The otherwise very very smart Don Dodge posted this gem that gets some bits right:

I talked to a Facebook App developer at the ReMix conference. He told me his app is generating 300 million page views per month. Wow! Then I asked what kind of CPM (Cost Per Thousand) ad rates he was getting. He shrugged and said somewhere between $0.02 and $0.05 per thousand. That pencils out to between $6K and $15K of advertising revenue per month for those 300 million page views. Pretty good for a couple of young hacker/coders with very low overhead, but not the kind of business that commands million/billion dollar valuations.

Basic Assumptions

What I don't know about Facebook could fill Wembly Stadium with just enough room for a Flock reunion, so let's assume:

• This is app is at the median of the top 50 Facebook apps
• The actual income is at the top range of $15K/month
• The top app earns 10X what the bottom app earns and it's a smooth distribution

So, the total revenue for all 50 companies is around $12M a year.

No Money In the Ecosystem

Take these three data points:

• I have a friend who runs a three person shop that supports Cisco routers for a fairly large school system. He billed $3M last year. That is $600K/person.
• We work with a small Oracle outsourcing shop (5 guys in the US and 25 in India) that billed $7M last year. That is $230K/person, but if you cost average that by salary dollar the number is $700K/person.
• There was a local business paper article about a 12 person company that does custom Microsoft VP/Apps/whatever programming and just broke $7M in total revenue or $580K/person.

What's the point?

There is a LOT of money in the Cisco, Oracle, and Microsoft ecosytems. I'm sure all three of these remora companies are too small to even barely come to the notice of Microsoft/Oracle/Cisco.

If any of them were doing Facebook work they'd be #1 with a bullet.

But I bet the 25th largest Facebook Widget Maker can get some 1:1 time with whomever they choose.

Let's review: $12M/year in the Facebook ecosystem and, what, a couple billion for each of the big three? Hmm, well, there may be a network effect from the users of Facebook, but the outside world is starving to death.

Wiser Words

Let's parse one particular part:

Pretty good [$15K/month] for a couple of young hacker/coders with very low overhead, but...

It may sound good to make $15K/month, but that is only a buck eighty a year. Take 50% out to pay for taxes and basic health insurance and you're making $90K. Hope you don't have any hosting or other costs....

So, really, it's krep income, even when you come near the top.

Valuations

The next bit is even more interesting:

... not the kind of business that commands million/billion dollar valuations.

Good lord, Facebook is "worth" $15B to Microsoft and a host of other people and it's certainly going through money like this bubble will never pop.

Let's look at the valuations of our ecosystem companies for a second:

• Oracle - Market Cap=$112B, Rev=$20B, Operating Margin=34%
• Microsoft - Market Cap=$280B, Rev=$58B, Operating Margin=40%
  
• Cisco - Market Cap=146B, Rev=37B, Operating Margin=25%

(By the way, if you aren't impressed with a HARDWARE company like Cisco having a 25% operating margin, you should be.)

So, Facebook is worth 10% of Cisco or Oracle and 5% of Cisco? I think we know that is crazy talk. But if that is the talk, then why is Dan dissing the 300M page views of a Facebook widget maker? Isn't Facebook just a bigger aggregator of page views?

Do Some More Facebook Math

What did Zuckerberg have to say about Facebook revenue on a con call in January of this year:

Revenue for Facebook for 2007 will be $150 million, as has been widely reported. But for 2008, Zuckerberg projected revenue to be increased to $300 million to $350 million.

Currently they have 450 employees, so this year their revenue was $333K/employee, which is not bad.

Next year they plan to have 1,000 employees ... yes that keeps their revenue/employee pretty much flat.

Remember the 25th most popular widget maker pulling in $180K gross/year? He's not looking too stupid, relatively.

How does this math work again?

Summary

There aren't very many people making money adding value to Facebook, it monetizes it's users poorly, and management plans to ramp staff and keep revenue/employee flat this year.

