Monthly Archives: April 2009

Pro-Profit for Antiviral Drugs: A critique of NPR’s goofy coverage on flu vaccines

Yesterday I found myself listening to NPR’s Morning Edition and its coverage of swine flu.  This story, Antiviral Drugs Discounted For Government : NPR, discussed the deep discounts governments negotiate and the resulting shrunk revenue and profit streams that big makers Roche and GlaxoSmithKline make on these drugs. 

My sense of NPR’s tone was decidedly anti-profit, and I find this worrying.  In addition to a tone that discussed how drug makers were not on track to reap a “windfall” from this, the following quote struck me as emblematic of NPR’s anti-profit tone:

To be sure… other instituations will put in more orders.  And more orders, means more profits.

We should not be anti-profit on flu vaccines, we should be pro-profit.  

First off, the amount of money at stake is very small—for something so important, minimizing a pandemic is something I’m happy to see someone profit from.  According to NPR, Roche made $120M in revenue on its key flu fighting drugs, roughly 50% less than the New York Yankees’ 2009 Payroll.   I’d far rather see Roche making more on flu vaccines than the Yankees.  I’d have no problem with that. 

Second, more profit would mean more investment in the distribution, safety, and efficacy of these drugs.  I don’t buy that this is all optimized.  According to some experts cited in the NPR piece, they’d advocate not taking the potential swine flu vaccine this fall as its won’t be proven safe, a la the 1976 vaccine.  Also, the logistical challenges to getting these drugs built and distributed are quite large.  Though I can’t point to how the safety and logistical problems would be fixed with greater investment, I’m confident that with greater profits in the segment, greater investment would be in place, leading to better solutions here.

The capitalist system has taken a body blow over the last year.  That said, we need to remember that we shouldn’t cut off our nose to spite our face.  It is dangerous to put an interest in profit minimization ahead of a drive to maximizing public health.  I fear that if we continue demonizing profit-making entities,  and we continue to push organizations to minimize their profit motives, that we’ll put ourselves at more risk here and elsewhere.

 

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MTV Wheezing Into Social Media Age

According to Tech Crunch,  “MTV has announced plans to a launch a show that taps into the power of social media, tightly integrating with Facebook and Twitter to maximize fan interaction.”  Wow, does this come across as the old media guys trying to wheeze their way into the party.  It’s not so much the strategy of MTV embracing the reality of their user base–they realize their users are using social media, makes sense that they’d use it.  Still, when to read about this on Tech Crunch as a show planning to use social media as a channel, versus just doing it and attracting users, the whole thing just sounds so put on.

I’d contrast it with the very powerful, useful manner in which CNN used Fbk and more recently Twitter in the election, inauguration and more recently with the swine flu and even with Larry King.  CNN has done a fantastic job, I’d say.  They’ve continued to drive the content that’s their bread and butter, first and foremost.  They’ve augmented it nicely with social media.  This is the way for ‘old media’ to integrate the newest media technologies.  The MTV approach that starts by saying we’ll have a Twit/FBK integration into some show, well, I don’t know, sounds pretty weak to me.  We’ll see.  Wheeze.

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NFL Draft Day: The Gold Standard in Buzz Building

Radio City Music Hall
Image via Wikipedia

Today was “day 1” for the NFL draft–the first 32 college players are selected by NFL teams at an event at Radio City Music Hall in NYC.   No passes are thrown, no game played.  Many of these players will ride the pine this fall and winter during the 2009-10 NFL season.  Another set will get hurt or won’t make the grade, prior to making any material impact on their teams.  And some will in fact break-through, but we won’t know this for years.

In reality, Draft Day is a professional, grown-up version of children choosing kick-ball teams on playgrounds. But the execution is amazing.  There’s lots of money at stake: 1st round players will be under contract to earn more than $400M in a few months.  There’s intrigue–teams trading or not trading, moves up, moves down.  And it’s easy to follow along at home, with things like Mock Drafts, and 24/7 coverage on SportsCenter.

All in all, the NFL has shown why it has grown to be the top dog sports business in the USA.  As a business person and marketing person, I’ve got to take my hats off to the NFL.

Given all this, I find it useful to reflect on the amazing, masterful job the NFL does in driving excitement and interest in their core fan base.  It is hard to imagine any other business or franchise putting together the same level of excitement or interest based on something less immediate.  Imagine early national party presidential candidate debates times about 10.

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Does MySpace Really Need a Chief Revenue Officer?

