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And Now a Facebook Rant from Mr. Lacy...

 This is a guest post by my husband Geoff Ellis. Add him on Facebook at your own risk! ;)

Maybe it's just me, but I am tired of people assuming I will add them on Facebook just because they press the "add as a friend" button.
Maybe it's because I am old and expect people to have some etiquette.
Maybe I don't understand that the online world doesn't need to have the same rules as the real world.

Imagine someone ringing your doorbell, you go to answer it, open the door, and that person comes into your house without saying a word to you. They sit down, look around, go through your stuff and still never interact with you. This is what happens on Facebook ALL THE TIME. If you are going to friend someone, send a note along with your request. If I don't know you and you want to be my friend, tell me who you are and why you want to be my friend. My Facebook is way more "my space" than MySpace was for me. It holds a lot more personal stuff and if I don't know you, why would I bring you into my house?

The same goes for old friends. I have recently received requests from people I haven't seen in 10+ years. They sent no note, and I accepted them back into my life. Once I did so, I sent a note back with the "how's it going, what are you up to?" spiel. Guess what? Out of 6 people, I heard back from one of them. That was 6 months ago and still no word from the other 5. It's just plain rude. What are they doing with my friendship? Letting it rot as is was before? Hanging out on my Facebook pages silently and enjoying my stuff without ever letting me know?

I talked to a 24 year old who says she never thought about sending an introduction note to people she doesn't know. Is it an age difference? Or is it just me? There have to be other people out there who are annoyed by this sidestep of the social contract. If you lack decorum, please don't try to be my online friend. I will leave you in the forever limbo of the more than 2 dozen friend requests that I have not accepted.

Guest Post: A Facebook Addict Gets Twitter Religion

This is a guest post by Eric Nam, of Boston College, who I met on the school's "TechTrek" to Silicon Valley a few weeks ago. We had a debate about Twitter just before Facebook changed their site to be more Twitter-like. I'd anticipated the changes would cause kids like Eric to find even less reason to start using Twitter. On the contrary, he's had quite a different experience. I found his thoughts interesting, and I thought you would too, so I asked him to write up a guest post for us. Enjoy!

Within the past two weeks, Twitter has successfully started a civil war of sorts within my closest group of friends. The argument: Twitter is pointless, a stalker’s paradise, and its services are already covered by Facebook. I completely understand this sentiment, as I was a cynic myself up until two weeks ago. However, within this short period of time, I have become a Twitter evangelist and a staunch believer in Twitter’s ability to fill a niche in the social networking world.

During a recent dinner with Sarah, my Boston College Tech Trek peers and I asked Sarah about her opinions on Twitter. Until this point, we were all skeptics, cynics and nonbelievers of the Twitter world. However, Ms. Lacy articulated the reasons as to why Twitter was so great, presented in her last Business Week column. Convinced, many of us joined the Twitter world as soon as we got back to our hotel.

Upon my entrance in to the Twitterverse, I was criticized by my friends who claimed that I had stalker tendencies by following @johncmayer, @gallaugher, @terrymoran @the_real_shaq and others, however I went ahead, unashamed and tweeted to my best ability. Since then, my number of “victims” has increased to 60 and includes a select group of friends that I care to keep up with, as well as my favorite websites and news sources such as @nprpolitics, @cnbctv, @theeconomist, @cnnbrk. What Twitter has done is capitalize on Facebook’s status update and transformed it into an incredible tool that keeps me connected with people and the stories that I am actually interested in.

As a deeply invested and long time Facebook user, I appreciate Facebook for providing me with embarrassing photos, easy ways to create events, and connections to my long lost friends. However, throughout my years of Facebook use, I have accumulated ‘friends’ who I am close with, but many more that I don’t care to keep up with, or are merely my acquaintances. 

Though Facebook’s newest platform attempts to preemptively negate Twitter’s allure, the real-time updates on my Facebook friends doesn’t draw me in. Honestly, I don’t care to be updated on what Billy from the 3rd grade is doing or how Susie wrote on Kimberly’s wall. Some may argue that I should “de-friend” them, but really, let’s think about how that’s perceived. Either 1. Sorry I don’t like you anymore 2. I don’t care about you anymore or 3. Who are you? Yeah, it’s not the greatest of feelings.

Furthermore, Facebook’s design has gotten out of control.

Happy Birthday Golden Goose- er Facebook!

UGC: Just a Loss Leader in the End?

Back in the late 1990s, dot coms were all about the land grab. The idea was the more eyeballs and shoppers you got- POOF!- the more valuable you were. Never mind, the advertising market wasn't quite there yet and you were selling bags of dog food at a loss. The common wisdom has been that this was irresponsible, and truth be told, none of these companies had any business being publicly traded. But, more than half of the companies started during this time, actually stayed in business-- incredibly high odds for startups. To many, that proves that the problem wasn't that too many companies were started and nor was it their unfounded business models. It was that too much money was wasted on each one, and that it was never a game the public markets should have been playing.

There was, of course, one very important benefit to that land grab and wasted millions in investment capital: All those free services and cheap bags of dog food did bring a ton of people online. And they stayed online, even as many of the companies that did survive did so by charging realistic prices and shipping if they were in ecommerce, or switching to premium services and subscription fees if they were in content or entertainment. In fact, throughout the post 2000s, nearly every Web startup pitching venture capitalists or reporters were all talking up their premium services and subscription fees. You can still see vestiges of it with The Wall Street Journal's stubborn resistance to giving away content for free and early Web 2.0 companies like LinkedIn that didn't wait for an ad market to develop, but rather charged fees for things like job posting and "InMail."

As the wet blanket of recession has settled around the Valley and startups have come under pressure to monetize what they've built, I've wondered when we'd see the same flight to subscriptions and fees. Instead we're starting to see something similar but with a Web 2.0 twist: The rejection of user generated content in favor of professional content that's more consistent, reliable and palatable to advertisers.

This is bold shift, as the whole Web 2.0 movement was predicated on user generated content and the engineer-centric idea that you could build an easy to use platform, everyday people would create content for free, and other everyday people would navigate it, consume it and push the very best up to the top. It was rooted in the conviction that you didn't need the kind of doomed content partnerships of the past between New York, Los Angeles and Silicon Valley, because Web 2.0 was democratizing media and entertainment and ultimately that platform was the future, not the content gatekeepers.

This was clearly the most pronounced on YouTube, where the viral sensations like the Evolution of the Dance and the Grape Lady (ow! ow! owwwwww!) became the lexicon of an entire generation and the myth sprung up that everyday stars of viral videos would become household names with their own movies and HBO shows. (They never did.)  Sure there were whispered claims that as much as 50% of YouTube's views were actually of copyrighted material. Still, the company never would have sold to Google for $1.65 billion without UGC.

In other words, user generated content was to Web 2.0 what free-bags-of-dog-food was to ecommerce.  But flash-forward to 2009, and there's still no clear way to monetize user generated content, either from the sites themselves or the would-be stars.

Guess what? The Web has evolved to the point where you can monetize professional content. And that's why you see most of the smarter members of the Web 2.0 elite doing the very content deals they would have rejected a year ago. First, there was YouTube's rumored deal with the William Morris Agency, and now Slide has teamed up with the Valley-addict Ashton Kutcher and his company Katalyst Media. Katalyst also launched its site The Blah Girls at TechCrunch50 and produced 24-hours-at-Sundance with Kevin Rose last month, to mixed reviews.

Under the deal, Slide's FunSpace application on Facebook will be the exclusive distributor for Katalyst's reality show about its own company, KatalystHQ. Cheetos will sponsor the show. (What's that? ACTUAL REVENUES!? Between Cheetos and BlahGirls' sponsor Vitamin Water, Ashton's poor fans are going to need gym memberships, stat.)

Liz Gannes over at NewTeeVee questioned the logic in limiting distribution to an application within a site, even if it is the highly popular FunSpace on the highly popular Facebook. That was my first question too. But, Ashton's approach to all things Silicon Valley is very hat-in-hand, you-guys-are-the-experts, teach-me-your-techy-ways. He wants to learn what works as much as he wants to make each particular project a raging success. I think that's smart. And Max, with his metrics-watching obsession, knows what works online.

I talked to Ashton and Max yesterday, and while they noted the shift from UGC to professional partnerships was real, both said "loss leader" was too harsh a term for User Generated Content. They were both careful to extol UGC's virtues. Max talked it up as an unparalleled way for sites to get a volume of cheap and frequently highly viral content, and Ashton said that professional content had learned a lot from more on-the-fly lifecasting and the interactivity of user generated video. Indeed, the content of KatalystHQ is little more than Ashton's receptionist shooting video of life around the office.

But the inconsistency and unpredictability makes UGC nearly impossible to monetize. Said Max, "It's a much easier ad sale to do product placement in professional video where advertisers can control how they want it to be. They don't really want to rely on thirty second clips of people slamming into trees."  So UGC is a tool for bringing in users and content, but not very monetizable. Hmm...Sounds like the very definition of a loss leader to me...

But I grant their point that the shift hardly means that the move to democratize content is over. It's very possible there is still a genius way to monetize UGC, we just haven't found it yet. Remember how long it took the industry to come up with paid search ads? Back when Google was founded, many VCs deemed it too late to an already mature market with no good business model. It's also very possible a huge star does arise from YouTube and actually does cross-over to traditional media. But just like in the post-March-2000-era, companies need to focus on where advertisers want to spend money now, versus trying to sell them on the future. The future, simply put, will still be there when the economic crisis is over.

But why should we believe ties between Hollywood and the Valley will finally bear all that much-promised fruit? Max pointed to nearly every broadcaster voluntarily making content available online, the surprising success of Hulu, and viewers increasingly choosing the Web as the place to consume even long-form content. "A year ago, I think (Slide's sassy head of business development) Keith (Rabois) would have spit in the face of anyone suggesting a content deal with us," Max said. "Now you can't argue against it." The wake up call for Ashton? Five years ago, if you made people chose to get rid of their TVs or computers, most of the ones he knows would have said computers. "Now, you ask the same question and hands down everyone would get rid of the TV. You don't need it anymore."

When I teased Ashton about his third splashy Valley press tour in just a few months, he added, "By the way, I'm not going away so people can brace themselves for that."

Is a deal with Twitter next?

Prediction: LinkedIn Engagement Metrics Will Soar in 2009

I did something this morning I haven't done in a long time: I spent an hour on LinkedIn.

Anyone who reads this blog, watches TechTicker, or has read my book knows I have long been very bullish on LinkedIn as a company, and occasionally the site has proven a God-send for tracking sources down. But in a world where Facebook and Twitter meet most of my connecting needs, the only uniquely powerful application for LinkedIn in my view is job hunting, and I haven't had to look for a job since I've been a member. So while I've played around with the Answers application and go to the site once a month or so to sort through invitations, I've never had much reason to spend a lot of time there.

So what changed today?

Death of Venture Capital, Part 825

A lot of stories in the press in the last few days that echo my past BusinessWeek columns about how this downturn is very different for the venture capital industry. Problems in short: The ten year index that the industry has held up since the Nasdaq crash is about to plummet. 1999 and early 2000 returns will fall off in a little more than a year, and more than 70% of VCs don't expect an exit window until 2010 at the earliest. Problem #2: Beleaguered institutions that invest in venture capital are increasingly trying to sell off their stakes. Worse: Some are considering flaking on capital calls altogether.

To those of you who say platitudes like: "Downturns are GREAT times for innovation!" yes, that's true, but you are missing the point. This isn't just the cause of a downturn. This is a structural change in the industry that needs to occur and has been building for nearly a decade. There is far too much money, tech is maturing, and clean tech isn't mature enough. Paul Kedrosky and I discussed yesterday on TechTicker:

But, beyond all this, I think there's also a mindset problem when it comes to venture capital. Investors and many entrepreneurs are no longer focused on building companies and taking real risk. Paul and I did another clip yesterday about Facebook, where he argued it doesn't make sense for Facebook to stay a stand alone company anymore because the ad markets are going to be locked up for 24 months.

I love P-Ked, but what the hell does a 24 month contraction have to do with building a company? Especially a company that's still private, growing like mad, has loads of money in the bank and is essentially break even? We've got to break ourselves from this quick-fix, quarter-to-quarter mentality of Wall Street-- and increasingly Silicon Valley-- if any next great tech companies are going to be formed. The very reason great companies are typically started during downturns is they're started by people who aren't obsessed with timing a market. They're started by real entrepreneurs.

Paul and I also debated what Facebook's "real" value is now, and I put real in quotes because startup valuations are always based on promise, team, and a lot of other intangibles that will hopefully lead to a great business, but don't reflect business fundamentals right now. Yes, Facebook still has to nail its business model, and if it doesn't it's valuation could fall by 90%. But I argue the downturn is a great time to do that, especially considering the amount of money Facebook has raised for cheap and revenue it already gets from its lucrative Microsoft ad contracts. Is it worth $15 billion? No but it never was, as I explain in the clip below. It's definitely worth somewhere in the low billions and definitely shouldn't sell this year in a panicked market where every big company has a weakened stock currency.

Why Evan Made a Smart Move

Om and I seem to be of the same mind. Biggest gamble on this deal: What the currency of Facebook stock is worth. That, and I take Evan at his word that he wants to keep building Twitter. After all, it's not all about money, particularly for people who've already made money. Twitter is a one of the biggest ideas in Web 2.0 and the team knows that doesn't just come around because you decide, "Ok we sold that one, what next?"

I think they made the right call. More in my Dirt segment on TechTicker today below: