Look, this is not something you can write on 1-Apr and have anyone believe it:

Li Ka-shing, Hong Kong billionaire and CEO of telecommunications conglomerate Hutchison Whampoa, has increased his investment in Facebook in excess of $100 million.

Man, that is some walking-around money to throw around. Or away. I know this cat is several billion dollars smarter than I am, but look at the numbers:

• Facebook: 60M subscribers
• QQ: 300M subscribers

What is QQ? Well, I'd say it was the facebook of China, but there is a major difference - it is profitable.

Profitable?

Yep , they had around a 40% operating margin - $224M bottom line off $523 million.

Facebook? Uh, not so much. I've heard estimates that Facebook lost $200M last year on revenue of, well, diddly.

What is kind of interesting to me about QQ is that <15% of their revenue comes from advertising and the rest is ringtones and krep like that.

So there is some real upside left there.

Why Invest In Facebook

I have no idea. Perhaps it gives him some leverage to be a dealmaker, maybe the later investors are getting crazy mad warrants.  Or maybe there is so much money and so few good deals that people are spreading their bets around the margins.

Why is QQ Profitable?

I suspect that the QQ guys went into this thing from day one with plans to make money.

I know the Facebook guys were just "gaining marketshare" (of what?) and "getting momentum" (towards what?) and "achieving critical mass" (I know of what!).

Beware The Bubble

Remember the Time Warner / AOL merger?   Remember what happened six months later?

Well, if you see QQ and Facebook merge to get "synergies" or "global market" then you should probably go long on cash equivalencies. 

I was over on Mixed Martial Arts and saw the best google ad in a long time:

It'd take a long time to make a million bucks at $20K/month! 

But, for some reason, it seemed very apropos given that the topic was Entrecard taking $112K on a pre-money valuation of $998K. It wasn't the odd numbers that caught my attention because that sort of thing is always negotiated and you get some strange round-offs.

It was the odd deal.

First, What is Entrecard?

It takes a bit of time to tease out what is going on since there are no fees, etc. It turns out that their business plan is to get footprint (they are on 6,500+ blogs) through cooperative advertising.

Imagine if instead of getting paid when someone clicked an adsense link on your blog you got a google credit to buy a keyword. Also then you'd have to imagine that you could click on the ads on your site and get paid for that too, but put that aside for a moment.

Short Term Revenue

To bring in short term cash:

Once per day we will allow a larger company to drop their card into the inbox across the entire network. This will not appear on your website anywhere, but rather only in your inbox when you log into entrecard. You will also receive 5 bonus credits for visiting these sponsors. We will also allow for sponsorship opportunities for our system emails and all of our RSS feeds.

Longer Term Revenue

Once the network is very very large:

When the [Entrecard] economy is in great shape, we will roll out a credit exchange for bloggers to sell their credits to advertisers, and we will take a commission.

So you can sell advertising slots (and thus traffic) like, well, like you do today for lots of other people.

A Revenue Model

Since Entrecard has 6,500 blogs in their network and can place an ad a day on each of them, that means they can serve up 2.3M ad/days/year. If every ad/day gets 10 views and they get a CPM of a quarter that is $6K/year in revenue across your revenue.

Which is not bad to start off with, because if you can scale up your blog network to fifteen or twenty million you have some serious dough rolling in.

I'm not dissing 6,500 blogs, but there are probably a million or more created every single day and these guys are getting naught point diddly percent of them. I looked through their "featured" page and didn't see any biggies.

I reckon that this model is pretty much stuck to the bottom end of the market. This is not stupid because that is the biggest part of the market, and if you can serve it right and with low costs, then you can get very very big - see WalMart.

And this "traffic for an ad-a-day" model really works in the bottom end of the market where people live on their sitemeter stats and are excited when they break a 100 for a week in a row.

Why do I say low volume blogs only? Because a big traffic blog doesn't want marginal traffic from other blogs, it wants placed ads (at best) or expensive adsense ads (at least).

Also, as a side note, this is why google bought blogger and why it has always amazed me that adsense isn't a default on all blogs. (Yes, I understand why, but they barely push it.)

You can also see that they aren't exactly ramping crazy revenue or traffic - look at the valuation.

