell you when to trust the other party and when its better to play things close to the vest.”

Words of warning

“Sometimes it is innocent and sometimes not so much,” said Chris Dixon, whose company Hunch was recently acquired by eBay, and who has seen all sides of these deals as a founder and investor. “Some companies are known to use acquisition as bait to get info, others are known to follow through and not mislead.”
Playing hard to get is one tactic for defending against a bait and switch. “ Don’t disclose critical technical info until last possible moment, after the letter of intent,” Dixon advised. But most importantly, with the uncertainty present in any acquisition, Dixon’s strategy is simply, “To run your business as if a deal won’t happen until it is actually closed.”
How does a startup ensure a good deal when its only leverage is to walk away from the table? “A lot of this is an art, not a science,” says Babak Yaghmaei, a partner at Cooley specializing in startups and venture capital. “I think practically speaking, there’s little that can be done to deal with a ‘bad player’ in a situation like this if the damage to their reputation and board relationships don’t keep the buyer honest.”
Like a lot of the investors we chatted with, Yaghmaei talked about the importance of a Letter of Intent. “Proceeding with deep technical diligence without an LOI is probably not the best idea, particularly if the technology build doesn’t create a sufficiently high enough hurdle. I know that LOIs aren’t binding but at a minimum they create a more ‘vested interest’ in the transactions by creating some formality around the process. Also, a seller can (and should) stage the technology disclosure in the diligence process and try (if possible) to not show all the cards until there is a high enough comfort level that the buyer is really interested and engaged.”
Going into the acquisition process with eyes wide open is the theme our sources returned to time and again. “Companies are always going to do a build versus buy analysis,” said Barry Kramer, a lawyer at Fenwick & West specializing in startups. “What is unusual is to get this far down the path of an acquisition,” before the buyer turns its back on you.
For venture capitalists who work closely with corporate partners, this is a minefield startups are going to have to pay increasing attention to in the coming years. “I think you’re going to see M&A expanding as one of the primary exits for startups,” said Taylor Davidson, a senior associate at the venture arm of the massive ad firm KBS+P. “It would really pay to have an investor on your team who knows the in and outs of this kind of transaction.”

The founder from our story is still looking to sell. He asked for his company to remain anonymous to avoid legal complications over the non-disclosure agreement. But the company had raised a little under $1 million and was well-known and respected in the local tech scene. The deal that fell through would have kept his startup intact, but now he’s just hoping for a soft landing for the investors. The team will disband and have already started looking for new positions in the fertile hiring fields of Silicon Alley. We asked the founder to share his experience, in his own words. The letter that follows is a raw account of a classic startup horror story.

In late September, I got an email from The Company saying they liked our product and wanted to discuss a partnership. We set up a phone call and it became clear that they were looking to acquire a company like ours, and we were interested in continuing a discussion like that.
In October, we had several calls and face-to-face meetings with various people, including the CEO and other senior staff, after signing a mutual NDA. We sent over some basic information about our product, the scale of our operations, and ballpark customer & revenue numbers. We gave them the ballpark offer we were looking for. They indicated a desire to continue the process.
November came and left with no progress, but that was fine because we were busy meeting with two other companies we had also engaged in acquisition discussions. In the meantime, we stayed heads-down on product and kept building.
Beginning of December we got our first real offer, via phone with the details sent over email post-call. It was a lowball offer and one we rejected immediately. We knew what our minimum was and we stuck to it. Several weeks went by. We shipped some amazing new products. Our investors worked their network to push for a deal worth accepting.
Finally, a few days before Christmas, we got The Call: an offer we could get excited about. At least, it seemed to be. But wait, why were they trying to value the stock at almost twice what they gave their own employees? That would result in us getting half the stock for twice the price. We pushed back on that and other terms related to vesting schedule, tax treatment, and earn-out parameters.
Beginning of January, we finally agreed on terms, which were outlined via email upon our request. We were told, “If you agree to these terms, we have a gentlemen’s agreement that you’ll stop talking to other companies?” As it turned out, we were talking to three other companies at the time (the two we were talking to in October declined to proceed, but three more had begun conversations with us in December). We agreed. We asked for an official term sheet but were denied; they wanted to do due diligence first. Maybe this should have been a red flag and cause us to completely halt conversations until a term sheet was signed, but given our waning cash reserves we felt like putting our eggs in this basket and creating a trusting relationship would increase the likelihood the deal would happen. We arranged to spend a couple of days at their offices for due diligence.
The first day of due diligence went great. Our engineering leads diagrammed in full detail how all of our systems work, from database schema to how we use EC2 instances to front-end javascript shenanigans. I was so proud of my team. Our systems handle load today that they wouldn’t project to have until five years from now, all on a minuscule startup budget.
The second day was a little more chaotic. We were given three hours notice that we’d be presenting a 12-month roadmap to the CEO that afternoon, and here to help us create the presentation were the VP of Product, Director of Product Marketing, and Director of User Experience. It was chaos — the three executives were arguing with each other about what to focus on, what was important, what details needed to be solved right now. My team sat back, amazed and horrified. Does nobody know what they want or what the CEO wants? I took charge and presented a plan that I thought would generate the most value; the others agreed. With minutes to spare, we finished up the PowerPoint and presented to the CEO. He nodded a bunch, asked some questions, and left. Later that day, I was told he wanted to meet me for dinner the following week to ask some final questions. We were told to treat ourselves to a fancy dinner on The Company’s dime. Sounds like due diligence was a success!
The next week, we met at a nice restaurant of his choosing. We talked about a bunch of topics including my thoughts on recruiting talent and my team’s commitment to a future with The Company. Everything seemed to be going smoothly. He nodded and said to me, “Are you ready to do this?” I said Yes. He said, “OK. I’m going to present this to my Board of Directors at our next meeting and then we’ll close very quickly after that. Once we do that, I want to make a lot of PR noise about this because it’s a big deal for us.” We shook hands. I walked home that night thrilled — we had agreed to terms, passed due diligence, and had a handshake agreement with the CEO to seal the deal! All that was left was getting the lawyers involved to write the Definitive Agreement and get this thing on the books.
Ten days go by. We’re all a bit nervous but the CEO’s presentation to his Board wasn’t scheduled for another week. Finally, in the last days of January, I get a phone call while I’m in the middle of cooking dinner. It’s from my contact at The Company. He tells me, “I’m sorry, but the CEO changed his mind. We’re not moving forward with you guys.” What? I was furious and trying not to panic. “Why not?” He gave me several reasons, including uncertainty about how our product would integrate into their suite of offerings (shouldn’t that decision have been made back in October?) and disagreement on the roadmap we presented (remember that chaotic three hours on the second day of due diligence? Also, he’s the CEO, if he wants it, he gets it, right?). The one that stuck with me the most was “Our engineers looked at what you showed us during due diligence and told our CEO ‘It doesn’t look so hard, we can build it ourselves.’” Information that we had shared under NDA.
We are a company without the cash to try to enforce the NDA, and The Company knows it since they saw our financials during due diligence. Even if we did have the money, it would be very difficult to prove any wrong doing. We just got screwed. I don’t think we’ll ever know if The Company was ever negotiating in good faith, or if the whole process was meant to siphon information.
As I look back on it, there were a few things we could have done differently, although I suspect we’d have gotten the same result. We could have insisted on a term sheet, even though term sheets are non-binding. Maybe we could have negotiated a breakup fee in case the deal fell through, although I don’t think we had the leverage to force them to agree to one. Ultimately, the real lesson learned is this: get your business to a level of success where you don’t care if the deal falls through. Get profitable. Get such amazing user growth you have investors begging to put in money. With that kind of solid foundation, you can weather any storm.


Source: http://venturebeat.com/2012/02/27/a-classic-startup-horror-story-the-ma-bait-and-switch/

Saturday 3 March 2012

The scariest tech trend of 2012?


The scariest tech trend of 2012?

Pete Cashmore predicts "ambient social networking" -- and its inherent privacy issues -- will be a hot topic at SXSW this month.
STORY HIGHLIGHTS
  • Cashmore: Breakout trend at SXSW this month may be "ambient social networking"
  • Apps would automatically share info about you with nearby people in your networks
  • Privacy is becoming an issue as more apps allow people to broadcast their location
  • The social nature of photo-sharing app Instagram also may make it a favorite at SXSW
(CNN) -- It's just over a week until one of the biggest geek gatherings of the year, South By Southwest Interactive, kicks off in Austin, Texas.
SXSW is where fledgling tech companies sink or swim. Twitter and Foursquare caught on in part thanks to massive buzz at SXSW, while thousands of other new companies dreamed the "Southby" dream but went nowhere.
So which new technologies might we expect to see breaking out at SXSW 2012?
Applications set to go mainstream
Pete Cashmore is the founder and CEO of Mashable.com.
Pete Cashmore is the founder and CEO of Mashable.com.
The iPad 3, which will be announced by Apple two days before SXSW Interactive kicks off, will be a big topic in Austin. Developers at the festival will no doubt be rushing to update their applications to work with what is expected to be a higher resolution screen on the device.
A handful of emerging companies also will continue to gain momentum: The mobile journal Path has achieved some success with the early adopter crowd after its latest update, while the social nature of photo-sharing app Instagram is bound to make it a favorite at SXSW.
Pinterest, the fast-growing darling of the online-scrapbooking set, also will be in Austin.
New startups
My bet for the breakout trend at this year's SXSW is "ambient social networking." While the last crop of mobile apps involved "checking in" to venues to find friends, many smartphones are now able to continually discover your location and broadcast it.
Once you log in with Facebook, Foursquare and other existing social networks, new mobile applications can alert you when a friend, or even a friend of a friend, is in the vicinity. Some even tell you when people nearby share your interests.
Which app names might you be hearing if this trend takes off?
Perhaps Sonar, which analyzes your Foursquare, Facebook and Twitter networks to see if any friends -- or friends of friends -- are nearby. Or Glancee, which alerts you when people with similar interests are, say, in the bar next door.
Ban.jo alerts you about friends you didn't know were nearby, whileHighlig.ht lets you see when your Facebook contacts are around. Tech enthusiast Robert Scoble predicts Highlig.ht will be "the hot app at SXSW this year."
Oversharing
The potential problem should be obvious: Privacy. This new generation of apps broadcasts your location at all times to friends -- and in many cases to people you don't even know. The physical distance at which alerts are sent varies, but some app developers propose that being in the same city as a contact would be enough to trigger a message.
And unlike the previous generations of applications that required you to check in to a venue, these apps are persistent unless you pause them or turn them off. The potential for both hilarity and calamity is clear.
So the real question is: How comfortable are early adopters with ambient social networking? And if they enjoy the experience, will mainstream users catch on fast -- or will privacy concerns scare them away?
At SXSW 2012, we hope to find out.

I was the Art Director


Source: http://www.youtube.com/watch?v=5joO4EvH1PA

Friday 2 March 2012

Jeff Bezos: the king of content


Jeff Bezos: the king of content

December 28th, 2011     by ddeal    
Jeff Bezos wants Earth’s biggest online retailer to become the world’s mightiest content publisher and distributor.  In a recent interview with Steven Levy ofWired, Bezos shared how Amazon is creating a web content powerhouse through an a three-pronged, interlocking approach that encompasses the Kindle, Amazon Web Services, and publishing platforms for authors and movie makers. Bezos isn’t just CEO of Amazon or CEO of the Internet, as Wired calls him. In 2012, Bezos may very well become the king of content.
The pillars Amazon’s content play, as related to Steven Levy, are as follows:
The Kindle
The Wired interview clarifies once and for all how the Kindle differs from the Apple iPad: the iPad is an elegant piece of hardware you use to download and store content. The Kindle and Kindle Fire are simply devices get you content that you stream.
The iPad sells itself through its operating system and features like Siri. By contrast, “What we really built is a fully integrated media service,” Bezos tells Levy. “Hardware is a crucial ingredient in the service, but it’s only a piece of it.”
And by “fully integrated media service,” Bezos means access to streaming content: the basic Kindle for reading and the Kindle Fire for rich media like movies. If you sign up for Amazon’s shipping service (Amazon Prime), you can get access to 12,000 movies and TV shows on the Fire at no additional cost.
The Kindle uses a faster browser known as Silk and access to Amazon’s own cloud server to make experiencing content nimble, fast, and hassle-free. Kindle users can store up to 20 GB of music free on Amazon’s servers — or an unlimited amount of music if you buy it from Amazon. (For more information on Amazon’s cloud computing storage services compared to those offered by major competitors, check out this article.)
Amazon has made its intentions clear: streaming, not downloading, is the future of content — not just music, but all content.
Here’s how Levy puts it: “the Fire is an emblem of a post-web world, in which our devices are simply a means for us to directly connect with the goodies in someone’s data center.”
Direct Publishing
The iPad has one feature the Kindle lacks: a rabid brand loyalty among its fans. I don’t believe Bezos seeks to compete by creating any loyalty to a device, though; instead, he wants to make the Kindle and Kindle Fire succeed by creating a content pipeline.
Enter the Amazon Kindle Direct Publishing program, which has writers, publishers, and agents talking. And for good reason – the self-publishing platform has helped bothknown and unknown authors find audiences. Essentially Kindle Direct Publishing promises readers a low-risk way to explore authors, with Kindle Singles (small morsels of a writer’s work) priced for as low as 99 cents.
Authors who choose the platform benefit from Amazon’s brand name and royalty sharing program. As The Wall Street Journal noted, the platform has helped a small handful of authors sell more than a million copies of their books — authors who found no success through traditional brick-and-mortar publishers.
To be sure, self-publishing is usually viewed as a desperation play — but Bezos hopes to change that perception through the legitimacy of the Amazon brand name. And he has some harsh words for traditional publishers:
As a company, we are culturally pioneers, and we like to disrupt our own business. Other companies have different cultures and sometimes don’t like to do that. Our job is to bring those industries along. The music industry should be a great cautionary tale: Don’t let that happen to you. Get ahead of it. I think with books, we have gotten ahead of it, as have some very forward-thinking publishers. But some of them are really leaning backward, and that’s going to hurt their business. They’ll find that other publishers are going to do very well in that vacuum.
Comparing publishing to music is no exaggeration. Just ask Clark Kokich, chairman of Razorfish, who recently published a watershed book about marketing, Do or Die,exclusively on the iPad after a frustrating experience with a book publisher. As he told me in an interview:
Publishers need to do the same thing as every brand.  They need to stop fighting change and start embracing change.  Instead of asking the question, “How can we make money in this new environment?” they should be asking, “How can we use all of this new technology to thrill readers?”
It’s do or die time indeed — and it’s not too hard to figure out what’s going to happen to publishers who fail to heed the words of Jeff Bezos and the model Clark Kokich has embraced.
Direct Movie Making
Amazon Kindle Direct Publishing is getting the headlines — but Amazon Studios is an equally intriguing approach for helping movie makers find an audience, too. In Bezo’s words, Amazon Studios is “a completely new way of making movies.” Through Amazon Studios, aspiring movie makers and script writers may upload their projects to be evaluated by movie fans, considered for serious award money, and possibly be considered by Warner Brothers. Amazon Studios has already launched three projects.
Amazon Studios is not without its share of controversy. Hitflix argues that Amazon Studios shackles screen writers with onerous terms and conditions. Basically if you work with Amazon Studios, you relinquish ownership of your work. On the other hand, the Consumerist basically asks, So what? Writes Phil Villarreal: “Even given the potential pitfalls, it seems to me that submitting a script to Amazon Studios is better than letting it sit on your hard drive forever. This is coming from a guy who has two screenplays collecting digital dust.”
It’s interesting to note an important difference between Amazon Kindle Direct Publishing and Amazon Studios: although both entities are geared toward emerging artists, Amazon Kindle Direct Publishing is more of a threat to traditional book publishers whereas Amazon Studios acts more as a partner to movie studios. AsWired notes, Amazon Studios has a first-look deal with Warner Brothers. The movie making industry, unlike music and book publishing, ain’t quite dead.
But it’s not too difficult to see what Amazon is doing with its community of writers and movie makers: finding them a home on Amazon. Few filmmakers are going to find success with Warner Brothers — more than likely, they’ll find Amazon distributing their product to Kindle Fire owners. As ReadWriteWeb noted about Amazon Studios, “the end product Amazon is funding will end up as inventory on its virtual shelves.”
Just one question: how come Amazon hasn’t offered something like Amazon Studios or Amazon Kindle Direct Publishing for musicians?
Amazon Web Services
If the Kindle is the portal to Amazon’s content, then Amazon Web Services is the infrastructure keeping all that content afloat — and also Amazon’s way of keeping its hands in the content provided by others.
Amazon’s investment into Amazon Web Services is another indication that Amazon is banking on streaming as the dominant method for consuming content. Through Amazon Web Services, Amazon provides the massive cloud-based support that you need to purchase, store, and stream content from Amazon anytime, anyplace, and anywhere. Think of it this way: Amazon has improved its odds for distributing content successfully by creating and owning its own infrastructure.
But Amazon is also hedging its bets in a way with Amazon Cloud Services. Did you know that through its cloud-based platform, Amazon hosts websites for companies ranging from Netflix to NASA? As Wired points out, Netflix, even with its recent stumbles, accounts for 25 percent of Internet traffic in the United States.
It’s as if Bezos is saying, “If you go to Netflix to stream content, be my guest — I’ll still get a piece of the action.”
But more importantly, Amazon is creating its own content layer across the webjust as Google is doing with social media. And here again, Bezos places his faith in the agility and speed of content streaming:
Our cloud services are really fast. What takes 100 milliseconds on Wi-Fi takes less than 5 milliseconds on Amazon’s Elastic Compute Cloud. So by moving some of the computation onto that cloud, we can accelerate a lot of what makes mobile web browsing slow.
Move quickly. Find what you want. Stream instantly — preferably on Amazon, but if not, Amazon will find a way to help you do so on someone else’s site.
The King of Content
What fascinates me most about Amazon’s interlocking web of content is Amazon Kindle Direct Publishing. One reason is personal: I live in house full of writers and have experienced the fractured nature of the brick-and-mortar publishing world first-hand. But Amazon Kindle Direct Publishing also intrigues me because of its potentially disruptive nature. In fact, I think Amazon Kindle Direct Publishing will be as disruptive to book publishing as Napster and Apple have been to music.
Within the next year, here’s what I believe will happen:
  • We’ll see a lot of bad writing flood Amazon Kindle Direct Publishing.
  • Amazon will appreciate the benefit of employing a more juried system to book publishing. Amazon will hire an editor — or pay well respected writer — to curate and recommend select works published on Kindle Direct Publishing. Amazon will sell the curated work at a higher price.
  • Bezos will increase the odds of his own success by rewarding a high-end, popular writer to publish his or her work on the Kindle Direct Publishing Platform. The action doing away with the stigma of self-publishing.
And Jeff Bezos will emerge as the king of content.
Just don’t forget emerging musicians, Jeff — they produce a lot of content, too.

The Science of Social


What Do 10 Million Facebook Friendships Look Like?

In Technologysocial mediamarketingfacebookEntertainmentStatisticsonline marketingSocial Media News on January 9, 2011 at 7:13 am
Recently, an intern working on Facebook’s data infrastructure engineering team took a sample of nearly 10 million pairs of friends from Facebook’s data warehouse and plotted out their relationships. The result? This intriguingly beautiful image and an accurate map of the world.
10 Million Friendships on Facebook
Here are the thoughts that Paul shared about the image and its creation:
After a few minutes of rendering, the new plot appeared, and I was a bit taken aback by what I saw. The blob had turned into a surprisingly detailed map of the world. Not only were continents visible, certain international borders were apparent as well. What really struck me, though, was knowing that the lines didn’t represent coasts or rivers or political borders, but real human relationships. Each line might represent a friendship made while travelling, a family member abroad, or an old college friend pulled away by the various forces of life.
We’d like to see an image of each individual Facebook user pinpointed on a map and see if it is attractive.

Social Media is a Science. Rocket Science, in fact.

In advertisingAutomotiveBusinesscollision repairEconomyfacebookLinkedInmarketingNewsSecuritysocial media,StatisticsTechnologytvtwitter on March 18, 2010 at 11:57 am
Yes, that’s what I said. Rocket science.  Shaking your head in disbelief? Really?
Well, would you design or develop your own website? Or would you look to a web development company or web designer to complete that piece of your marketing toolkit.
Likewise, would you shoot your own television commercial or buy or place your own media spots to air that commercial? And, if you did, would you be convinced that you are targeting your demographic and getting the best bang for your marketing buck?
Didn’t think so.
Recently, we met an attorney and he told us that we have a unique skill set as creative and marketing minds. In fact, he told us that we were like rock stars or athletes since our product exists between our temples.  Our product is ourintellectual property.  What value does that have? What price tag can you associate with such a product? We know our value, but struggle with that in this ever changing world of new media, but we left the conversation feeling like we need to take out some hefty life insurance policies on our brains.
Just as when the internet revolutionized the advertising and marketing agencies in the 90s, and everyone sat back and waited for the established ad agencies to come in and eat their lunch, it didn’t happen. The eager college grads designed websites for big companies and tried to figure out how this new thing called the internet. The media world is being transformed again, and the question is will ad agencies leverage their client relationships in the social space? It didn’t happen with web development and design. Why you ask? Traditional agencies are about creativity not technology and they left web design and development up to the rocket scientists and we predict the same will occur with social media. Ad agencies will work with other entities that are comfortable in the space, and where the learning curve is short. Given the recent downturn of their industry, they cannot afford to take any unnecessary risks either.
The risks to not adapting to the shift in the market are great, though many are resisting and in fact, ignoring the trends, but then again, there are still nearly 40% of small businesses that do not have websites in 2010!
Consumer behavior is evolving at a frenzied pace. One in which the internet marketers find overwhelming and even those social media strategists. Why? Keeping your finger on the pulse of the marketing and advertising industry is a full time job in itself. Watching and identifying trends, seeking out new mediums to communicate and developing effective messages for those mediums is another. Here is a 50,000 foot perspective.
1.  The web is social.  48% of the 1,000 respondents in a recent study commissioned by Retrevo indicated that they check in on social media activity when they are awakened in the middle of the night.  Granted, this is heavily skewed by night owls that are in the 25 and under bracket, but a large portion of many big brands target market are online and engaged with social media networks at that time.  61% of  Facebook users are 35 and older. Still think your customers aren’t using social media?
2. There’s a reason that they call it “old media.” Media industry ad revenues declined 12% year-over-year to $125.3 billion in 2009, according to a report issued by Kantar Media.  The only major growth area? Online ad spending. TV ad spending fell 10%, with spot spending falling off dramatically due to the lack of political ads from 2008.  Magazines dropped 17%. Newspapers and radios each dropped 20% and outdoor advertising fell 13%.
3.  User content is key to the online experience of millions of US Internet users. Ranging from communications to e-commerce to entertainment, consumers are increasingly in charge of the creation, distribution, and consumption of digital content.  The number of people who consume user-generated content exceeds the number of creators.  This is true of any content loop – there are always more spectators than active participants.  The difference? User generated content is affordable, accessible and integrates well with mass participation. As a result, the gap between creators and consumers is smaller than in traditional media.  The downside? The craze of content generation is not likely to produce commensurate rewards for marketers or site publishers, since advertisers shy away from attaching their brands to unpredictable content.
What does this mean for brands and marketers? It means it is even more difficult to manage because the assets from media that traditional media used to control (print, broadcast, online publishing) is migrating to channels that they don’t control and most importantly, can’t. Why, you ask? Because the fun new media that everyone is all abuzz about is invite only.
The media world is changing, and predominantly, online media. The solution? Realize the full-potential of the over 82 million user content creators. How? Marketers and site publishers must be willing to work together. What does this mean for you and your brand? It means taking risks. Something no one wants to do in the current economy, and something few businesses every want to do with their marketing strategies or brand.  The other piece of it? It mandates becoming very savvy in the social media segment, finding safe havens with social media channels, and taking refuge among these content creators that you’ve forged relationships with.   Until these changes occur, user generated content will remain a phenomenon and the popular appeal eclipses its commercial possibilities.
So, how does this make social media rocket science? The chart below shows that 79.7 million people created content on social networks last year. What does that mean for you? It means that 23.9 million people posted blogs. 18 million videos were uploaded.  More than 13 million people participated in virtual worlds, yielding a number of over 88 million content creators, which counts everyone who generated content at least monthly. Just because it’s call the social space, doesn’t men it is like outer space and there is nothing out there. It’s crowded out there. There is a lot of competition, millions of businesses vying for attention. Plenty of things to crash into.
It’s a rocket ship alright. And in order to launch it, guide it and land it safely, you need a scientist. Choose wisely. There are many “experts” out there that may get you off the pad, but solid piloting skills? Not so much. Look for a team that can provide the telemetry you need to effect a successful mission of launching or guiding your brand in the social space.
Written by: Sara Paxton, managing partner, CTO, and Social Media Officer of Evans Media Group, Kansas City’s Social Media Agency, a boutique agency located in Overland Park, KS that specializes in traditional marketing, social media marketing, online marketing, and public relations.

What’s the Social Media ROI? Here you go.

In advertisingBusinessEconomyfacebookLinkedInmarketingsocial mediaStatisticsTechnologytwitter on March 11, 2010 at 7:10 pm
Facebook fans and Twitter followers of a brand are more likely to not only recommend, but they are also more likely to buy from, those brands than they were before becoming fans/followers.
A study of over 1,500 consumers by market research firm Chadwick Martin Bailey and iModerate Research Technologies found that 60% of Facebook fans and 79% of Twitter followers are more likely to recommend those brands since becoming a fan or follower. And 51% of Facebook fans and 67% of Twitter followers are more likely to buy the brands they follow or are a fan of.
Data was collected from 1,504 adults (aged 18 and over) via a nationally representative online survey questionnaire by Chadwick Martin Bailey Feb. 8 and 9.