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Social Media: The Power of Compound Interest and the Law of Social Media Success

Written By Noah Mallin | July 9, 2009 | Share This |

Profile Optimization

According to Wikipedia (and they are unfailingly accurate, right?), had the Native American tribe “…that accepted goods worth 60 guilders for the sale of Manhattan in 1626…invested the money in a Dutch bank at 6.5% interest, compounded annually, then in 2005 their investment would be worth over €700 billion (around USD1 trillion), more than the assessed value of the real estate in all five boroughs of New York City.”

Aside from being one of the only parts of the entry on “Compound Interest” I was able to comprehend, this illustration also finds a neat parallel in the world of social media engagement. How so?

Simply put, the more ongoing, successful activity you engage in within social media platforms, the more your success level grows. I like to call this The Law of Social Media Success.

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Search News: Google News Scoops Next Steps in Google Search

Written By Noah Mallin | April 15, 2009 | Share This |

Profile Optimization

The age of the algorithm is over. How’s that for a declarative statement? Of course I’m oversimplifying but the truth is that the major changes in search engine results pages aren’t coming from new or radically improved crawling and indexing. Instead they are occurring through a fresh approach to how results are served up and categorized.

Google is characteristically cautious about messing with their main search tool – after all, they dominate the search engine field and continue to make gobs of money from their current layout – why mess with a good thing?

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Search News: Getting Kosmix Intervention Through The Holy Trinity of Search

Written By Noah Mallin | March 19, 2009 | Share This |

Profile Optimization

I was pretty harsh on new search engine Kosmix’s chances at whupping Google’s butt in yesterday’s post, and I don’t take back any of those conclusions even as I have continued to play around with the engine myself. Ultimately Kosmix has come to reinforce my sense that the best search campaigns are the ones that use all three of what I like to call the holy trinity: Paid search, SEO, and social media.

What sparked this thought was seeing how the Kosmix results page shuffles things around and surfaces stuff that would get knocked to a different page on Google.

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Social Media: Search it, Say it, Sell it

Written By Noah Mallin | January 27, 2009 | Share This |

Profile Optimization

When many people think about social media marketing, they often think of ads or fan pages on sites like Facebook or YouTube rather than the actual content and ways people use the platform. Let’s say you’ve been diligently updating your company’s Wikipedia page from home and you are running a paid search campaign to make sure that potential customers who are searching for your product will see your site. You’ve even got SEO down so you can own the real estate on relevant search reply pages. Could it be that you are still missing an opportunity to connect with interested customers?

There are more and more people who are finding out about products online by asking about them. Only they are asking their peers first and then going to a search engine (if at all).

Obligatory Twitter reference in 3, 2, 1…

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Search News: Wired’s Chris Anderson Gives it Away For Free

Written By Noah Mallin | December 17, 2008 | Share This |

Profile Optimization

The ironic setting for The Long Tail author Chris Anderson’s talk today was the Wired Store here in New York City, his magazine’s very cool mecca of pricey Wired-approved goodies. I’ll give them credit for not Hammacher-Schlemmering the place up by calling every item “The World’s Best…”

The setting was ironic because Anderson was previewing his latest book, coming out next year. Although if you read Wired it was more of a review as his basic thesis was laid out in his cover article “Free! Why $0.00 Is the Future of Business.”

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Search News: Last Night a SERP Saved my Life – Cyberchondria and SearchWiki

Written By Noah Mallin | November 25, 2008 | Share This |

Patient

My wife and I have a particularly naughty cat at home. Like many urban dwellers we find it necessary to place those little Raid roach discs around to keep unwanted visitors from parading through our kitchen area. This cat is obsessed with the discs – if they are not placed somewhere very inaccessible she will invariably locate it and bat and bite it to her heart’s content.

The first time we found a disc in the middle of the floor full of bite marks we freaked out, convinced that she had poisoned herself. While my wife called the vet I did what any right-thinking idiot would do and looked up the roach trap ingredients online to see what pet interaction warnings there were. To my relief, while not recommended, the discs would not kill her outright or even make her sick if she wasn’t regularly chowing them down whole.

In retrospect though, perhaps the interwebs wasn’t such a great place to turn to for feline health advice. After all, when it comes to human health the Internet is anything but infallible.

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Social Media: Twitter as Training Wheels - Can All the Goodness of Social Media Be Packed Into One Tool?

Written By Noah Mallin | October 27, 2008 | Share This |

Profile Optimization

Today I eavesdropped on a conversation between Star Trek: The Next Generation’s Wesley Crusher, I mean Wil Wheaton, and MSNBC’s next generation newscaster Rachel Maddow about podcasts. Apparently they share more than just a hairstyle (see pic). Normally this kind of experience would be bought to me by late night pizza and my overactive dream-state synapses.  In this case though I was perfectly awake as it floated down my Twitter stream in between my middle school friend and entertainment PR specialist Ariel’s insights on the music scene in Iceland and former colleague Tom linking to an interview with New York Times ad columnist Stuart Elliot.

So wow, the future huh?

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Social Media: Technorati Expands its Search Niche, Becoming Mini-Google

Written By Noah Mallin | August 26, 2008 | Share This |

Mini Me

Technorati has always been a strange beast – neither fish nor fowl. Often mentioned in the same breath as Digg and Delicious it’s used by many passively as an aggregator of blog postings. Here’s how Technorati describes their mission:

Technorati is the recognized authority on what’s happening on the World LiveWeb, right now. The Live Web is the dynamic and always-updating portion of the Web. We search, surface, and organize blogs and the other forms of independent, user-generated content (photos, videos, voting, etc.) increasingly referred to as “citizen media.”

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Weekly Search Roundup: Summer Search Blockbuster Edition! Rumors Run Rampant, Bombs are Defused, Hostages are Taken

Written By Noah Mallin | July 25, 2008 | Share This |

Tropic Thunder

Summer is blockbuster season at the multiplex: Long lines, stuff blowin’ up onscreen real good, and $25 on snacks at the concession stand while you sit in air-conditioned comfort. This week’s search industry news also brought some of the thrills of a summer blockbuster or at least perhaps we can spin them that way. To the SearchCave!

Let’s lead off with the obligatory Google updates:

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Facebook: Worth Two Times Mozilla?

Written By Drupad Sil | April 29, 2008 | Share This |

Market Crash

Henry Blodget at Silicon Alley Insider unveiled the SAI 25 Live, an auto-updating list of the world’s “Most Valuable Digital Startups” as assessed by Blodget and his associates. More from SAI itself:

“Like public companies, the value of private change in real-time, but there’s no convenient way to track these changes… until now. We’ve created a real-time tool, the SAI 25 Live, that indexes the value of the SAI 25 companies to the NASDAQ. The SAI 25 Live updates the values in real-time (with a 20-minute delay). So if you’re jealous of all your friends at public companies who can recalculate their net worth all day, just check out the SAI 25 Live. This will tell you how much your stock options are worth right now.”

Now, there are a multitude of techniques available to perform valuations of public companies practiced by investors, ranging from the textbook (dividend discount model, earnings multiplier model) to the obscure (ask James Simons at Renaissance). However, they all have one thing in common: a heavy reliance on the availability of financial data, like revenue and profit numbers, free cash flow and balance sheet results. Unfortunately, these numbers are rarely publicly available for private institutions like those on the SAI 25 Live, leading one to wonder how accurate these valuations are. From the SAI 25 Live valuation page:

“Valuing companies is a subjective exercise, one that is highly dependent on information. In theory, companies are worth the present value of future cash flows, but since no one knows exactly what future cash flows will be (or the perfect rate at which to discount them), theory and a dollar will get you a cup of coffee. An additional challenge of valuing private companies, as opposed to public ones, is that detailed financial information is often unavailable or outdated. And many private companies are often early in their growth cycles and therefore haven’t reached mature profit margins.

Ultimately, of course, private companies are worth what any stock or asset is worth – what someone will pay for them.”

Of course, here Blodget is correct twice. Private companies are certainly worth what people will pay for them. Also, theory and a dollar will get you a cup of coffee, which is exactly the value of this analysis. The SAI 25 Live takes into account implied valuations in private financings (a terrible absolute indicator, but of some value directionally given an existing valuation), financial performance (nonexistent for most of this list), market share and market size (doable), and growth rate (dependent on revenue numbers, which are rarely reported and so must be guessed) making this list a poor indicator of anything other than relative valuations (Facebook is worth more than Ning, who knew?), and even there it can only be used sparingly (company X being worth Y times that of company Z on this list is probably meaningless). In the words of Erick Schonfeld at TechCrunch:

“Putting a value on private companies is hard enough for insiders and venture capitalists who have full access to the company’s financial statements. When outsiders try to do it, even well-informed ones, it is nothing more than a guessing game. But it is nontheless perhaps one of Silicon Valley’s favorite parlor activities.

Some of these valuations have more merit than others. Some have none whatsoever. For instance, SAI gets at its $125 million valuation for Digg by ‘splitting the difference’ between a $200 million buyout rumor we reported and the $60-to-$8- million that Kara Swisher came up with. Splitting the difference between the two rumors is not exactly the height of financial analysis.”

Agreed. Some have even gone so far as to call it an attention-grabbing activity, like FakeSteve:

“To make it fresh and dynamic, they somehow yoked these made-up numbers to the NASDAQ so their made-up numbers change into new made-up numbers all day long. That way all these [employees] working for worthless companies will click on that list all day long…generating loads of stupid traffic for Alley Insider. And trust me, that’s the real point of this list. It’s a cheap ploy for ginning up traffic.”

Or for pulling financial information straight from the horse’s mouth. There are so many requests for data that could correct these valuations that it almost seems like a device for getting these companies to divulge their actual numbers straight to SAI. Regardless, it is difficult to accept a 25x revenue valuation for Facebook common stock, given that Google trades at between 10.5x and 15x revenue, which in itself is unusual. Also, Wikipedia, valued at $7 billion, is a nonprofit, meaning the assessment measures Wikipedia’s asset value if it were to change into a for-profit organization. This change would certainly affect its users, which in turn would affect the site’s operation, affecting the valuation.

Perhaps the best thing to take away from this is that it is indeed just an entertaining parlor game to perform these valuations. Serious investors should already be familiar with this.

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