A Betterfly Personal Local Search Idea for Yahoo! or Google

It rarely write about private companies other than Facebook but an intriguing company named Betterfly (http://betterfly.com) caught my attention, specifically for how it addresses local personal search and how Google, Yahoo!, and AOL could benefit from having this company within their fold.

Betterfly is a New York City based local search engine that promises to match consumers seeking for what they term Betterists, - teachers, tutors, coaches, trainers, or anyone else who offers a service that helps others learn.

The company's press release states that it is the first of its kind search engine to exclude companies in the search results, but rather present individuals skilled in a particular service. Like other e-commerce and advertising sites, Betterfly, allows clients of the Betterists to leave reviews. But unlike other sites, the Betterists must first verify that the person seeking to leave a review was indeed a client. This was designed to prevent third parties from leaving negative or positive reviews and potentially skew the review and ratings system. The bias here is that the Betterist who knows that a client will leave a negative review can simply state that they never serviced the client. More work needed there.

Nonetheless, I think the idea is unique and the search engines like Google, Yahoo, and Microsoft could benefit from Betterfly's model to serve more personalized local search results. The site offers an alternative and frankly a step up to Craigslist in that it allows the Betterists to host a webpage page with their qualifications, it has reviews, and the interface is much more user friendly.

Betterfly also facilitates the transaction with the calendar service, a feature absent from Craigslist.

Google and Yahoo! should take a look at Betterfly as a way to enhance and offer a better search result set.


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YouTube should become a subscription channel

With the news from the New York Post that Google is looking to hire an Investment Banker with contacts in Hollywood to help sign content deals I could not help but think further that Google should become a subscription streaming channel. Couple that with speculation that Google is schedule to launch Smart TV with Sony, the concept thickens.


This is a logical end to what has been an ordeal to figure out how to effectively monetize the site. The Post also states that Google may buy a film library. Makes sense in that it can have exclusive access to the films and bypass troubles signing content deals with other studios. MGM comes to mind.

Ultimately I think Google could charge a $5 to $10 monthly fee for streaming movies and TV shows and the company could take that further and seek to become a channel. That off course rest with the idea of getting carriage on the cable, satellite, and telcos. But using Epix as a guide I believe YouTube can accomplish that.







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Google to launch Smart TV

The Financial Times noted that Google along with Sony are set to unveil a new set of tools to bring web services to Sony's televisions. The platform is said to be based on Google's Andriod operating system and Intel's Atom processors. Read More!

Facebook Update from an Exec

This is a follow-up to a post showing an analysis that Facebook can charge $2.50 per month. See it here. This week we happened to be in a meeting with a high ranking Facebook exec in which she stated that Facebook has indeed thought about charging but has ruled it out entirely. In fact, she stated that Facebook will never charge users for the service.

End of story on that subject but a few more tidbits:

Facebook has 500 million users with 80% from outside the U.s.

Zynga at one point generated more revenues than Facebook. She did not specify when that occurred.

75% of Facebook users play games on the site

Faceboook is cashflow positive

The privacy issue is the only thing that can kill Facebook.


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Facebook can charge $2.50 per member per month

I was approached by a friend who believes that Facebook will eventually charge for the service and he  wanted to know what that fee would be. My uninformed reply was that Facebook will never charge for the site as along as they are able to generate advertising revenues and per action fees from users. Plus, if they do, another free enterprising clone will be sprung that will cater to the users who decided to leave Facebook.

Nonetheless, I decided to entertain the idea and promptly opened a blank spreadsheet. A few key assumptions:

1) Starting point of 400mn users worldwide
2) Assume an attrition rate per price level
3) Assume all US dollars
4) Assume costs of 10% of revenue for credit card fees, staffing, and systems to support payments.
5) Assume Facebook currently generates $525 million annually in advertising and other fees
6) Assume they lose those fees commensurate with the attrition level of users.

See a previous write-up Cashburn Book for old assumptions on Facebook's revenues.

The calculations show that Facebook can maximize profits by charging a price of $2.50 per month. At that level they will lose 25% of their user base or 100 million users but they will generate $8 billion in revenues.

That revenue level would drive Facebook to instant cash flow positive and they will have zero issues going public.

Will FaceBook do this? I still don't think so. Are they running a more complicated version of this analysis and going over it weekly? You betcha.





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Google will always be about search innovation

A lot has been said about Google's inability to find a business outside of search that it can effectively monetize and that Google is a now a value stock. The latter couldn't be further from the truth in my view. How could a stock of a company who consensus has revenues growing 21% in 2010 and 22% in 2011 and with profits growing similarly, with both years likely beatable, could be considered a value stock? We need a séance to get Graham and Dodd back to discuss the topic. But more on that at a later date.

See my previous write-up about Google hitting a wall.

I believe Google is making headway with display and video advertising and TV has, I believe, true potential for significant growth. However, when I think about Google's product launches and acquisitions, I think, reinforcement to the core business to drive incremental growth, rather than finding a business outside of search. I thought that about Andriod and Google's push to get ahead of mobile search advertising, which reinforces the core search business. Make no mistake, Google is search and will always be search. And search, like e-Commerce, is only 20% to 25% into its growth curve. Therefore, Google, like Amazon in e-Commerce, has significant runway to continue to pursue its core business. Think about it. If search lacked growth, as several articles in the Wall Street Journal have alluded to, why would Microsoft spend billions and lose billions to enter the market?

To understand my thinking better I took a look at Google's products and services and sorted them into clear winners, potential for winning and losing, and the losers. What I found was that the clear winners all serve to boost Google’s core, immensely profitable and strong cash flow generating business, while the losers were just sunk costs with hardly a dent to shareholder value. In fact, I believe that Google actually gained knowledge from the losing ventures that they could use to enhance the current business and pursue others. 

So to Google's managers and engineers I say keep innovating in search, keep focusing on what you do best, and shareholders will come back.

Clear Winners
AdSense - A $16bn business in 2009
AdWords - A $7bn business in 2009
Search Appliance - about $300mn not bad.
DoubleClick - A $1bn business. Not bad
Andriod Operating software - I love my Andriod based phone
Gmail - don't know of anyone without a Gmail account
Google Finance - other than Yahoo! Finance's chat boards I switched almost entirely to Google. I do like Yahoo!'s quick and easily downloadable historical quotes.
Google News - use it daily. Love the Google alerts
Blogger - Love it but could be more powerful.
Images - good to find out what clients look like before meeting
Patent Search - has been helpful with my stock research
Google Maps - use it all the time
Google Calendar - love the email and text reminders
Picasa - should get more marketing dollars to get the word out. Great asset
Google Reader - use it everyday. 
Google Earth - good product. Helpful planning vacations.
Google Base - Remember Base? Helped shaped Google as a shopping destination
Google Book Search - not a big fan but my Phd friends have taken to it
Google's dark fiber purchases

Give me time
Chrome - jury is out on this one. I went back to Firefox
iGoogle - I see potential
YouTube - the $1.65 acquisition has resonated with users globally but has had difficulty driving profits thus far. I see profits in 3Q10.
Google Aps/Google Docs - I see potential.
SketchUp
Google Trends
TV Ads - maybe Google hits its non-core stride here.
Knol
Trends - useful tool for analysts but that's about it

Wait and see but most likely a loser
Google Phones, i.e., Nexus One
Checkout - oops. Paypal is way to penetrated.
Wave - someone tell me what happened here

Best up and comer
Google Transit

Down for the Count - Chalk me up as Sunk Costs
Dmark
Print advertising
Orkut
Buzz
Desktop Search
Google Health
Google Video
Google Talk
Notebook
Co-op
Answers
Local
Music Trends
Personalized Search
Web Accelerator
Dodgeball




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