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By Tai, August 31, 2010 10:32 pm

• Lack of supply drives company value to $33.7b
• Right of first refusal is detrimental to company shareholding when capital structure changes and/or venture capitalists exit
• Speculation is again hype-driven
• My personal forecast is that post-IPO price will rise despite current craze in the secondary market

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By Tai, August 12, 2010 9:36 pm

Prof. Alexander Groh and Prof. Heinrich Liechtenstein, together with a group of researchers from IESE’s International Center for Financial Research (CIIF) and support from Ernst & Young and DLA Piper Weiss-Tessbach, have rated the varying levels of “attractiveness” of global countries for venture capitalists and private equity investors.

The index sources from over 150 databases.

Key indicators of VC/PE attractiveness include:

1. Economic Activities
2. Taxation
3. Entrepreneurship Culture and Opportunities
4. Human and Social Environment
5. Depth of Capital Market
6. Investor Protection and Corporate Governance

The index can be viewed at VC/PE Index IESE

Venture Capital and Private Equity are also taught at University of New South Wales at postgraduate level.

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By Tai, June 10, 2010 12:34 am

Amazon positions itself as a technology company, not a retailer

1. Target the long-tail with million titles, while the largest physical book store may only store 400,000
2. Intensive investment in technology
3. Location: Seattle, near computer talents
4. Product search, data mining, personalized shopping
5. In-house software systems
6. Leader in cloud computing
7. Supplementary product: Kindle
8. Scalability
9. B2C to C2C

Jeff Bezos’s vision and financial expertise

1. Prior to Amazon: Princeton Computer Science & Electrical Engineering graduate, 2 years in Commercial Banking and 4 years in NY Investment Banking
2. Focus on customer service, avoid price war
3. Started with books then diversified
4. Act like a Venture Capitalist to other younger e-commerce firms then get advertising fees from these partners
5. Lock out competition with this partnership network
6. Use sophisticated financial structure including:
   • Private equity (only $1m in 1994)
   • Convertible preferred shares ($8m in 1996)
   • $326m 10% senior discount notes mature in 10 years
   • Debt repurchase
   • $1.25b 4.75% convertible subordinated notes mature in 10 years
   • $680m 6.875% euro-denominated subordinated notes mature in 10 years
   • Live many years on credit rating CCC but the company has had enough cash to spend. Good governance!
7. Good accounting compliance

Operations

1. Revenue sources: commission, advertising, affiliate marketing, cloud computing leasing
2. Order from suppliers after customer has made an order
3. Weathered the dot-com bubble and GFC well

Reference

Cott J., Palepu K., ‘Amazon.com’

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By Tai, April 20, 2009 2:05 pm

Micro-blogging is raising a trend in Vietnam, not by the number of users, but by the level of media coverage. Obviously, the coverage of Vietnamese media is not as high as the hype of all the global ones on Twitter and its ecosystems, but still, it is perceived by many to be the main trend of Vietnam internet market in 2009.

I don’t. Well I don’t talk about micro-blogs for Vietnam. I see different things.

Moreover, there are two missing pieces of important information from media coverage: appropriate market and the greatest monetization opportunities.

Without the knowledge of the target market of Twitter-like services, reporters easily fall into the trap of comparing micro-blogs and blogs, and users will be confused.

Without seeing the monetization opportunities, people will be reluctant in using/investing for them.

This article solves this issue by discussing the two points mentioned.

1. What is the market for Twitter-like services?

I identify 4 groups of users:

1. Geeks. Obviously, this group has already been there. They are innovators and early adopters of the services. Most use Twitter and not the clones anyhow.
2. Users who want to use Twitter as a substitute to Yahoo! 360 blast. Check Kazenka’s out.
3. Those who want to keep up with the Joneses. i.e. want to show that they’re cool by using a trendy stuff.
4. This group has not existed: those who want SMS incentives for using the service(s) to send mass messages

It’s the last group which has not existed that is potentially profitable.

2. What is SMS incentive and why is it a group when it hasn’t even existed?

In an over-simplified example:

3. Devices and platforms

1. Device: Only smart phones or laptops can access Wi-Fi. All phones can SMS.
2. Platform: good Wi-Fi is not ubiquitous even in urban areas. Mobile coverage is country-wide.

Hope that (2) and (3) answer @firstjames’ wonder.

4. Which player has the potential?

I would say ASAO. Their Ola Me is more than a Twitter clone; the product is one in ASAO’s mobile package suite. And the company may have the credentials to negotiate for SMS incentives.

Addendum: lamgi.vn also has SMS incentives.

5. Summary

This entry is not about micro-blogging. It’s all about the market of SMS incentives, powered by Twitter-like services.