Author: mark

  • I'm selling a 6 month old viral business in a hot space.

    In January this year I started researching keywords with high search volume and high earnings per click. I wrote a tool that extracts data from Google AdWords Tool and Traffic Estimator. I built intelligence into it that spotted high earning keywords, retrieved more suggestions and recursed in that fashion.

    I then looked at at the resulting high earning keywords and analyzed the search results for each keyword or phrase. What I was interested in was finding a space where the earning potential was high, the search volume was high but the top ranking website or websites were of poor quality and innovation had stopped.

    I found it in the Nutrition and Weight Loss space. The top ranking site is low quality and is owned by a media empire, meaning they’ve stopped innovating. Paydirt!

    I grabbed a huge pile of government nutrition data and developed a large nutrition website. I employed someone to add a high quality meta-data to the site that made it more useful and attractive.

    To make the site truly competitive, I added a viral model that tied into SEO. The viral hook is not a “Facebook Like” button or other gimmick. It’s a full blown application that other websites install, providing the site with valuable backlinks and increased marketing and distribution.

    I launched the site in late January. Three months later it had enough credibility with the search engines to start getting traffic and the SE traffic took a nice jump.

    Thankfully the site survived the Panda Google update and has continued to grow. In the last week it’s taken another healthy jump in traffic.

    Here are the current stats:

    • The site currently gets over 700 visits a day from a vertical audience interested purely in nutrition.
    • Over 500 visits per day are from search engines.
    • SEO traffic is rising.
    • 50% of traffic is North America i.e. USA and Canada.
    • Hosting costs are $20 per month on Linode and costs will remain low because the site is well engineered and optimized.
    • Yahoo Site Explorer lists the site as having 5,377 backlinks from external sites.
    • Site currently has 350,000 pages of content indexed by Google with more crawled daily.
    • Site has over 7,000 photos that were hand added by my staff.
    • It has several features in the space it’s in that are unique and useful.
    • It provides a needed and genuinely useful public service that is unique in the nutrition space.
    • The site is barely 6 months old so it has a ton of growth potential.
    While this site will continue to grow with very little incremental work from my side, I’d like to see the project taken over by someone firmly in the Nutrition space. Someone who can complement the great online distribution the site has with a bricks and mortar nutrition business.
    I’m selling the site for $29,000 which includes handover and some of my time to get you set up. I’m looking for the right buyer that can take it to the next level and get a great long term ROI. If you’re interested contact me at mmaunder at gmail dot com.
    Here’s the traffic going back to April.

  • I'm calling it: Google+ is a flop.

    Does anyone else not care about Google plus? Hitwise released a report that says Google+ traffic had declined by 3% for the week ending July 23. Google are of course in damage control mode and claiming that Hitwise ignores Android, iPhone and traffic to the web app and only takes into account traffic to the site itself.

    Shouldn’t they all be growing virally? Google claims they’re in limited field trials, it’s invite only, etc, but I can get in and so can you I’m sure.

    What worries me is that a social app that is truly engaging and social should have a very strong viral loop. New users invite new users.

    If you’re Google, you’re starting with an audience of over a billion people. That’s a pretty good seed for your viral loop. They should be having to fight the traffic off with a sharp stick.

    I think their strategy of softly-softly when launching new products hurts them in the long run. They’re so worried about down-time they’re sacrificing valuable PR buzz and new product momentum to avoid it. Twitter still goes down regularly and that hasn’t hurt them yet.

    But the real problem I have with Google Plus is it’s fugly.

    I don’t mean purely on design. The language they use to describe each product feature is like something out of The Boo Hoo Bird: “Circles”, “Hangouts”, “Sparks”.

    I also think the designers are still suffering from PTSD from the Google Buzz debacle:

    [box]Circles let you share with just the right audience.[/box]

    i.e. We didn’t screw up this time. Pinkie promise!

     

     

  • Why burger stands, gas stations and politicians tend to cluster

    Presh Talwalkar has an elegant explanation on why competing entities in an environment where demand is linearly distributed (like two burger stands on a beach) tend to cluster in the center of demand.