MySpace pulled trigger on Owen Van Natta to run MySpace.  

While I don’t know Mr. Van Natta, my quick take reaction and question centers on whether a former Chief Revenue Officer of Facebook is really going to fix what’s ailing MySpace.  IOW, is the revenue problem really the issue that’s highest priority to MySpace?  My take—absolutely not. 

MySpace’s growth has flat-lined, dead in the water relative to Facebook, to say nothing of Twitter.  The site built for teens as the cool hang-out and spot for media now looks bloated, slow and niched. 

So my question is, how’s a business guy really going to fix that?  What ails MySpace, IMHO, is far more product related – it’s an SNS that appeals to a younger demographic, and isn’t tracking to pull in older users in the same way that FBK and TWIT are.  This isn’t a business problem, it’s a product problem.

Scarier still, I’ve read elsewhere the argument that MySpace needs to be the SNS for Music.  Perhaps this is why you bring in a Revenue Officer.  My first take is that this is a dumb idea—take a MySpace, a flat lining SNS and combine it with a dying industry.  Good luck there!  Maybe as an encore Mr. Van Natta could combine AIG and GM.  🙂

It’s not at all obvious what the next steps are for MySpace, and how it might speak to a broader set of users.  Their product doesn’t.  The business strategy of pulling in media like music doesn’t resonate with me at all to a level of scale that’d be needed to make an impact.  Sounds like a mess.  My bet would be on MySpace getting sold in next 2 years at >50% markdown to acquisition price. 

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WSGR’s Yokum Taku – the Valley’s Best Start-up Lawyer?

DISCLAIMER: My company, Moonshoot is a client of WSGR and Yokum Taku.  While I think this is a fair commentary, I’m absolutely not above writing a puff piece as a way to try and build kharma / discounts in the future (I am an entrepreneur after all).  So reader beware; you’ve been warned. 🙂

About this post: This is partly a post on WSGR and Yokum Taku.  As title suggests, I’ve been happy with them.  Yokum’s work in the industry in general and for us in particular has been great.  Its also my brief lessons learned on choosing and working with attorneys as a startup founder. 

This week, Wilson Sonsini Goodrich & Rosati’s Yokum Taku released the Automated Term Sheet Generator.  It’s like Quicken for Term Sheets.  This is a great thing for founding teams and entrepreneurs.  It enables them to raise initial capital with a minimum of legal fees and hassle, while still promising to ensure decent hygiene for when the firm gets to a point of needing full-time, professional representation.  If you’re just getting started, this is a great resource.   It’s yet another resource Yokum’s help put together to support entrepreneurs and to drive WSGR’s reputation. 

Yokum is also the author of Startupcompanylawyer.com, a super valuable resource for entrepreneurs who have a need to ‘go deep’ on provisions associated with financings.  I’ve done a few, and I’ve found Yokum’s articles here super in helping me get my head wrapped around complex topics.  If you’re raising money and have questions, before you call a lawyer, go to his site, read and digest. 

Yokum is also our attorney, and I’ve worked with Yokum for over a year as a founder.  I’d give him and his team at WSGR high marks.   I have 3 key reasons. 

WSGR actually keeps costs down by providing rockstar Associates.  Many startup founders whom I asked for a recommendation argued against WSGR, on the grounds that they were too expensive.   WSGR’s rates at an hourly level are at the high end, but this is only really half the story. 

The legal bill you get at the end of a month is the weighted average of the following, in general:

Legal Bill = ((Partner (Hours & Rate)) + (Associate (Hours * Rate)) + (Paralegal (Hours * Rate))

Where Rate (Partner > Associate > Paralegal)

Thus to minimize Legal Bill, you need a few things:

  • Minimize total time, of course
  • Of time you do spend, maximize time that Paralegal and Associate are working

If you think about the total bill in this way, you’ll find then that the real key in managing legal bills is this: find an awesome Associate and Paralegal.  If you can do this through a great firm, then my strong belief is that you’ll be able to manage the cost. 

Our team beyond Yokum are rock stars—our Associate Jesse Chew has my complete trust, and the paralegal Andrew Wang has also been super efficient and competent. 

So benefit to me is that I’ve got Yokum when I need heavy hitting.  At same time, our associate and paralegal can handle the vast amount of legal billing.  I’d estimate that vast, vast majority of billable hours has not needed Yokum.  This saves us cash, while giving me confidence that if the chips are down, Yokum’s available. 

Yokum calls it like he sees it, and helps figure out what to do.  Pay advisors to advise; pay cheerleaders to cheer.  I’ve met several attorneys who make me feel great everytime I meet them.  I come out of meetings feeling like I walk on water, like Venture Hacks might start quoting me. 🙂

Having worked in the industry a while though, cheery lawyers spook me a bit–a little like the feeling I’d get if a doctor came in, looked at an X-Ray, and said “uh-oh”.  I feel much more comfortable with an attorney who says, basically “Look, I’ve done this a few hundred times.  You are nuts to think that [insert idea here] is going to happen.  Here’s my strong belief as to what will likely happen.  Here’s what I’d suggest we do.”  This is much more Yokum’s approach, and for me, it’s what I prefer.  May not be for everyone, I get that. 

Responds to everything within the business day.   Though I’ve never heard it stated, Yokum and WSGR appear to have a policy that ensures they get back to you same day, no matter what time of day.   I’ve got a very early stage company, we’re no Google (yet).  Still, as a client, I’m treated well.  This predictability is very nice to have.  They’re the only service provider I’ve worked with about whom I can claim this.  It stands out. 

 

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Be in the Review—MKTG Lessons from Windows Mobile

Yesterday was a tough day for Microsoft, and not because of its earnings announcement, which Silicon Alley Insider rightly calls its first revenue drop in memory “horrible, considering the circumstances.” 

I think it was a much harder day, because of two prominent articles talking about the relative mobile ad share and Application Development traction of the Iphone relative to Microsoft Windows Mobile.  The lesson from this is useful to marketers everywhere—namely, get in the review!

First, Erick Schoenfeld’s article Android Catches Up To Palm In Mobile Ad Market Share. IPhone Still Blows It Away compares ad share on mobile OSs, with the Apple IPhone garnering 50%, RIM at 12%, MSFT‘s WM at 11%.  #3 in the market, never a place MSFT wants to be.  It is especially tough that the story is about Android playing catch-up to the IPhone.  Microsoft’s Windows Mobile platform is an also-ran, not even mentioned. 

Second, in MG Siegler‘s article “Zero Remains a Popular App Number for Non-Iphone Owners” analyzes the user traction of apps on IPhones versus non-IPhone platforms.  The classic “Leader v. Everyone Else” story.  Here the only Microsoft comparable is the Motorola Smartphone Owners.  What’s very tough here is that  Windows Mobile isn’t even called out, it’s as if Motorola is the only platform not Apple, RIM or Android.  Yikes. 

I love Microsoft, loved working there.  I remain an unabashed fan, and those who count it out are nuts IMHO.  Great people are still there.  Great businesses are still there–Windows 7 should be a super release.  XBOX and XBOX live are coming along, as businesses .  The Server and Tools business is a powerhouse, despite current market conditions.   Its enterprise business is thriving.  MSFT is and will remain powerhouse.

In mobile– a vitally important area of growth and focus in this industry and to MSFT–to not even be mentioned is a real problem.  This is particularly true, as Windows Mobile is now nearing release 7.  With a v7, having traction as a dev / app platform is vital. 

The silver lining is that the mobile app dev platform is still *very* early.   MSFT has come back before, and it can again.  Still, it’ll be important that the WM marketing guys are extremely aggressive in getting the word out and getting into the reviews. 

 

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Quick Thoughts on Oprah Effect on Twitter

This quote from Hitwise Intelligence – Heather Hopkins – US: Oprah Effect on Twitter caught my eye:

There’s been much debate among loyal Twitter users about whether this spells the end for Twitter’s coolness, as soccer moms sign up in droves.

Total, absolutely, 100%, USDA Prime Grade BUNK.  Wanna know how I know? 

Do this thought experiment…  try it at home. 

Step 1: Replace “Twitter” in above quote with the word “telephone,” “email,” “the Internet,” “Facebook.” 

Step 2: Now put your mind’s eye into the following year for each communication technology.

Email: 1994

Internet: 2000

Facebook: 2007

I may have the years off by a year or two, but the net/net is that anyone who thinks that these technologies would lose something when they became “too mainstream,” fail to understand the power of networks. 

All of these technologies became vastly more cool after they became mainstream.   They became more cool precisely because the broader usage spurred broader innovation and investment.  Sure, you as an early adopter and a technical elitist now have to contend with your mom asking you questions about Tweeting, but in return you get a broader, more robust ecosystem. 

Still don’t buy it: invert the argument.  Raise your hand if you’d like to go back to dial-up internet and AltaVista as the leader in Search! 

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