[Bump and update: two hours after posting and  we have the number one slot for our own  whois search.  Neat.]

This is not yet another weary re-telling of the Google Blogscoped article on whois this morning. I am sure our readership has an almost 100% overlap with the blogscoped guys. I am also sure that at least a few "SEO Bloggers" will duplicate the article with some added tips and tricks.

No, whenever I read a google "trick" or "feature" article I always use it on my site name and our key, er, keywords to see what will happen. I can't remember who suggested this to me, but I'm sure it was someone a lot smarter than me (that's a bit set!)

Whois Promote-My-Site.com on Google

So type in "whois promote-my-site.com" in google and see what happens:

Which is accurate and cool and handy - at least a dozen times a year.

But what struck me is that our site did not get even one mention in the results.

Hmmm.

So I tried some other SEO domains (seomoz.org didn't show up in the first two pages, etc...) and found that this is a common issue - lots of mentions of the site from other sites, but no direct link.

Then I bumped into seobook.com having the first four results. And it is because he has a "whois tool."

Not being entirely without wits, I immediately wrote this post about google's whois tool and what I found when I queried "whois promote-my-site.com."

Because now I'll rank with a good article on whois and how it affects my site. Assuming that there isn't some strange search logic going on in google-land.

We use filezilla as our Pointy Haired Boss friendly (*cough*) ftp front end. It rocks, and it is free - what more can you ask for?

Lately I've been testing screen capture software and have been spending a lot of time rebooting my PC (install/uninstall) and reconnecting to our servers, shoving a video up, testing it on several different computers. Rinse and repeat.

And it was really bugging me to have to change the destination directory to /home/pmsforms/images. Sure, it was three mouse clicks in a sea of other mousing, but my backbrain was telling me I was being a luser.

Timesaving Tip

Yeah, how stupid am I? Go to the File->Site Manager dialogue box, go to the Advanced tab and set the default remote directory.

Heck, if you have more than one directory that you use a lot you could create two different profiles that take you where you need to be.

Wish I'd thought of looking for this about a thousand mouse clicks ago!

Ever used Baidu? I haven't because, well, my Chinese is not much better than my French or my German. And without even cognates from five years of Latin to guess my way around a site, heck, I don't think I've ever used it.

And, yes, yes, I know that there are more internet users in China than there are people in the US, blah, blah, blah. I am focused more on the fact that my 12 year old makes more mowing lawns in a weekend than the average Chinese guy working in a factory for a month. And I sell stuff that doesn't cost a dime, so the vast masses of Chinese consumers are worth significantly less to me than they are to, say, P&G.

Logs Are Worth Reading

I was looking through our logs, saw a search string, and clicked on it. It turns our that we rank for:

PLEASE DO NOT REPLY TO THIS E-MAIL. This e-mail address is not monitored

Which is the strangest search string I've seen in a while.

Wile there I tried searching on "Promote My Site" - we usually rank between 4th and 6th or so on Google, depending if Matt Cutts had oatmeal or a biscuit for brekky that day. Here is the result for that on Baidu (we are 6th):

Ok, the string they show is:

GOTO=http://technorati.com/blogs/promote-my-site.comblogreactions&&HREF:http://technorati.com/search/promote-...GOTO=http://promote-my-site.com/authtrans.php?authority_string={{!VAR1}} TAG POS=1 TYPE=DATA EXTRACT=...

Perhaps this all makes sense in China. But it really reminds me of the very very early days when everyone was switching from X to google and every once in while you'd get a result where you just had to scratch your head.

I think we forget how much better that all works now.

Well, not wrong in the sense that they are writing silly stuff (lord knows there is plenty of that in the SEO blogosphere!) but that they get the wrong end of the handle, as it were.

Article the first: Real People Don't Have Time For Social Media.

B: The Decline and Fall of Tech on Digg.

Go read them both as they are frightfully well written and insightful, but ultimately not to the point I'd have made.

Here it is in a nutshell, though: People have to spend too much time on Digg and there is less tech news there.

Yes, yes, I know these articles aren't a pair, but they have a lot of similarities in their outlook on Digg/Social Media

Jumping to What?

 Ok, I think people often spend a lot of time "working" on things that don't have ROI. But even worse, they simply don't consider ROI or even measuring it. I might say they act in a tactical fasion with no linkage to a strategy.

Which brings me to the second part about Digg not being so tech friendly. I am not so sure this is true in the sense that it's permanent. We are in an election cycle and it's been quite a while since Steve Jobs came out of his hole, saw his shadow, and dropped a raft of fanboy flavored iPods on us.

But say it is so. So what? Does that mean that the tech readers aren't there anymore? Or that they are actually more interested or less?

Which brings me around to the "too much time" argument, which I still think is bad ROI focus and lack of testing.

So, while the articles are good, I would encourage people interested in social media to keep examining their overall strategies of readers, links, subscribers, etc, etc and not jump to any conclusions.

I was pondering yesterday's post about Mowser's demise and ran across an old (last boom) stack of business cards from VC's, startups, and "advisors." So I decided I would try a very unscientific snowball sample experiment and grab the top 20 cards and see what I came up with.

Winners

• The Monster Board Who? You know them as Monster. This card was pre-merger, so around 1998 I guess. Ok, they may be getting their lunch eaten by the hippies at Craigslist, but still. Big winners.
• RedHat These cards were right next to each other, so also a 1998 vintage. Shoot, another job opportunity worth $5M for just being there missed.
• Butler Technology Solutions I'll just give you the money quote from their website:
• "Winning in business requires solid strategy, steady performance and Yoga-like flexibility. " (I guess down-dog wins in the end.)
• Ultimus Still rocking good workflow stuff and have not gotten killed by the 27 different flavors of Microsoft and BPEL out there. High quality development offshored to Pakistan.
  

Alive

• NetCentrics Still doing the consulting and "product development" thing.
• ElementK Just not quite Special K but still around to provide IT training.
• NetGift.com Still loading, albeit slowly. There are generic shopping sites besides Amazon and Zappos?
• AccPac Bought by Sage.
• InfoTech Document solutions, bought by Ricoh.

Dead Pool

• MedicinePlanet.com Used to supply travel health information, now the website points at the WHO. I'm sure there is a story in there somewhere.
• OfficeClick.com Ten years ahead of their time, they had a hosted application suite for temps to use onsite for immediate productivity. I suspect they were killed by Office. Now their site points to dsl.com.
• PacketCom.com Site does not load, guess we didn't need yet another next gen telecom system after all.
• Poertera They used to do Learning Management Systems, now they:
• We create value-aligned business models with our clients that provide mutually beneficial financial returns.
  
• Infocruiser Hosting and dial-up (remember that?) internet. Site does not load.
• Nuforia They were new media before there was new media. Some shop in SFO bought the bones. I mostly remember them because they had these rounded edge business cards that made all the cats from Asia laugh. Long story.
• Opus360 "Staffing and training solutions for the digital age." And doesn't that sound Victorian now? They are long dead.
• YipiNet  Yes, "YipiNet dot com" - not all the terrible names are happening now. They had "online coaching for executives" in an age before the internet was pervasive. Dead, dead, dead now.
• nCommand Don't know what they did and their website has disappeared and the domain is for sale.
• Tandem Big computers for big money, bought by Compaq in 1997 (told you this was an old stack of cards!) and the domain isn't even pointed at anything anymore!
• Constallar Mega-ETL vendor, lacked tech to go with their sex appeal, ran out of cash, but threw great parties. Website dead.

Odd Ball Stuff

I don't want to make fun of people (google knows all, sees all) but I did run across

• A beautifully made card for a "Medical Intuitive-Astrologer." I am not sure what that is or where it came from, but I did sniff the card to see if it smelled like patchouli.
• At least a dozen cards from the late 90's with out a web address or email.
• Tons of cards with no cell phone numbers. Remember $600 cell phone bills for roaming in Philly for two days?
• My NEXTStep card stack. Sigh. Anyone want to buy a cube with an optical drive?

What's the Lesson?

Well, it's kind of obvious - the odds are stacked (30% win, 50% alive, 50% dead), even if you assume that I threw away the stupidest ones. (I did)

Here is the real hint: I pulled 10 VC firms and 10 Law Firms at random and they were all still in business.

Hmmm. Remember learning that the only people who really made money in the California gold rush were the guys selling picks and eggs? Still true.

I was reading a very sad, frank, and wise notice from Russell Beattie about the death of Mowser, his mobile browser project. I know, and you know, that most startups die young, the ones that don't mostly become zombies living on consulting, and the small remaining percentage are bought for peanuts by larger companies lusting after their IP and management team.

But it is still sad.

And before anyone misconstrues anything I am about to say, I've been there, so I am very sympathetic.

The Aftermath

I think Russell can say it better than I can:

Seriously... A salary will be a good thing to have again. I'm *thousands* of dollars in debt to my family and friends, maxed out on every credit card (all of which are in collections), on my last chance for my apartment (if I bounce one more check...), had my car repossessed *twice*, electricity turned off, cellphones switched off, landline canceled outright, and on more than one occasion (this weekend in particular) eaten little more than buttered macaroni as I waited for an overdue PayPal deposit to arrive (3-4 days? Come on!). Having a steady income will be a welcome mental break, believe me.

So, here's the thing, did he make a mistake or, even in hindsight, was this the right way to fund his company?

VC or Credit Card Debt

Well, that's the question, unless you're Guy and have been rich and famous for so long you forget why.

There is no answer. I know that's all very Yoda, but there it is.

The Third Way

Jeff Bezos is supposed to have sat down and gone through all the different items that could plausibly be purchased via the internet (pet food: no) and settled on books.

My last startup we went though a host of things we could startup that had serious FY money potential and that could be started while we were still consulting and earning our basic dough.

You see, we'd both done it the VC way and the credit card way and, since we didn't like the outcome of either, we went for the third way.

India

If I wanted to start a company without going into debt and without selling my soul to a VC, I'd go live in India and insource my project. 

A good mid-level manager who was willing to move to India could easily make $50K USD, which is the equivalent of $400K in SFO.

Take your partner with you, share an inexpensive room. You now have $70K to play with to hire technical people.

Which, in the good old US of A might get you a semi-palatable Flash programmer, but in India one can get a very good technical programmer for $15K.

Bootstrap four or five good programmers and be there to supervise them.

Plus, should things go badly, as they likely will, you now have an impressive resume to take home to the US.

You can rinse and repeat this process in China or Vietnam if you like, but I prefer curry to eel.

Keep A Stiff Upper Lip

Personal advice to Russell and everyone else swimming in the dead pool - it's all very survivable, and likely you'll take another run at the brass ring. I did, and I believe you can catch it if you work hard enough.

I am not a big fan of "top 10" lists because my teeny tiny dinosaur brain can only remember two or three of the points, which makes me feel like I'm treading water watching eveyone else evolve their way ashore and I've left my proto-feet behind somewhere. But someone recently sent me this ancient (1994 era) email that had Bonnie McElveen-Hunter's:

The Ten Commandments For Failure

• Thou Shalt Have Little Faith
• Thou Shalt Pick Thy Partners with Wanton Abandon
• Thou Shalt Make the Quick Buck
• Thou Shalt Have No Enthusiasm
• Thou Shalt Seek Easy Street
• Thou Shalt Do It Alone
• Thou Shalt Not Be Accountable
• Thou Shalt Have No Sense of Humor
• Thou Shalt Give Nothing Back
• Thou Shalt Believe Failure is Final

Wow, there is a lot in there, but let me divide this into three piles and then I'll pick the three that I need to remind myself to remember!

No Brainers for Business Success

I think that a few of these jump out at me as being really important and obvious:

• Thou Shalt Hav No Sense of Humor
• Thou Shalt Believe Failure is Final
• Thou Shalt Not Be Accountable
• Thou Shalt Do It Alone

Anyone out there who is overly serious, self-important, arrogant, and the Lone Ranger? You are so headed for a fall. I know guys like Steve Jobs like to be the famous front man, but it's not like he's actually designed or built or programmed anything that was famous. Sure, he makes decisions and micromanges and drives people to nervous breakdowns, wait, dang, don't work for him - it's a trap!

An Embarassment of Riches

But some of these are things that most startups have too much of, not a dearth:

• Thou Shalt Have Little Faith
• Thou Shalt Have No Enthusiasm
• Thou Shalt Make the Quick Buck

Have you ever seen a zombie startup that is running on denial, manic positivism and leaping from the last big thing to the next big thing? Uh, huh, you sure have and so have I. It's hard to write off your dream, but sometimes you just have to move on.

Remember these Three Rules for Success

I liked these a lot, not because I don't "know" it already, but because it's good to be reminded of important ideals in a new way:

• Thou Shalt Pick Thy Partners with Wanton Abandon
• Thou Shalt Give Nothing Back
• Thou Shalt Seek Easy Street

Now these, these are good.

When you're decideing on people to hire or companies to partner up with, take a deep breath, You've got to live with those people for a long time. Read our A Managers Hire A People article - it distills down 40 years of hiring experience in high tech.

And when things are going well you need to help someone else prime the pump. Take on an intern, pick an office charity, free your people up to do service work.

Finally, if what you're doing seems easy, well, you're probably about to step into an open manhole cover. Time to do some risk management!

Today's article at Bruce Clay was about avoiding a PR nightmare. He rightly suggests that the easiest way is to be smart and not get into one in the first place, which is easy advice, but then he knocks one out of the park by giving a 1-2 punch to the most human of impulses, retaliation:

1. Refrain from personal attacks. At all costs. There are no exceptions.
2. Refrain from responding to personal attacks. At all costs. There are no exceptions.

Not content to summarize a Dali Lamaesque ("We are not anti-China, we are pro-Tibet" - how clean is that?) truth clearly, he goes on to give you a good physical marker you can use to guide yourself:

As a general rule, if your hands are shaking after you have finished typing out your five page rebuttal to their argument, DO NOT PRESS PUBLISH.

Perfect.

Politics

Not the politics of the personal, which is what the above is all about, but the politics of, er, politics. For example, I was using Brian Schaler's Digg Status tool and got an interesting error message.

I'm not sure if he's kidding about how people complain about Bush on Digg or is encouraging people to complain about Bush on Digg.

It doesn't matter, but the possibility of offending a large number of people is certainly present.

Around here we have the usual mix of big-L and little-l libertarians, democrats, liberals, conservatives, and republicans. I think we even have a communist and an economist. But our ironclad rule is:

1. No politics while you're representing the company

If a client brings up politics we are polite (no matter how much we agree or thing he's crazy) and move right along.

I have an English friend (nu-Labor if you follow that stuff) who finds American's willingness to talk politics at work with customers appalling. I think I agree with him.

At least. Which is a pretty good piece of pocket money. I suspect even Warren Buffet would slow down to pick that up.

I attribute this to SEO because even thought it was a change in business process coupled with good SEO that made it happen it could not have happened without SEO.

Fair warning to people looking for "advanced" techniques - they ain't here. But what I'm going to talk about is a LOT more valuable than a trick that may or may not work with Google next week or next year.

Best Ever YouMoz Article

Let's look at the real money quote that J Kelly Garrett put in his amazingly excellent SEO article at YouMoz. This piece of advice will serve you while you climb up the value chain from a specialist to a trusted business advisor:

I took the pile [of papers, documentation, etc], pushed it aside, and asked him [the business owner] to tell me about himself. This is a common technique of mine, whether it is a small business owner, or the Chairman of the Board for Burlington Northern Railroad.

He wasn't asking to hear about the guy's soccer team, he wanted to get the gestalt around the company. What is important about the environment, goals, challenges, employees, culture, customers, etc, etc, etc.

It's Not About the Technology

Really, it's not. Not even in SEO. I wasn't about the technology in OO programming. It wasn't about the technology in robotics. It wasn't about the technology during the dang moon shots either.

It's about how the technology serves the business and makes it more successful. Sometimes 'success' means one or more of:

• Improved profit
• Increased revenue
• Decreased risk
• Stronger resilience
• Faster new product introduction
• and on and on...

But if the technology isn't in service to the goals of the business then it will eventually fail.

The $2M Piece of Advice

I know exactly when I finally understood this. No kidding.

I left one job as a consultant making $55/hour doing NeXTStep programming (hey, that was LOT of money back then) and got another one making $75/hour. The had two slots to fill - lead programmer ($50/hour) and technology business advocate ($75/hour).

For some reason, don't know why, during the interview I was homing in on the business objectives of the billing audit system they were building. I kept asking about change management (people, not source!), about deployment, about disruption, etc, etc.

Next thing I knew I was walking about into the freezing flipping cold in Chicago holding onto a 50% raise. Bubba, you don't get too many of those.

If you work that out - 48 weeks a year, 40 hours a week, 40 work years in a lifetime - you find out that that change in focus gets you a $1,920,000 raise.

Actually, it's even more than that because you keep the advantage while you march up the food chain.

Back to The SEO Example

What really struck me about Garrett's example was that the business took the fairly traditional and predictable approach of getting some SEO guys to graft web and SEO onto a traditional "ring and pitch" business.

The SEO guys put together a campaign that generates 2,500 leads and it kills the guy because:

• ROI goes from "signup" to 2 years.
  
• "He is looking at ROIs that should apply to heavy machinery and commercial aircraft."
• Growth rate drops from 19% to 3% because of process issues:
• "growth rate has plummeted from 19% per year to 3% per year because he is in the office answering the phone all the time with close rates of 12% [down from 97%]"
  

Actually, there were a lot of issues, but those are the two killers. Look at what happened - his profits got pushed out a year from acquisition AND instead of looking at an yearly "takehome" increase of $67,032 he was seeing an increase of $10,584. That is an opportunity cost of over $55K!

You can go broke quickly making money that way.

Do the math

I'm just going to quote Garrett's point in toto because it sums up the whole problem so neatly:

SEO Firm Declares “Success.” The PPC campaign is bringing in over 2500 hits per month. Closing the sales is not really their job. They just need to work with the business owner to further tweak everything to bring in more hits. “Obviously” the copywriting needs work to further capture the ones that do get there, or there is something wrong with the business, or whatever...but we are getting people to the site. Just wait till the site starts to rank higher with the search engines!

Remember, the owner is now going broke pretty quickly, has sunk a fair bit of capital into the new venture AND is probably pretty much apoplectic. In fact, if he's like any dial-and-smile salesguy I know, physical and financial threats are probably in the offing.

What's the Solution?

I won't repeat the meat of the article but basically Garrett becomes and advisor and helps the owner re-engineer his business so that he goes back to ROI on close. But most importantly the business growth goes back up to the previous 19% and then all the way up to 28%.

So, back to the math - previous to the first campaign the owner was looking at a yearly "raise" of $67K based on growth. The slap-on-SEO campaign took him down to a $10K raise. The SEO+BPR campaign took him to a $98K yearly raise. Thus the title of this post because the SEO catalyzed a $31,752 additional raise.

I'd like to read a lot more articles like this, and I hope he keeps writing.