Clearly these guys are not getting valuation based on hype. Facebook is losing money hand over fist and is "worth" billions pre-money to Microsoft (who are not stupid).

So they are getting their valuation based on revenue.

As a side note: this is why I would NEVER have released the details of this deal. Your competitors and the general public can find out a lot from a little.

Valuation Information

Ignore the $112K number because it's really three numbers: $34K in three tranches. So the revenue valuation ends up with the end-of-period revenue of the company - or in a year. Differently put, Andrew Te paid $112K for 15% of a company based on it's valuation at the end of a year.

Nice trick, and that tells us that the Entrecard guys really needed that money.

I know $34K can sound like a lot of money, and if you've hooked yourself up into Amazon's Web Services (like I said you shouldn't), then you've got to write that check every month. I know they're there because their model spreadsheet showed hundreds of thousands of bloggers signing on every month and they (thought they) needed the capacity - and I might have done the same.

For example, if your last 12 months revenue was $50K, then the investor will say: "Five times trailing is a pre-money of $250K."

But if the last month was $8K and this month was $10K, then you'd say "At a growth rate of $2K/month over the next 12 months our revenue will be $252K so our five times leading valuation is $1.26M!"

And if you're hot hot hot then you say, "Our growth rate is 25%/month so our yearly revenue will be $670K and our five times leading valuation is $3.3M."

So, yeah, if you're trying to figure out how strong someone is you can kind of look at their valuation and see what they managed to pull off.

The Devil Is In The Details

One of the things you often see with tranche based investment is some really tough conditions for the seller. Looking at the valuation options you can see that the Entrecard guys fell towards the bottom.

How can I say that? Well, remember that they're really only getting $34K, which is what percent of $250K? Right.

If they use the money to keep paying Amazon and to, say, quadruple their blog base, then, hey-ho, they get the next $34K. And so on.

And if they miss their numbers, I am betting that there is some ugly change of control stuff in there.

Conclusion

Look, I'm not saying they shouldn't have taken the money, and I'm not dissing their business plan. I hope to never be in the position of having to take VC money again, and if I do, I hope it's a big big pile for a teeny tiny piece of the pie.

Sigh.  Once again they almost avoid being the rotten apple of my eye.  My not so snarky comments in red.

This evening Cari.net will conduct an emergency maintenance window to provide additional protection and redundancy for the C2 Data Center. [Planned emergency maintence window. Nice!] Every attempt is made to provide advance notice of these windows; however, in the interest of our customers ,it has been decided that postponing these actions may subject our customers to undue risk. [We forgot to send the email, we got the Special Post Mortem Version of D&D.]

At 12:00am this evening (Friday, March 28th) [Ooops, 12:00am Friday was this morning, around 18 hours ago.  You probably mean midnight tonight, or Saturday morning.][Wait, what time zone?], Cari.net Network Service Teams will install an additional BGP router [Oooooh.] within the C2 data center. This router will provide load sharing and additional redundancy to this segment of our network.

The maintenance will begin promptly at midnight and is expected to take approximately 15 minutes. Service impact should be minimal, though customers with equipment or services located in C2 may notice brief periods of latency and intermittent loss of connectivity during this short window as BGP tables are recalculated. [Is my stuff in C2?  How would I know.  Don't you know?  Why don't you tell me?] Senior Networking Team members will be onsite managing this event. [Blame will be allocated immediately!]

This work is being done to augment changes made during the March 21st window and to provide protection against additional large-scale network problems in the future. [We are not sure we fixed it right last time.   Now we're pretty sure it's the fuel injectors and not the distributor.] Customers located in Cari.net’s C5 facility will be unaffected by this maintenance window. [Probably.]

 Golly.  I am starting to think that Dilbert's PHB works there.

Earlier this week I had a perfect storm of things go wrong at work, any one of which would have been likely to infuriate me on a normal day. Combine them all together in a row, thrown in a quick round trip flight on United Airline (motto: You Think K-Mart Has Lousy Service?) and then add in several off-diet expensive-but-yucky airport food meals that made me gain three pounds. Result: One Ready To Explode Guy.

Bad Temper = Bad Decisions

I'm about as old as a dinosaur and one of the things I've learned is that I make bad decisions when I'm mad. Really really bad decisions. It's not that I haven't made good decisions when I was tee'd off, I have. It's that the ration of good:bad decreases. (Or increases, if that is what I meant, I have never properly understood how to say ratios.)

Worse Ever Bad Decision Made When Mad

At an earlier startup we negotiated a $12M round with a fund-of-funds that wanted to get some exposure to the boom in tech. As this was right before the bust, you may assume that they got more exposure than they really wanted. But at the time everyone and their grandmother's bond fund was buying into tech startup.

So we negotiated a deal with these cats, and while they were not VC's per se, they were very very smart and tough people, who checked us out from top to bottom, inside and out. Like seeing the doctor after 40, but with a spreadsheet instead of a glove. At the end of several months of work, and tens of thousands of dollars of legal bills (on my side alone, who knows what they spent) we had a rough draft of a contract and were just fiddling with valuation and board seats ($20M or $18.5M, 3 seats or 4.) I must admit that I was negotiating pro-forma and really was already getting a better valuation than I'd hoped and losing fewer board seats.

Then, after it was all settled, I got the final copy of the contract and they'd slipped in warrants for 15% of the company.

What you can't see is what signs he's making with his paws.

I even slept on my answer, thinking that would help me be more reasonable and let me re-enter negotiations.

Not As Smart As I Thought I Was

Because, you see, I'd confused letting some time lapse to letting my temper subside. So the next day, feeling deceived, I called them up and read them the riot act and, basically, told them where they could stick 12 million one dollar bills folded up into tiny little points. Not that you could have fit them all in there, but the piledriver I suggested they rent might have packed a few more in.

Now, this is a very human response to being systematically deceived, but it was foolish on many levels.

Wait, Deceived?

Yes, well, someone doesn't come up with a perfectly worded 4 page section in a contract overnight, with full references to other sections special provisions. So they'd always been planning on putting this section into the document right before signing. And, thus, I was deceived and duped into spending the things that are most scarce in a startup:

• Money
• Time
• Attention
• Energy

Why It Was Foolish

Well, turning down the money because they would be bad business partners would have been fine, assuming one had other options (we suddenly didn't) but turning it down mad was foolish because:

• I burned bridges. I have those guys in my contacts list so I can avoid them because I can only imagine how stupid they thought I was.
• We needed the money. Knowing what I know today, I would have taken the money. Could I have come to that conclusion if I was calm and focused? Maybe.
• Their plan was to manipulate me. They weren't making a mistake in slipping that stuff in. The only reaction where I could have still been in control was if I'd remained calm. So they won as soon as I got mad and started reacting without calm, deep, and mature thought.

Getting Smarter

Now I know that time does not equal calm, and I have learned to recognize when I'm stomping around mad, or even just sitting working on strategy stuff in a rapid simmer. So today I have restricted myself to working on the administrative items that I hate but have to be done: review of next year's health care plan, lease renewal review, reading all the inbound customer comments for the week (yes, I still do that), etc, etc. All things where I might take a to-do, or have to get something done, but all transactional and places where even a bad decision is not disastrous.

And if I'm not better by Monday, I'll know to keep myself out of the game until my head is ready to go there and do a good job.

I enjoyed Don's article on firefighting and it reminded me of something so true we forget it all the time: be careful what you ask for. Or, put differently, people will do what they're incented to do.

Y2K

Back in the days when Cobol breathing dinosaurs roamed the earth there was this problem we were trying to fix and verify all the issues. I had a fat juicy consulting contract to ensure that not only was everything inside a company remediated but that they had failover plans.

One day I was in a plant and I was going through their operations manuals when the plant manager bragged that they'd thought of everything, written it down (early ISO-itis, clearly) and that there was nothing I or an "act of god" could do to shut down the plant.

As I was gazing at this pompous combed over windbag I could see the emergency cutoff swtich for the computer room power. So I walked over, opened the cover, and pushed it.

The entire plant shut down, idling 200+ workers for hours. But in all our planning we'd never thought to test that particular item. I went to eight more factories to test their failover - by the second one they'd all tested and it worked.

I got in exactly no trouble whatsoever because I was being paid to find problems that'd been over looked.

Sales

Sales people may fail to make sales no matter how you try to pay them, but they'll always focus on the shortest line between them and a paycheck.

You want to pay a guy more on new customers? Perpare to lose sales nto your install base.

Pay them to have face-to-face meetings? Watch out for those expense reports because your guys will stack up so-called qualified prospects from morning until night.

You want deals closed? Be sure to specify margin.

So when you tell a sales guy he'll get paid for X, make sure you really want X because you'll get a lot of it.

Seth Godin had an interesting article, Managing Urgencies. Here's one of many money quotes:

The problem, of course, is that most organizations are on fire, most of the time....Add up enough urgencies and you don't get a fire, you get a career. A career putting out fires never leads to the goal you had in mind all along.

Several years ago one of my employees imparted this nugget: "You are always living in the long term." Even though all of the pressures in a normal job tend to be focussed on the immediate, to quote BSG Razor "You make your choices and you live with them. In the end, you are your choices."

The fires you face today are usually the result of decisions you made months or even years ago. Here's an example. I did a consulting project for a software company that found itself mired by failing projects. Years ago, they had made some fairly poor choices, such as hiring people that weren't quite up to the job and not instituting standard practices such as source control, release management, and code reviews. They had 30 different customers with 30 completely different sets of source code, and were fixing the same bugs (with different people) at every project. The CEO asked me to come in and do a "health check" on their processes. I was to present my findings at a board of directors meeting.

I did my presentation to the board. I explained what the problems were and basically suggested that since they had 30 projects that were going to miss their delivery dates by an order of magnitude, the best thing they could do was 1) Clean house and get rid of some poor managers, 2) Start using best practices, and 3) Stop all work and concentrate on building a single branch of their source code that would be relatively bug free that they could then branch out to their projects. All pretty standard recommendations for software projects in trouble.

This approach didn't seem revolutionary to me, but it wasn't at all what the CEO had in mind. I had totally misread the situation. He was looking for outside validation that everything was ok. Or maybe he just wanted some improved firefighting equipment or techniques. Perhaps he should have spoken to me before I went in front of the board, but he was busy putting out fires. In fact, the entire company was built on a culture of fire fighting. Employees that went to extraordinary lengths to fix situations that simply should not have existed were lauded as heros, and the few technical people that were pushing for change were just "negative." Years later, the company was sold at a "fire sale" (how fitting) and almost no one from those days is now with the new company.

It's very easy to get trapped into just looking at the current fire that needs to be put out. After all, when the house is on fire it's pretty tough to be thinking about installing the smoke detectors.

But merely moving from fire to fire is not leadership. A leader is someone that can guide change even while dealing with the day-to-day. If you find yourself unable to deal with anything more than the minutiae of your business, then where will you be in 5 years? I'll give you a hint: Even if you manage to stomp out these fires, unless you're proactive you'll just be fighting another set of fires.

I've been having a right proper geek fest with Excel, PivotTables, and the output from our Social Heartbeat Monitor of 2,000+ Social Networking and Social Bookmarking sites.

Actually, that was hard to type as my hands are kind of cramping up.

I'm still pondering what this all means, and it'll get a lot more interesting when we start having week-on-week data. But here are some interesting graphs....

PageRank and Live Count

As you may recall, we looked at over 2,000 sites and found the ones that were "live" - they loaded, they at least looked like they were having some social activity, etc.

So here is the total pagerank distribution - and it's interesting to me how many middle pagerank (if you can call a PR5 middle!) social sites there are.

But this is only interesting to the point where you can see what is live.   Remeber that not-live includes stuff that does not load, linkfarms, obviously dead sites, etc, etc.

So, fear not, fifteen seconds with my trusty Excel and you get:

Quite a spread - you are much more likely to have non-live sites towards the bottom, but can you imagine a PR9 site that is linkbait or a personal blog or something?

Actually, it was half.com, which used to (if you're old enough to remember) have all sorts of things not related to selling and buying. Thanks, Meg, for all the fish.

I Feel The Need for Speed

Quick explanation: pageload is the time it takes to load the home page of a site from our server in lovely cari.net. I rounded all the times to the nearest whole number so 1 second is really 0.5 through 1.49. It is a relative measure, so that should be fine.

And what we see is, well, it's all ove the board, but can you imagine a 7 second load on a PR10 website? That was the Annotea project at w3.org. A-freaking-mazing.

Sad Sad Man

Yes, I am, and it is because I love stuff like this.

What interesting stuff are you guys pulling out of this? We've had scores of downloads - many more than we thought for something so, so, so of interest to SEO type people. (And thanks for all the kind emails!)

We use a TracFone for our "on call" phone. We used to just rotate phone numbers but then you have to keep track of everyone's number and every once in a while someone will blow through their plan because of a support call and that is both annoying and expensive.

TracFone Is A Great Deal

Someone did some research and found that for under $100 we could get a simple phone, 800 minutes of airtime, and a year to use them. And if the phone was lost then we could get a new phone for $20 and swap the airtime for free.

Perfect.

When we signed up (over the internet, a fairly painful process but not requiring any human contact and associated sales pitch!) we signed up for "specials on airtime." I actually like looking at this sort of advertising because you can see that a company can spend a fortune on it and do a poor job.

Missing the Spellchecker

But this is a special case - this is the third email where the TracFone guys have mis-spelled "instantly" as "instanstly." And I've dropped them a note on their "contact us" page to let them know. Never a reply and clearly they haven't changed it.

So maybe they're missing more than a spell checker - maybe they're missing a while customer service department.

Another Useless SERP

Oh, and I checked with the wise and all powerful google - the word "instanstly" only occurs 2,190 times with 406 mentions in the primary index. So I am pretty sure that this blog post will rank first pretty quickly. That is some long tail!

I also looked for "instanstly trac" to see if anyone had written anything about this - 10 results total. Now, I've had some queries that returned nothing, but I can't recall anything returning only 10.

It's always great to get a new tool like the Social Heartbeat Monitor ™ and I always appreciate an article explaining why someone built it.

But that is often all you get. I have to admit, I rarely read detailed instructions, so I'm a bit reluctant to, you know, write 'em.

How It Works

The Social Heartbeat Monitor ™ page has a a pretty traditional advanced search form built around a grid. And since most of the people here are going to be search professionals, I am very much going to continue to resist explaining how to use an advanced search form, but below I have covered the search, status, and filter options so that it is all a bit more clear.

Search Options

The search options are the normal and useful ones:

• Name
• URL
• Domain
• Description
• Page Title
• Meta Description
• Meta Keywords

The "domain" variable is the stripped down url, so "http://promote-my-site.com" becomes "promote-my-site.com" - which is handy for deduplicating our list against the one you use.

It is also useful for using "%.br" to find all the Brazillian domains. The url is what we were able to make load in our browser: "http://www.myfunkysite.com" loads but "http://myfunkysite.com" does not.

Status Options

These are pretty simple:

• Live - site is what you think it is - pligg or scuttle or myspace/facebook clone and you can login, post, etc
• Dead - does not resolve, throws error pages >5 days a month, etc
• TBD - have not had time to look at it yet
• Waiting - waiting on a response to test the site
• Zombie - site resolves to a link farm, or it loads but does not work reliably enough to be "live"

I'm sure someone from Gartner could come up with more expensive names, but those should be pretty clear.

Filter Options

And the filter options (equals, min, max) are:

• Page Rank (PR)
• Google Backlinks
• Yahoo Backlinks
• MSN Backlinks
• Pages Indexed by Google
• Pages Indexed by Yahoo
• Pages Indexed by MSN
• Name in Google
• Name in Yahoo
• Name in MSN
• Load time

I think the only things here that require explanation are:

• Name in Google/Yahoo/MSN - How many times does "VOIPigg" show up in each search engine. Think of this as a rough (very) strength indicator.
• Load time: how long to load the home page from our server. Yes, yes, I know that this isn't perfect, but it gives you a rough order of magnitude (ROM) for how fast/slow a site is. The range for live sites is from almost 10 seconds from Alexadigger to four tenths of a second (0.04) for eZine Writer.

All of the search and filter terms are available as columns in the grid. Obviously.

Downloads

Now, rather than swearing at google docs, you can download the whole list as a csv and filter away in Excel. Heck, if you're a glutton you could even put it back into your google docs and hum the Heintz Ketchup "anticipation" song if you want.

You do to register first to download. Why? So you can have the option to be notified when the list changes. Or when you next want to download the list you can get only the stuff that has changed. Handy, we think, and worth a quick and painless regsitration.

Feedback

Please do give us your feedback of the features and functionality. Things that seem obvious to us but not to our beta testers have pretty much been eradicated, but each time we release a new tool and thousands of people come bang on it we find they've done stuff we did not anticipate.

We already caught the problem when someone puts "-0.5" in the PR field, but what else will people come up with?

Enjoy!

And remember, since the Social Heartbeat Monitor ™ is fully ad supported freeware, you can count on it sticking around. We have around a hundred updates to the list but wanted to wait to get it into this new form before putting them in.

We're taking down the downloadable list of 2,162 social bookmarking and networking sites and replacing it with an interactive analytical tool that gives you a lot more information and display control. It will let you see the heartbeat for any social bookmarking or networking site. Thus, in a fit of imagination, we called this the Social Heartbeat Monitor ™.

(Plus it is much much cooler than a google doc and you can get the list directly as a "csv" file.)

Things you can find out

We've built some controls around a grid so that you can filter the list of 2,000 plus social bookmarking and social networking sites down into the sublist you're probably most interested in. By my watch it is between 30% to 70% faster than google docs. (Attention google: my technical staff is better than yours!)

We added the kinds of controls that will help you find something specific:

• You want PR5 or better Live Sites? No problem, there are 534 of them.
• Sites that are live but between PR2 and PR4 with >1,000 pages indexed in google? 403 of them.
• Insert your question here....

But most importantly, we introduced the idea of a heartbeat for each site.

Heartbeat?

It's great to have a big list, and it's even handy to have a "Live" indicator so that you know that sometime in the last two months I was able to use the site in an appropriate fashion (create user, login, post). But we're including what we call heartbeat information:

• Pages indexed in Yahoo/MSN and what-is-their-name, oh, yeah, Google
• Backlink count for Yahoo/MSN/Google
• Load time

We'll be keeping this information on a weekly basis for each site so that you can track a site over time. And, because we really believe in making this information widely useful, you'll be able to download the performance over time.

Made for Custom Analysis

For example, Mixx is getting huge buzz right now in the SEO community and has 133K pages indexed in google. Does anyone (outside Mixx) have any idea what that was last week? You'll know in a week if you come back.

To put it even more in perspective, Digg has 9.8M pages indexed and Dogster has 134K pages. Dogster? Yep, it's exactly what you think it is. But both Dogster and Mixx are PR6 sites with similar google love. Where should you be putting your funny dog stories? (Trick question, the answer is both digg and dogster, wtih mixx in third place if you have time!)

Do you find that your stories do better on PR4 sites or PR8 sites? Do you want traffic or links? Now you have to consider.....

Tribal Knowledge vs. Experimentation

Well, we know all about long tail search and long tail e-tailing and long tail PPC campaigns, etc, etc. And there are even a few of us talking about niche sites versus huge volume general sites (ex: Digg vs. VOIPigg) but you know, it's all been logic, supposition, and educated guesses.

At Promote-My-Site we've written about getting a diversified portfolio of social bookmarking and social networking sites. So we started thinking about analyzing sites - how many backlinks, what is their PageRank, what is the change over time, etc. It's all obvious stuff to want to know, but except for traffic share changes for the "big 10" you can't really get any of that. For free anyway. And you certainly won't get that easily downloadable.

No longer. Now you can experiment using our Social Heartbeat Monitor ™. Find sites that are in your specialty, look at smaller but still high value sites (there are a ton), re-post some of your greatest hits. Once you find a combination that works and gives you good ROI, find more sites like it using our filters.

Calling All New Sites

We spend an astounding number of hours pulling lists from the internet and came up with 2,000 to look at. Yesterday I got emails about three new ones. We'll be constantly adding things to the list and we'll give you a way to find "what's new." You can also easily suggest new sites right from the Social Heartbeat Monitor ™ page.

Time Will Tell

We believe that a social bookmark and network heartbeat will be a valuable tool for looking at the change over time of a social networking or social bookmarking site. We think you'll enjoy it and find it useful to build a portfolio of performing social network and bookmarking sites.