In our blog “What’s A Unit of Trust Worth These Days’ we said a new generation of technology and services, for instance electronic medical records, will find it difficult to gain consumer traction until there is some mechanism that accounts for individual authentication , what we called the “trust thing”. How do we know that people (or companies) on the internet are who or what they purport to be? How do you know that the doctor giving you online medical advice is really a qualified doctor? How do you know that the eBay vendor will really send you the widget you purchased? This is equally the problem in the offline world, particularly the finance industry where, by definition, the fractional reserve banking system is based on trust. But at least you can get some comfort by walking into a brick-n-mortar bank, and yelling at the manager, or filing a lawsuit on a tangible entity. Not so with online activity.
Yahoo! Inc (NasdaqGS:YHOO), provides internet services to users, advertisers, publishers and developers. The Company has been struggling to hold its market share among its top competitors (Google, Microsoft), especially in the search business and losing share to Microsoft’s BING while competing with young innovative companies in their core business areas (See more details in FOCUS’ Internet and Digital Information Quarterly Insights Report). (more…)
Why Would Investment Bankers Embrace Social Media During a Downturn?
I was thrilled to be asked by Bob London, a friend of 2i, to offer my perspective on the effect of the recession on my investment banking practice. You can read the article in Bob’s Executive Perspectives Blog or below.
Internet-Reliant Sector M&A Activity and Insights
Intangible Insights analyzes the Internet industry by functional area and by vertical. The functional areas, which we believe represent the vast majority, if not all, Internet-Reliant companies, are categorized using standard industry definitions for Content & Media, Applications, Merchandising, and Offline Service (not included in the index). We try to include pure play companies for each functional category in the 2i Stock Index, but some companies cross functional boundaries (e.g. Amazon, which generates significant merchandising revenue through the sale of third-party products but also has viable and growing revenue from its Amazon Web Services, an application function.) We include these firms because of their industry leading status.
Overall M&A Activity
Clearly M&A transactions have slowed substantially during the last two quarters, with Q1-2009 being the slowest quarter for deal closings over the past 12 quarters. First quarter 2009 M&A activity is off 39% when compared to the recent peak of Q2 2007. However, if we stop and recognize that M&A transactions were getting completed at a historically blistering rate in 2007, we gain a bit of perspective. In fact, with all of the doom and gloom and economic meltdown, it is astonishing to see that M&A activity in Q1-2009 was off only 16% when compared to a more moderate time of M&A in Q2&3 2006. We fully expect that Q2-2009 also will be slow, but we’re starting to see signs that the last two quarters of 2009 could possibly be more active than the first two. With a 6-8 month cycle for typical transactions getting completed, look to the first two quarters of 2010 to be back at a pace more in line with historical averages.
At 2i we read a wide range of financial resources, from the standard print media to the blogosphere to subscription databases. Depending on what you read and who you follow, there seems to be some consensus that the general economy may have bottomed, and although it may be a long tunnel, there could be some light at the end of it in Q4-2009 and Q1-2010. The Dow Jones Industrial Average, a leading economic indicator, is only down 3.5% since the beginning of the year. The unemployment rate, a lagging indicator, continues to rise to 8.9% currently. While the broad economy is a fundamental driver of the internet industry, we like to maintain our focus on the Internet-Reliant industry.
We’re posting four blogs over the next few days on the Q-1 State of the Internet Industry. Once all the blogs are posted, we’ll put them all into a PDF document and include it on our Reports page.
You don’t have to be a techie to understand that Social Media is all the rage today. Social Media is not exactly brand new, but it is still grappling with issues of value creation, business models, communication platforms, etc. And while companies and “experts” are trying to sort these issues out, it is pretty clear that a handful of companies like Facebook, MySpace, Linked-In, Twitter and a few others have established a dominant and almost ubiquitous position in the arenas they serve.
But what about niche segments like healthcare? Are there still opportunities for companies out there? You bet. This week Intangible Insights brings to you a podcast of Joel Selzer, Co-Founder and CEO of Ozmosis, a social network that enables verified, U.S. licensed physicians to exchange medical knowledge. Joel shares his thoughts on some of our standard topics at 2i, including business models, monetization, valuation, and intangible attributes, such as the trust factor. Even during the idea stage of Ozmosis, Joel and his team were well aware how important “building trust” would be to their community and brand. Ozmosis’s tagline is “The Physician’s Trusted Network”. (See our related blog “A Unit of Trust is Worth How Much These Days?”).
You can listen to the podcast in its entirety or in four parts that track the summary below. The podcast is on the next tab over and you can also download and listen to the podcast here.
Following are a few highlights:
We are excited to showcase our first podcast with Rajesh Rai, a co-Founder and Partner at New Markets Venture Partners (NMVP), an early stage venture capital firm in the mid-Atlantic region. Raj had many interesting things to say and we encourage you to listen to the full interview. A few highlights follow:
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