With social networks being all the craze lately in our web 2.0 boom or bubble depending on which side of the fence you stand one has to wonder what plans the top social networks have to bring their revenue in line with user growth as there is only so much VC money out there that anyone of those guys can get.

In the next 24 months we should see alot of cleanup happening on the web as companies either die or consolidate their efforts to generate revenue and look at either becoming profitable or breaking even , especially VC backed companies as the VC crowd don’t do 10 or 20 year plans.

Google Adsense is definitely not a business model, as that will not generate the revenue you need to keep pace with high growth.

Alot of companies will need to seriously go to the drawing board and come up with some really clever ways to make their apps profitable. I think it will really be hard for the feature apps that only focus on one thing.

Seeing that I am in startup stealth mode I will as well need to be thinking around the same plan for generating constant revenue.

I was just reading an interesting article on Forbes about the best paid tech CEO’s and to no surprise Larry Ellison ,Chairman of Oracle is the best paid.

Click here to read more

After Microsoft pulled back the offer Yahoo got a trashing in the markets and seems to be on a losing streak. I see Yahoo retreating back to around its previous price before Microsoft made the offer. I think at this point the share price should be the last thing Yahoo should worry about, as it has bigger problems on its hands like increasing revenue and search market share.

 Check out the share price below.

YAHOO INC                                   

(NasdaqGS: YHOO)

Last Trade:	24.26
Trade Time:	3:57PM ET
Change:	4.41 (15.38%)
Prev Close:	28.67
Open:	23.02
Bid:	24.27 x 28000
Ask:	24.28 x 29000

Seeing that planet earth is curently going into recession and I am not talking about the USA here, but all countries are expierencing some sort of issues and no fiscal or monetary policy will be of any assistance at the moment. What we need is to start creating jobs and opportunities in the global market place.

What better way to do it then to utilise the internet. But how do you ask with a slowdown in most economies people don’t have money to spend. Well I think this possibly the best time to start any type of web business as with the right product you can still make good cash.

 Lets look at what people need to still do in order to keep an economy going.

1. Travel

2. Food

3. Accomodation

4. Communicate

The above is the basics we need in todays modern age. I would like comments and ideas on how we can take these basic concepts and turn them into web businesses. Size is not the issue here, but sustainability is.

I will be breaking each of the above in the days to come.

It would seem that after Yahoo set the bar higher Microsoft is looking at going at a more aggressive strategy to aquire Yahoo. I think for Microsoft it is more a case of catching up in the web world and Yahoo is the ideal way to do that, even though it is an expensive way to do so.

The aggressive way is what Microsoft is used to so they could probably work though the larger investors to get the approval they need. Unfortunately this makes Jerry Yangs job all the more difficult as he hold about $1 billion of stock and he would have to work hard to convince fellow shareholders that Yahoo holds more value as a seperate entity then being part of Microsoft.

If I was Yang I would’nt sell as Yahoo holds alot of untapped value which can be seen if they position themselves in the consumer areas that always grows despite what the markets say.

Heres a thought - What are the basics for consumers

Food

Travel

Sport

Housing

Money

Entertainment

So lets take each one of these and break them down into more focused areas and develop applications focused around them. Use the consumer to build the applications, see what they want and how they want it. Focus groups of radom individuals would be a great start. Go back to the basics and work from there.

The company also needs to generating more profits in order to boost that flagging share price which needs a kick. How would we do that ? Their new ad system is good but they need to look beyond that. Mobile applications is going to bring a new wave of opportunities. I think Yahoo should really put significant effort in this but focus on emerging economies where there is huge growth potential.

An example of this would be South African based mobile provider MTN which took a risky strategy of going into Nigeria. This proved to be very profitable for the company and propelled them throughout Africa and the Middle East.

Yahoo needs to start taking more risks and become more agile if they want to combat a takeover.

The Yahoo AOL strategy is not going to be any better for them. In the long run Yahoo as an entity on its own will work better for itself.

As everyone knows cash is king and during times of recession cash becomes king ,queen and the whole army. Most businesses usually keep reserves for just this type of period ,but what how would a startup do this as it does not have the cash reserves in place as yet and needs a constant flow of cash.

The most obvious would be to raise as much as possible and hope that you don’t crash and burn before the recession ends. Even though the advertising business is growing in the web world it is also becoming more tricky to make huge amounts of cash without being clever in how you present the advert to your customer base.

Many of the current hot web 2.0 startups are raising cash. I have taken this from venturebeat.com , you can read the rest of the article there.

Take widget-maker Slide, for example. The company hired well-connected investment bank Allen & Co. in December and rushed to raise $50 million at a $550 million valuation. Its executives flew out to New York right before Christmas to seal the deal with its private-equity backers, as Keith Rabois, Slide’s vice president of business development, tells me. They didn’t want to wait until the economy got worse (and pocketbooks thinner) in January.

Perhaps the biggest thriller here is Glam, the online media and ad network for women, which boldly planned to raise $200 million in equity and debt in August, but which it has yet to close. Things are clearly taking longer than expected, although the company says it has an announcement coming soon.

Here’s some data. Out of 379 IT-related funding rounds that happened in the fourth quarter of 2007, 129 were for web companies, according to Dow Jones VentureSource. From total of $3.7 billion in investments, nearly $1.1 billion went to these web companies. “It’s pretty impressive for that little [industry] segment”, Dow Jones’ Adam Wade tells me, noting that there have been more than 300 rounds raised already in January, a good portion of which have been web deals.

For more data points on the latest funding, take a look at the social networks. Facebook raised $240 million from Microsoft last October, then raised another $60 million from Hong Kong billionaire Li Ka-Shing in November, and an undisclosed amount from European entrepreneurs the Samwer brothers in January. Hi5, as well, just raised another $15 million in venture debt on top of a $20 million round last summer. Meanwhile, Bebo hired a bank last fall, and I hear it is looking both at selling and raising more money.

Seeing that I am busy with my startup, I am going to try to bootstrap it for as long as possible. I think VC funding will definitely slow down and VC’s will become more picky on what they want to invest in.

So we are all interested in hearing about what Yahoo is going to do with the $42 billion offer on the table. I think many are speculating that Yahoo will take the offer and call it a day. Will this be good for competition and the free market ? I think not. Why you may ask is because of the following,

1. We will in essence have only 2 choices for advertising Microsoft and Google.

2. Microsoft will definitely try to stomp out smaller competitors first using teh Yahoo platform

3. Users will at some point be migrated to a Microsoft standard and that will be a step back for opensource

4. Openess and Innovation go out of the window (and into MS Windows)

5. All of Yahoo’s smaller business units like Flickr will loose that look and feel and will become a profit tool that we don’t want.

All of this is very bad for startups even if they don’t see it now , they will see it later.

The counter aguement is that people will just migrate to other services and all startups to grow and compete including the ad companies. This is not an incorrect statement but the percentage that will migrate will be a small portion of users as most of us don’t want to go and recreate accounts and move tons of mail and messenger contacts to another servce.

 From the advertising side why would’nt Microsoft give the entire userbase deep discounts for a few months and essentially bring the samller competitors to their knees.

It is scary to think about it ,but this could be the reality.

Maybe Google to intervene with a bid as they don’t have a strong presence in many areas that Yahoo is king. Another way would be if Google bought shares in Yahoo more towards 40 percent region.

Well let us wait and see what the coming weeks will bring to the table. 

It is interesting to see what the full impact will be on technology companies especially comsumer based companies like Google , Yahoo , Apple. I think that a looming recession in the States will impact not only US based companies but tech companies globally.

The increase in web ad spend in recent times will probably still continue to rise but at a slower pace then previous years. This coupled with increased competition as well as more publishers will hurt many playing in this space. As CPC rates drop many will instantly see a decrease in monthly revenue. This will also create a knock on effect with spending as publishers tighten up their belts and buy a Prius instead of a Hummer.

I am sure there will a few tweats on the advertisers side as well to increase profits thereby driving the Ad giants to do the same. We are going to have to get more creative in order to generate more profits in this space. Already we see Google changing its policies with regards to domain tasting. this will definitely hurt them in the short to medium term. On Yahoo’s side the layoffs with help keep them on a good running but they could also be opening the door to some competition as I am sure some key people on their side are looking at starting a venture in the Ad space.

Microsoft like the rest will feel the same pain from their web initiatives but I think overall they will continue to do well because they focus on so many verticals.

My suggestions would be

1. Look to the mobile ad space as there are more mobile phones on earth then PC’s

2. Leverage the mapping technologies to provide adpsace

3. Provide free PC’s to 3rd world countries and encourage small businesses there to use the internet (Just a wish)

4. Look at expanding your offerings like aquiring some business tools that your userbase could leverage. 

The full impact of a recession moving forward will propably be seen more towards the 3rd quarter of 2008  as people will slow their spending habits not drastically but carefully so as to not totally impact their lifestyles.

For those of you that have money keep it close and wait for bargains it will be coming.

I was just playing with the openads server and I must say from a functionality point of view it is a cool alternative tool to selling and managing ad space for your site.

 The good is that they have a live demo that you can play with to give you a feel of what they offer. This is a useful application for those of use that don’t want to use Google and have a significant web presense. I will definitely be looking at implementing this on my web project that I am currently developing.

So if you are interested in managing your own ad space give openads a shot.

 You can go to www.openads.org

An interesting article on fortune.com about a South African companies MTN (Mobile Provider) Standbank anf Fundamo (Technology Provider) providing cheap banking services for the many millions of poor people. I think this is a great initiative as this assists in building an economy and with low transaction fees it make perfect sense. I see that Fundamo also provides services in other countires in Africa as well.

This concept has the possiblity to revoluntionize banking for the poor, which as a matter of interest constitutes as large part of planet earths population.

Imagine that every person on earth has the opportunity to save money and in turn assist others. This is one way to assist in alievating poverty and bring the masses closer to a middle class lifestyle. This would take a few decades but at least there could be hope at the end of the tunnel.

Talking about poverty kiva.org (nothing to do with me)  assists people with loans by leveraging other people to borrow through the site.

Maybe kiva.org and Fundamo should join forces and create a new mobile banking system.