    The intuitive explanation is this: Imagine two burger stands on a straight beach a mile long with the beach crowd evenly distributed along its length. Customers will gravitate towards the closest stand. If one stand was a quarter mile from the left and the other was a quarter mile from the right, they would have an equal number of customers.

    But if one of the stands moved slightly towards the center, it would gain more customers and the other stand would lose those same customers (a zero sum game). So the optimal position for both stands is dead center i.e. on top of each other. That gives them both 50/50 market share and prevents the other stand from gaining more market share.

    …even though it causes people on the beach to have to walk further to get a burger.

    Check out Presh’s blog entry for a full explanation and accompanying graphics. He relates this to why politicians tend to position themselves in the political center and why news channels all carry the same stories.

    Bringing this back to the real world, I wonder about things like goodwill, brand loyalty, pricing power, brand cachet and so on. Positioning yourself in the center of the beach, in the center of the political spectrum or, if you’re a news channel, carrying the stories everyone else carries does not engender much love in your target market.

    If a competitor were to come along and position themselves off-center, they may sacrifice a portion of the market, but develop fierce loyalty among their customers for being better and being different.

    This brings to mind many famous brands who started with a cult following:

     

  • Listen to this podcast on the budget process, you must

    Keith Hennessey does a spectacular job of explaining the complicated process of arriving at the federal budget and where it is currently stuck in this week’s Econtalk.

    He also breaks down who has the power to move things forward right now. It’s so good I was tempted to transcribe selected bits here, but I just don’t have the darn time.

  • Obama Campaign comes a calling

    Got another call from the Obama campaign today who I spent a lot of time and energy supporting last election. I don’t support either party currently because I’ve evolved into an economic conservative but still socially liberal which leaves me stuck with no party to support.

    So just for the hell of it I tried to convert the volunteer into a Hayekian liberal. After 5 minutes he still wouldn’t bite.

    He did mention he’s had a rough day. Surprised, I am not.

  • The US City with the Fastest Internet is…

    According to Pando Networks, Seattle has the fastest average Internet speed in the country with an average speed of 1,017KBps. Compared to San Francisco and Austin who have 912KBps and 911KBps respectively
     

     

  • What in the world…

    Someone just arrived at my blog by Googling:

    WHAT IN THE WORLD IS GOING TO HAPPEN TO THESE PEOPLE IN THE US WITH THEIR SOCIAL SECURITY CHECKS

    A reminder of the hard problems Google’s engineers are working on.

  • My new favorite "we're screwed" graph

    Yesterday FT.com’s Alphaville posted a graph showing that the US treasuries CDS graph had inverted for the first time ever.

     

    What that means is that the cost to insure against default on 1 year US Treasury Notes costs more than it does to insure a 5 year note. This goes contrary to economic liquidity preference theory – meaning that investors generally see bonds with a longer maturity as being riskier so to insure them usually costs more.

    So why does it cost more to insure a 1 year treasury bond? Investors see the risk for the US government as significantly higher in the short term and that psychology creates this weird effect.

    Footnote: I’ll make this clearer in another blog entry but for now I’d like to add that I see the risk of an actual default by the US government is extremely close to zero. If we don’t get our act together by August second, we don’t automatically default. We just have to gradually make harder and more irresponsible decisions about who to pay and what to defer. Those decisions have a forcing effect on our political system as pressure will rapidly mount beyond calls from disgruntled constituents to calls from creditor’s lawyers.

     

     

  • Every national curriculum should require web programming for graduation

    Every primary and high school curriculum should include a mandator web programming course the same way it includes math and a first language.

    When’s the last time you used pythagoras? How about Euclids proof of the infinitude of primes? Both of these are popular in high school math curriculums.

    My sister one of the best chef’s in Cape Town. She writes about food and runs a restaurant review site. She doesn’t use pythagoras that often I’ll bet. But she recently asked me for shell access to the server her blog is hosted on so she could run “chmod 775 *” on a directory to fix a permissions issue. She’s also buying templates from Themeforest and knowing PHP would help her customize them and fix a few bugs.

    Most non-programmers think of programming as a 3 to 4 year computer science degree, a course of advanced calculus thrown in as a prerequisite for graduation and the ability to write a basic compiler or operating system.

    Here’s the truth: Most programmers spend 99% of their careers writing very simple code that is not that different from english. Most of it is a knowledge of syntax rather than opaque math or implementing complex algorithms. Ask any one. Most of them will tell you the last time they used calculus in programming was in school.

    It’s my strongly held belief that everyone should start learning basic programming starting age 7 and the course should continue through to graduation from high school and should be prerequisite the whole way. It should include the following:

    • PHP. It’s open source and the most popular programming language on Earth for many applications beyond just Web. My computer science grad friends are probably freaking out that I’ve chosen a loosely typed language that doesn’t require variable declaration and isn’t purer OO, but it’s the most popular language and it’s what real people actually use to get the job done.
    • Javascript. It runs in every browser and now on many servers.
    • HTML. Obviously.
    • CSS. Obviously.
    • SQL using MySQL.
    If a country were to require all it’s students to graduate from high school with a working knowledge of the above, it would be vastly more competitive. That’s the goal of a national education curriculum.

  • Why startups are attracting so much investment

    There has been plenty of speculation during the last 2 years that we’re in a tech investment bubble. It seems every blogger is trying to “call it”.

    It hasn’t burst yet and if AirBnB’s $112 million round of funding announced today is anything to go by, it ain’t going to burst any time soon.

    Lets pretend the US dollar is going to continue to fall in value. You have an appetite for some risk and you’re watching your dollar denominated wealth dwindle away.

    You could invest in bonds, but we all know that’s not very chic right now since even sovereign debt defaults.

    You could buy currency, but just when you thought the Euro was safe, turns out half the Eurozone is in crisis and the charter doesn’t even have a clause for a member state defaulting. It “just wan’t supposed to happen”.

    You could buy gold, but that looks like one hell of a bubble waiting to burst. [Although my prediction is that it will keep rising until early next year]

    Hey what about Treasury Bonds. Well we already had that conversation about August 2nd earlier today, so forget that.

    What about commercial or private real-estate. History has shown that has always been a safe investment …if you exclude recent history.

    All this makes the US software sector look extremely attractive. Even *gasp*, startups!

    Software companies make more money if the dollar falls. For example Google’s Q2 2011 international revenue made up 54% of the total and is increasing. If the dollar falls, expect Google to bring back the free food and tea trolley.

    Software is not as affected by rising interest rates (which are coming) as, for example, companies that need to borrow big to finance land, oil rigs, multi-year construction projects, etc.

    The software labor force is completely dynamic. Software developers can work remotely and many companies (like WordPress) have entirely distributed teams. So if India or China gets expensive, we’ll just move it back on-shore. But more importantly, because software labor can be based anywhere it is a much more efficient market than running a US based law firm for example.

    The target market is also dynamic and can quickly be switched from one country to another. Unlike brick and mortar businesses, switching from selling in the UK to China simply requires a team of translators and to stop spending ad money and resources on the country in question and divert is somewhere else. No physical stores to shut down, no plant to move, no warehouse to dispose of.

    And of course once you’ve written the software, the ongoing cost of running a software company is not much at all. Sure you need to keep innovating, but if the company stops writing software tomorrow the revenue keeps flowing.

    The US has a track record of being the best at software. It’s rare to see a viable foreign competitor for the likes of Google, Facebook, Microsoft, Oracle, CA technologies, IBM, Accenture etc. I’m not discrediting awesome companies like SAP, but they are rare.

    Companies like AirBnB, Facebook and Groupon represent a new breed of software company that is more efficient, nimble and profitable. They don’t require a on-the-ground sales team like IBM, Microsoft and Symantec. The team can be based anywhere, their server resources are distributed across the globe and all their revenue and costs are completely dynamic and distributed and can adapt continually to the rapidly changing environment.

    In the current investment and risk environment, software startups are, understandably, just about the sexiest thing since, well, this: