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What does success look like?

July 1, 2011

Despite the reality of unemployment, underemployment, the wars and battles overseas, should we look on the recent Internet IPOs, Zynga, LinkedIn, Pandora and Yandex , as a positive trend? My concern is déjà vu to 2000 before the bubble burst, IPOs may not be an indicator of much significance to the economy. For example, while Google and Facebook engage in corporate MMA, Pandora came out the gate strong and seems to be fading yet emerging but potential revenue stream issues are cropping up regarding publishers like EMI v. the performance rights societies.

So how do or should these businesses really measure success?

Comparing Facebook to LinkedIn to Pandora, who is the strongest and why? Check out nasdaq.com and Bloomberg.com.

Why and how has the financial industry measured success for these companies, for their valuation?

Speaking about IPOs and valuation, let’s discuss various entertainment delivery channels. Hulu was speculated to come out the gate at $2 Billion valuation.

What does that mean for Comcast or Dish or Verizon or AT&T?

If Hulu is riding over these ISPs and competing with them (Comcast-NBC had to relinquish some control re Hulu read Bloomberg) and Netflix, how does Hulu measures their success?

What potentially could threaten Hulu’s valuation and growth? Why?

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7 Comments leave one →
  1. Carmilla permalink
    July 3, 2011 1:30 pm

    At Kaiser Permanente Clinical Technology Finance we measure our business my dashboard and profit and loss monthly statement. The dashboard provides us the capability to measure how we are doing with service calls for repairs on medical equipment, financial, and how many parts we purchase for the repair of equipment. The dashboard really helps top management with what levers that they need to pull to either reduce or increase the performance of the engineers. In turn since Kaiser is such a large health organization they need to have a dashboard that will help them gauge where they are doing well like patient care and membership.

    We also use a monthly profit and loss in Finance. The profit and loss provide use to see a how our financials are doing on a monthly basis. We as Finance need to report back to management on how we are operating in expenses according to the budget.

    The dashboard and profit and loss is a form of measurement that I have provided management and seems to be working well for Kaiser.

    Comparing Facebook , LinkedIn and Pandora it looks like LinkedIn is doing better that them all. LinkedIn current stock price is trading at 94.54 USD and Pandora is at $20.04 USD. Facebook isn’t a public company until 2012 per the article that I read on Inc.com until 2012 but I believe that they are doing very well with the Zynga games and that Facebook is all over the world and has millions of people logged every day.

    Financial industry measures their success by calculating their profit. In addition, after deducting total costs from the total revenue, businesses get a better picture of the profit they earn in their endeavors. Whether measured monthly, quarterly or annually, calculating profits helps businesses measure financial success.

    I believe this is great for Hulu they have grown tremendously over the years and deserves to be competing with the large organizations like Comcast, Dish, Verizon and AT&T. Hulu will be right up in the running with them and they will have to rethink how they are going to keep their customers from moving over to Hulu. In addition Hulu competing with Netflix business is going to be great because I think Netflix really isn’t all that great and Hulu will have movies that have been released sooner to offer their customers.

    What could threaten Hulu valuation and growth is if they have lower than expected secular earnings which could hurt their growth in the process.

  2. Carmilla permalink
    July 3, 2011 1:42 pm

    At Kaiser Permanente Clinical Technology Finance we measure our business my dashboard and profit and loss monthly statement. The dashboard provides us the capability to measure how we are doing with service calls for repairs on medical equipment, financial, and how many parts we purchase for the repair of equipment. The dashboard really helps top management with what levers that they need to pull to either reduce or increase the performance of the engineers. In turn since Kaiser is such a large health organization they need to have a dashboard that will help them gauge where they are doing well like patient care and membership.

    We also use a monthly profit and loss in Finance. The profit and loss provide use to see a how our financials are doing on a monthly basis. We as Finance need to report back to management on how we are operating in expenses according to the budget.
    The dashboard and profit and loss is a form of measurement that I have provided management and seems to be working well for Kaiser.

    Comparing Facebook , LinkedIn and Pandora it looks like LinkedIn is doing better that them all. LinkedIn current stock price is trading at 94.54 USD and Pandora is at $20.04 USD. Facebook isn’t a public company until 2012 per the article that I read on Inc.com until 2012 but I believe that they are doing very well with the Zynga games and that Facebook is all over the world and has millions of people logged every day.

    Financial industry measures their success by calculating their profit. In addition, after deducting total costs from the total revenue, businesses get a better picture of the profit they earn in their endeavors. Whether measured monthly, quarterly or annually, calculating profits helps businesses measure financial success.

    I believe this is great for Hulu they have grown tremendously over the years and deserves to be competing with the large organizations like Comcast, Dish, Verizon and AT&T. Hulu will be right up in the running with them and they will have to rethink how they are going to keep their customers from moving over to Hulu. In addition Hulu competing with Netflix business is going to be great because I think Netflix really isn’t all that great and Hulu will have movies that have been released sooner to offer their customers.

    What could threaten Hulu valuation and growth is if they have lower than expected secular earnings which could hurt their growth in the process.

  3. mbarnum permalink
    July 4, 2011 9:25 pm

    Although Facebook has not yet offered publicly traded shares, it is still probably stronger than LinkedIn or Pandora. According to the Wall Street Journal, Pandora’s business model makes it almost impossible to be profitable. Ideally, success would be measured in the long term, but many investors are impatient and want to see profit sooner rather than later. LinkedIn is still in its infancy in some ways. Many people do not see the purpose or benefit to LinkedIn as compared with Facebook. Some people see LinkedIn as a cross between Facebook and Monster.com, but with fewer subscribers. According to Facebook, they have over 500 million active users, a number that grows daily. LinkedIn has 100 million registered members, but far fewer actually use LinkedIn on a regular basis.

    The valuation seems arbitrary, given the fact that at LinkedIn’s current valuation of roughly $10 billion, they are trading at roughly 41 times their 2010 net revenue (WSJ, May 19, 2011). It is this sort of valuation that leads to the debate of whether we are looking at tech bubble 2.0, or if there is real value in these companies. Since many companies do not earn any profit for several years, value is based on potential earnings. Again, somewhat arbitrary.

    Hulu is likely to be purchased by Google or Yahoo, or another company with expertise in distributing digital entertainment. Hulu measures its success by subscribers and revenue, and they use Netflix as a benchmark. Netflix is so much larger and has a broader customer base as compared to Hulu, which makes Netflix an obvious threat to Hulu’s valuation and success. While Hulu’s paid subscribers can watch television shows online, Netflix offers online viewing in addition to movie dvd’s by mail. Hulu might have to partner with a larger media company in order to compete.

  4. Jyoti Lalwani permalink
    July 6, 2011 12:00 pm

    Figures for unemployment and underemployment are very generic in nature as they represent a bigger picture of the economy. A particular sector may or may not share the same figures and trends. Software / Internet industry is experiencing a substantial growth and companies are finding it a right time to come up with IPOs, largely due to the current valuations. Unlike bubble of 2000, this time companies have strong roots with desirable products and services.

    Apart from financial data, Social Networking and Internet Industry has additional standards to measure the success of a company like total number of registered users and average time spent on the site. Valuation of these sites largely depends on the user base because it is considered as a market for targeted advertising.
    Facebook is standing tall among these companies with more than 500 million active users. As of March 2011, twitter had 200 million users followed by linkedin with 100 million active users. Alexa rank also portrays facebook as undisputed winner with rank 2. Twitter has rank 9 and linkedin has rank 16.

    Pandora, Hulu, Zynga, youtube and Netflix are already big names in online entertainment Industry. These new mediums will definitely take away share of advertising and marketing budget of companies from traditional entertainment sources like cable. AT&T and Verizon are facing strategy shift and providing free / paid “On demand” shows and movies to stay competitive. Hulu is already in a sweet spot with current valuation of $2 billion. For long term success, company need to address few fundamental issues like long term streaming rights, addition of subscription fee and deviation from ad supported model.

    Groupon and livingsocial has added another dimension to the industry. Facebook and google are already in the game to capture this market. New Ideas, services and products are fueling the growth and it is interesting to watch the trend.

  5. Lorena permalink
    July 6, 2011 6:33 pm

    I believe that despite the reality of unemployment, underemployment, the wars and battles overseas, the recent Internet IPO’s, Zynga, LinkedIn, Pandora and Yandex, can be in fact perceived as a positive trend. I take this position because although I do agree with the position that IPO’s may not be an indicator of much significance to the economy they do demonstrate that some sectors within certain industries are achieving phenomenal success, and that is a testament to at least some growth taking place in our struggling economy. The fact that some companies like Pandora come out strong and later experience problems, which later contribute to dwindling success should come to no surprise to us. It is a well know fact that approximately 50% of businesses fail their first year. In addition, according to an article entitled, “How Many New Businesses Fail in the First Year” located on ehow.com this number has been held to increase dramatically in the first five years of running a business, when the number is claimed to rise as high as 90 to 95 percent. Couple these grim facts with the ever evolving economy that at present seems to revolve around constantly changing technology, specifically social media platforms and a positive economic outlook is not what should be expected.

    Most businesses tend to measure success from a financial standpoint. After all the definition of a business is an organization engaged in the trade of goods, services, or both to consumers, in which most of them are privately owned and administered to earn profit to increase the wealth of their owners. Therefore, it should be of no surprise that financial industries measure success by looking at a business’s profits. However, aside from profit there are three other areas that the success of a business should use to measure its success. The first is a growing customer base. A growing customer base means that the business is successfully capturing its target market. Customer satisfaction should also be considered. If your customer’s needs are being met your guaranteed repeat service. Third, Employee satisfaction, if your employees feel good about their job they will continuously work hard for the business helping ensure its long term success.

    There is no doubt that a 2 Billion valuation for Hulu means they have become a powerful competitor in the telecommunications industry. So what does this mean for Comcast, Dish, Verizon, or AT&T – well there is a strong probably they are going to lose some of the market share and therefore revenues. Hulu has become competitive for a few reasons three of which are the following: 1) leader when it comes to recent and ongoing TV shows – reality TV has exploded in popularity in the recent years 2) movies that can reach their customers sooner than Netflix’s 3) Hulu is absolutely free as long as you’re content to sit at your computer for viewing and willing to put up with a few brief commercial interruptions – Hulu Plus is available for a reasonable price in comparison to Netflix’s. I believe that Hulu can measure its success by profits of course, but more importantly by its growing customer base. In today’s fiercely competitive economy is imperative that a company not obtain a portion of the market share but retain it and continue to grow it. Customers are essential to a company because they are responsible for driving economic growth.

    Both lower than expected profits as well as competitive prices from competitors for equal or superior service(s) can threaten Hulu’s valuation and growth. Lower than expected profits can create hesitation on behalf of investors, who are seeking to maximize their investment. In addition, competitive prices mean some customers will think twice before signing up for a lesser known service(s).

  6. Pankaj Munjal permalink
    July 10, 2011 2:42 pm

    The nation’s job market slowed and Unemployment rose to 9.2 percent according to the Fresnobee.com. However, these numbers are misleading. Unemployment at this point is worse than what gets reported because there are so many discouraged workers who do not even qualify for benefits and are unaccounted for in the big picture. I believe that the wars are all irrelevant with no looming threat at this point. The current economic situation should force the US to pull out of these war zones which have no more credibility since we were misled to begin with; it has become wasteful spending. Looming debt crisis and international instability are definitely a concern far greater than it has ever been.
    The recent Internet IPOs, Zynga, LinkedIn, Pandora and Yandex could be a positive trend as far as technological innovation goes, but, it is not enough to move a country’s economy forward at this point. Silicon Valley will always be the innovative capital and hub of all future developments in IT. And, with people being unemployed, more people are turning to the Internet and there is more free sites offering cheap entertainment. Sites like “hulu.com” are great since they offer free TV show episodes and movies. Entertainment is getting cheaper comparatively since movies and online music is easily accessible. Google has already launched its Facebook version of social networking. Despite the challenges, I think that the past has taught us great lessons. We have survived any major crisis and though outsourcing is preferred to creating jobs here in the US, people have been able to receive extended unemployment benefits. I think it is time to redo the taxation system in this country, so, more businesses can stay here and keep jobs in shore instead of going abroad.

  7. Jessica Newberry permalink
    July 22, 2011 5:10 pm

    Currently the economy is not showing signs of improvement because layoffs are still happening. Business should measure success by having a low number of layoffs and making a profit at the same time. A business who has to lay off massive amounts of people just to survive is not a successful one.

    Facebook’s popularity has grown tremendously among the older crowd because some of its popular feature such as social networking and the ability to find long lost friends. LinkedIn is a networking site based on making business contacts and finding jobs. Also with the low popularity of Napster due to its reputation of stealing music then needing to charge its customers after the scandal, Pandora has become quite popular because it is free and accessible through the internet.

    Facebook is worth 100 Billion.
    LinkedIn is worth 9 Billion
    Pandora is worth 2.6 Billion

    In today’s market, the value of a website is measured by the number of “hits” and members it has. Advertisers pay to be advertised on the sites where they will be exposed to the most number of people.

    Hulu is free television online that can be viewed on notebooks, I pods, and phones; but it has yet to replace the major cable and dish companies. There is a status involved in buying the biggest and best high definition television; therefore, companies such as Comcast, and Dish network are needed to power the big televisions.

    The threat to Hulu is another company coming up with a better way of unifying all of the networks that works along with the television along with the Apple’s “I” system.

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