Techonomics During War Time = Expansion – Impact on Entrepreneurs

Marc Andreessen wrote a post on the impact to Silicon Valley if Microsoft and Yahoo buyout happens.    I believe that this massive war is changing the landscape but in a positive way.   This tech war becomes a catalyst the urgency is now.   Marc has experience living the last war when he was a Netscape.  Some might have forgot but the Microsoft assault on Netscape actually validated the market and created the wave and bubble of Web 1.0. 

What Marc is trying to say is that this war might actually propel Web 2.0 up in a big way.   Nice post Marc – it’s a must read – inside baseball – post. 

I agree with his post that it will be a net positive in that other companies will have to ‘shore up’ their positions.  I like how he put it..Marc says “if the Microsoft/Yahoo deal does go through, those same companies in many cases will be looking down a very scary double-barreled shotgun of an ascendant Google and an armored-up Microsoft”.   

As I mentioned in my previous posts, entrepreneurs and big companies have to understand the mentality in a war time venture.   If a business big or small gets caught in the battle during wartime, they need to be a supplier or arms dealer.  

Here are a few strategies for business during tech war time:  1) be a supplier or arm dealer, 2) build value and cash flow positive and stay out of the way – bunker away, 3) pick a side and join their mission.  

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WAR: Microsoft Invades Sunnyvale & Google Anwsers with “Lets Go”; The Business Models of WAR

Google answers Microsoft two days after Microsoft invades Sunnyvale.   Google is not backing down.  This is going to be good.   John Markoff writes a piece that this will actually be good for Silicon Valley.  I am not sure but it will be fun to watch.  Google is not Netscape.  

People: we are in a full-on WAR between Microsoft and Google.  Now Google fires back in a blog post saying Microsoft’s unsolicited $44.6 billion offer for Yahoo Inc. “raises troubling questions.”

Google’s blog post, by Google Senior Vice President David Drummond, asks whether Microsoft could “now attempt to exert the same sort of inappropriate and illegal influence over the Internet that it did with the PC.” It accuses Microsoft, which has been targeted by antitrust regulators in the U.S. and Europe for years, of “frequently seeking to establish proprietary monopolies — and then leveraging its dominance into new, adjacent markets.”

This blog post by Google is a complete smoke screen.  It is clearly a knee jerk reaction to Microsoft’s sneak attack into Silicon Valley last week.  I’m sure right now Google executives are jamming on  a counter attack.  They have to – Microsoft just invaded Sunnyvale.    Word inside Google right now – ‘calling all arms’.

As an entrepreneur you have to understand your environment, an no better time than now.  As big businesses try to figure out their place in this war so do startups.  That brings me to business models of WAR.

What do startups need to do – be a supplier of something.  Something of value and need in wartime.  Picks, shovels, food, shelter, arms, hostages,,.etc – figure it out because the WAR is on.

As John Markoff wrote today on Silicon Valley’s venture view…“There is a sense here among investors that Microsoft, as a more effective counterweight to Google, might actually serve to spur innovation in the Valley.  “When Microsoft was in the ascendancy, there were whole areas of investment that were of less interest to investors,” said William R. Hearst III, an affiliated partner with the venture capital firm Kleiner Perkins Caufield & Byers. “Now you could enter a new area and people will think that maybe one of the two colossuses will be interested in acquiring your start-up.”

Translation:  the opportunity for startups:   be a ‘WAR time” venture.

Entrepreneurs Beware. Yahoo Buyout Could Kill Technology Startups? Advice: Be an Arms Dealer.

Entrepreneurs beware Microsoft buying Yahoo could shut down the tech startup scene.  It could send the startup climate back to 2001 levels – nuclear winter shut down.  I lived through 2001-2004.  It was ugly.  

Brad Burnham has hit on a narrow topic about the downside of the Yahoo buyout for Silicon Valley.  Brad’s story is very relevant with ‘macro’ implications to the tech world not just Silicon Valley.   This deal could cripple startup activity.

Efficiency for Microsoft means leverage with suppliers.  Translation:  Startups are suppliers and Microsoft just became Walmart.  This could have a chilling effect on the VC and tech investment community.  This new industry structure puts even more of an emphasis on ‘hits’ or category specific deals.   If the Venture Capitalists are confused today can you imaging what they will do going forward.   This could get ugly. 

Advice for Technology Startups and VCs:  Understand where your company is in the pecking order in this war.  If you’re not an arms dealer then you might want to rethink your strategy. 

Update:   others are thinking the same….  A VC -Fred Wilson; Opportunity for another big player to bid:   News Corp. 

Microsoft’s War: Google is NOT Netscape. People: Please Stop the Comparison.

Joe Nocera of the New York Times writes that Microsoft is really a tired competitor.  Not sure I agree that Microsoft doesn’t have the weaponry – under the right battle plan I think that they can compete and surpass Google.  What I am sure of is that Microsoft will not “kill” Google.    Nevertheless, Google isn’t Netscape. 

Although there are many differences between Google and Netscape, the big difference is that Google is a multifaceted cash producing machine and Netscape was a one trick poney – the browser.  Netscape was an easy target for Microsoft at that time.  Today, Microsoft is fighting a different competitor.  Google has great cash flow and control of the most coveted market –  online advertising.  This fight for Microsoft is to the death.  Microsoft is the underdog not Google.  A case can be made that Microsoft is the Netscape and Google the old Microsoft – the tables are turned.    It’s going to get bloody.

 As I mentioned yesterday Microsoft is officially waging “War” against Google, Microsoft needs Yahoo.  Why?  Two reasons:  it’s search position and it’s user base of registered users.  The rest of Yahoo will fall into a product group or get ‘whacked’.   If this buyout goes down in Microsoft’s favor , then there will be a ‘ton’ of collateral damage at Yahoo.

WAR! Microsoft Officially Declares WAR on Google! Microsoft Makes $44.6 Billion Dollar Bid For Yahoo!

As the president ial elec tions (can use those political keywords because of a Techmeme flaw) is down to two person races, the Internet battle has been waged.  WAR!  It’s official.  It’s now a two company race:  Google and Microsoft.

I’ve been seeing the battle of the titans coming for sometime, but this is the open gambit of a World War between Microsoft and Google. – the rest of the Internet world is whitespace. 

I was writing up a review on the Google earnings while on a plane coming back from Flordia to Houston.   Two words sum this up: holy shit.

More to come… I have to get on a plane to SJC from Houston.  Unbelievable with impact to all.  This is an A-bomb.  It will affect big companies and startups.  Wow.

Yahoo Stalled: No Wind in Their Sails? Google isn’t stalled. What’s the Problem? New CTO?

Last year Jerry Yang took over as ‘Captain’ Yahoo but their ship is stalled.  Where are those new ‘sails’ to capture the new winds that are clearly blowing Google and Facebook’s way?  Yahoo needs to change the game.  Where’s the competive strategy?  Where the “Eye of the Tiger” attitude? 

Businessweek had the best analysis on Yahoo’s situation around the recent layoff and future prospects for success.  Display advertising is feeling the pre-recession jitters but not search (or ecommerc) advertising.  Yahoo keeps losing ground in search to Google.  According to Nielsen Online‘s numbers, usually the most conservative measure of the market, Google’s share of searches in December was 56.3% to Yahoo’s 17.7%, and Google got 70% more searches per searcher than Yahoo.

Yahoo needs new products and fast.  Jerry Yang says they are focused on investments on new initiatives.  As Yang’s vow to keep spending on some initiatives indicates, Yahoo’s hope remains coming up with new services that catch people’s imagination as Google, MySpace (NWS), Facebook, and other sites have.

I’ve been predicting a Yahoo comeback and openness for sometime.  Look for Yahoo to join opensocial and compete in the web 2.0 infrastructure. 

New CTO?  What does it Mean:

Silver Lining in new CTO hire:  One promising sign from their new hire, Ari Balogh, is that he’s an infrastructure guy.   He knows how to deal with scale and product rollouts that are managed service based.  What does this mean?  Yahoo could develop (fast) a significant position against both Google and Microsoft Live if Ari Balogh and team can integrate services and leverage user data for new products – a kind of “Mega Mashup” product strategy.  The portal model is dying and advertisers are voting.   

Also look for possible Data as a Service product set.    Yahoo has so many possibilities but they need to pick a few and go with it.   Yahoo has all the ‘raw materials’ and the audience to roll out ‘instant’ killer products. 

For Yahoo to succeed it’s all about competitive strategy.  Can’t wait to see how they execute their plan. 

Yahoo Please Join OpenSocial: Hey Jerry Yang – Go Social and Get Open Now; It’s all Jelly

Jerry:  It’s time to join Open Social.  Now is the time to change the game.  

I’ve been posting a lot on Yahoo recently first on Yahoo at CES and then on their stock performance.  I believe that Yahoo can be a big player in web 2.0 and social networks.  Yahoo can be competitive and might just have the answer in being the next Google-like performing company.  Specifically, Yahoo has already helped pioneer RSS and widgets (with Konfabulator).  Now it’s time for Yahoo to join open social.  Yahoo has the assets to make a difference in web 2.0.

The three things that I would do right now if I were Yahoo:

1) Join OpenSocial immediately – like tomorrow

2) Do a major stock repurchase – joining OpenSocial and going open will cause some stock performance in the short term so it’s no better a time to do a stock buyback. Show everyone you’re in it for the long haul.  Don’t sell.

3) Port all your products to be web 2.0 enabled including social networking environments and data portability.

These three things can propell Yahoo to the front of the line in term of being competitive while delivering user value.   

My prediction:  Yahoo will join OpenSocial.  By joining OpenSocial Yahoo can take advantage of their huge subscribe base, lead the open data movement, and leverage the user behavior trend in social networking and widgets.

It’s the bread and jelly that Yahoo needs. It already has the peanut butter. 

Jerry Yang took over as CEO this past June and announced it here on his blog.