40z.com - making sense of internet branding

Its the 90's all over again! Not!

OK, its time to wake up. Here is why it's different this time. In the 90s, the capital was there. The excitement was there. And the big picture was there. But, the infrastructure was not. And as such the revenue models didn't work. Here is what is different now:

We've had 8 years of infrastructure getting put into place. Web applications and software are doing things we couldn't even imagine in 1999. And they are doing so cheaply and efficiently.

The revenue models are working. With cheap, efficient, highly sophisticated technology in place, revenue models are suddenly working. Google has proven that monetization works in the internet advertising model. But the internet is more than just advertising, unlike television.

What technology?  Search technology. Transaction technology. Networking technology. Server technology. All at screaming high speed and cheap. The internet is the place where the transaction is actually occuring. You don't just see what you want? You look for what you want, and in an instant, you find it, and you buy it.

The people are coming. Television, and newspapers are faltering. Everyone is leaving for the internet. Its instant media now, unlike the 90s. The infrastructure is now in place for instant news, commentary, watching movies, listening to music, sharing photography, etc. etc. and all at high resolution/bandwidth. TV sets? Movie theaters? Newspapers? Film cameras? Anyone remember the eight track tape?

The people are creating content. Unlike the 90s, when you had to hire droves of people to create content for everyone to look at, now individuals can create their own. And they are able to broadcast it themselves to the whole world. You can make your own movies, and look like a $10 million dollar film production. Amateurs can create photographs that only pros could create 10 years ago. And music? How cheap are those home studios making crisp perfect digital recordings? Anyone with a blog can create their own editorial page and tell the world exactly what they are thinking.

Getting left behind are all of those who are simply looking at a new crop of acquisitions, and IPOs, and saying, its a bubble! Just like it was before! Well, its not. And just a little homework will show you a huge difference. The companies getting acquired have revenue and profit, enormous growth rates. low expenses, and are quickly taking leadership positions in their industries. Watch out. Its real this time, and a lot of people will get left behind.

VCs: are they happy?

If you've got a spare half hour or so, and care about VCs, this video of the Stanford Summit 2007 is probably worth watching to get a taste of the current mood of the VCs about their market vs. private equity, IPOs, etc.

VC comments on Business.com deal

Paul Kedrosky, VC partner at Ventures West, and well known blogger at Infectious Greed writes:

"Okay, we have a new high water mark for a single domain sale. Business.com has been bought by R.H. Donnelly for $345-million. Sure, the company has $50-million in revenues, but don't kid yourself, this is about the domain name. Impressive."

What do you think?

Here is what I think. I think it was the domain branding which made the business model succeed. Sure anyone could have registered A2Zbusinesseslistedhere.net, and probably sold one or two ads. But, thanks to the brand, and the hard work of an ad sales team, 6,000 businesses wanted to be listed at 'business.com'.

But truly, take a look at business.com. It is quite similar to a parking page. In fact, it is a parking page...Just a parking page that goes deep in its number of ad links. It's interesting that in news of the acquisition it was called a 'search directory'. I expect in the future this will become a new name for parking pages that are developed more deeply with ad links. 'Search Directory'.

And to be honest. It has a lot of validity. Compare how quickly you can find what you want specific to business at business.com compared to a search at the major search engines. Having a narrow, topic specific search directory weeds out a lot of irrelevant results... 

Why this is not bubble 2.0

It's easy to look at the prices of domain sales, and internet acquisitions, and just assume this is another dot com bubble all over again. But in those famous last words... things are different this time. Without writing a book, here is the essence.

Google has changed everything. Google created a way to monetize the internet for ad revenue that simply did not exist previously.

Website development is cheap. What used to cost you millions in the 90s, you can now do with a cheap template. And look just as professional as your billion dollar competitor.

Media companies are scrambling. Why? Because people are leaving TV in droves for the internet. Look for standard media as we have known it to soon be archived in museums. "When I was a kid we got the news each morning printed on paper, delivered to the door. And news in the evening for one hour on TV." "No way, dad! When was that? In the 90s?"

The distribution systems for everything are changing. This time its for real.