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Posts Tagged ‘burning-as-much’

Facebook is reportedly still in the process of talking to several private equity firms about a significant follow-up investment in the company. According to the New York Post, which tends to be a bit sensationalist at times and is owned by News Corporation, the social networking juggernaut has already held informal exploratory meetings with Providence Equity Partners, General Atlantic, Bain Capital, Kohlberg Kravis Roberts and others to date.

The article cites Facebook to be looking for fresh capital at a $5 to $6 billion valuation, with the potential investors only willing to pour more capital in the company in the $2 billion to $3 billion valuation range. We earlier reported that Facebook received a term sheet for an investment at a $2 billion valuation, but the New York Post claims no term sheets have been drawn up to date.

The articles cites unnamed sources with knowledge of the situation, but that none of the companies involved will comment officially or so far failed to return requests for more information. As soon as day breaks in the U.S., we’ll do a bit of poking of our own.

From the mouth of ‘people familiar with the matter’, Facebook’s attempt to raise additional capital is supposedly causing some friction with its existing investors (which include Accel Partners, Greylock Partners, Meritech Capital Partners, Microsoft and Peter Thiel), who are said to be against diluting their shares and urging the company to start squeezing some real revenue out of its now more than 200 million registered users.

As Michael wrote earlier, Facebook may not have a lot of choice:

They’re burning as much as $20 million a month in cash and are dealing with ridiculous growth. They likely have less than two years runway left, and possibly significantly less if they continue to add new users by the tens of millions that are currently flocking there every month.

To be continued, no doubt.

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Facebook has been pitching for a new round of funding these last few months to bridge itself to an IPO sometime in the future. We’ve known that since October, when (former) CFO Gideon Yu was in Dubai. In December CEO Mark Zuckerberg said the company was open to raising new money but only at the previous $15 billion valuation set by Microsoft.

But we’ve heard more recently that the company has been pitching hard for new cash at a much reduced valuation, hoping for at least $4 billion. And some investors are biting, but not at that price. A source with knowledge of the possible transaction tells us that Providence Equity Partners (who are also investors in Hulu) and General Atlantic have submitted term sheets at “around $2 billion” valuations.

Will Facebook take the expensive new money from Providence or General Atlantic? They may be forced to. They’re burning as much as $20 million a month in cash and are dealing with ridiculous growth. They likely have less than two years runway left, and possibly significantly less if they continue to add new users by the tens of millions that are currently flocking there every month.

The cost of taking money at such a low valuation is higher than it appears. In addition to the direct dilution to stockholders from the new money, old investors at the $15 billion valuation may need to be made whole. Venture rounds traditionally include anti-dilution provisions that give investors more stock if the company raises new money at a lower valuation. Those anti-dilution provisions are heavily negotiated and can end up anywhere from full protection (which is very rare) to no protection at all (which is also very rare). It’s likely that there will be some form of additional dilution, possibly a lot of it, from the $375 million Facebook has raised at that valuation.

As an interesting side note, Providence was heavily involved in the $15 billion round, and submitted a term sheet in the $10 billion range or higher at that time. The big rumor is that Facebook convinced Microsoft that the competition was Google, not a private equity firm, and it helped close the deal at a much higher rate. If there is truth to these rumors, and we believe there is, Providence dodged a big bullet by waiting patiently for the market to come down.

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Apple makes a lot of great products. In fact, I’d say that the percentage of products it makes that are great is higher than that of just about any other large company. But one product it makes is absolutely awful: The Mighty Mouse.

My first encounter with one was a couple years ago when I bought an iMac and the Mighty Mouse came with it. I used it for several months before I became fed up with it and ditched it in favor of — yes — a Microsoft mouse. But I recently bought another Apple computer and got another Mighty Mouse with it. This time, I opted for the wireless Bluetooth version thinking it might be a better than the wired one. Wrong. If anything, it’s worse.

Let’s go over the problems. First of all, the thing is shaped quite oddly. While it looks nice and can work for both left and right-handed users, people don’t have hands shaped like pebbles. There are a lot of natural contours on the insider of the hand, and the Mighty Mouse neglects them for a stylish look.

Second, the side buttons that you are supposed to squeeze to activate are almost non-functional. The problem is that it takes entirely too much pressure to click them. As a result, every time I click the side buttons I hear the Mighty Mouse’s plastic creak under how much pressure I’m applying — but I have no choice. In all the combined months that I’ve used the Mighty Mouse, I can probably count the number of times that I’ve actually used these side buttons because of this.

The third problem pertains directly to the wireless Bluetooth edition of the Mighty Mouse. Not only does it eat through AA batteries like no other, it simply loses the connection with my machine for no apparent reason every so often. You might not think it’s a huge deal — but just imagine being in the middle of doing something important and having absolutely no mouse support. I’ve had to learn some keyboard shortcuts just because of that. And I’ve tried it on multiple machines — same result.

Fourth, the all-white mouse gets dirty as hell. Granted, I’m a heavy computer user, but there is no reason why a mouse should be covered in grime every other day, to the point where I have to clean it. Yes, I shower, and yes I wash my hands. The thing just picks up a crazy amount of dirt, both on its bottom and on its top. And that directly relates the the device’s biggest problem.

By far the worst part about the Mighty Mouse is its top track ball. While it’s nice that the thing can move in any direction, because of that, the ball accumulates much more dirt than regular mouse scroll wheels. And once it gets clogged up enough (which you can’t see mind you because it’s all inside), it is completely unusable. The ball still moves, but nothing happens on screen. If you own a Mighty Mouse long enough, you’re going to run into this problem. Any web search or Twitter search will reveal thousands of users with the same issue.

Apple indicates the solution is easy: Take a clean cloth doused in water and hold the Mighty Mouse upside down and “vigorously” rub the ball. Sometimes that works, sometimes it doesnt. But because you have to unplug or unpair the mouse to clean it, you often are stuck in a back and forth cycle of unhooking and hooking back up to clean the thing and see if it works. And even when it does work, you’re just going to have to do the same thing again in a week or two. It’s frustrating beyond belief.

And I think Apple knows the device isn’t very good. It’s been filing patents for a while now for a new type of mouse that incorporates multi-touch elements on its surface. That’s exactly what it needs, because this track ball on the top just isn’t cutting it. It’s odd that all mice in the 199s had trackballs on the bottom, but everyone moved away from that because they would get so dirty, so quickly. But for some reason, Apple decided it would be a good idea to put the exact same type of ball on the top of the mouse.

I’m anxiously awaiting the future where everything is touchscreen and we don’t have to deal with mice or physical keyboards anymore. But until that day comes, the least Apple — a company which prides itself in the quality of its products — can do is give us a decent mouse with its computers. Or at least don’t patronize us by calling this mouse “mighty.”

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Microsoft says that Live Search Products and Live Search Cashback have now been unified into a single experience. You can now access Cashback on Live Search Products page, which is Microsoft’s comparison shopping vertical site. Microsoft has migrated Cashback from the Jellyfish platform (the social shopping site that Microsoft purchased in 2007) to the Live Search platform.

Last year, Microsoft launched the Live Search Cashback program, which gives users monetary incentives to click through and buy products from the ads they’re shown. It was controversial since the move to gain market share from Google was so drastic and seemingly desperate.

The Cashback program didn’t have much of an effect on Microsoft’s search, with its marketshare initiallly bumped up before hovering around 9 % (which is what it was before the program), and Google’s share remaining at nearly 62 %. But there was a silver lining to the program for Microsoft; its ad revenue from Live Search increased. Last fall, Microsoft reported a 30% growth in Cashback offers made to customers, with 20 of the web’s 50 top online retailers in the U.S. participating in the program.

Live Search Products was launched in 2006 as a commerce-only search engine/shopping comparison engine to give users more relevant results when looking to buy items online. Live Search Products was launched to be a direct competitor to Froogle, which was reborn as Google Search Products.

Microsoft’s Live Search name has gone through several rebranding efforts of its search site in the effort to keep up with the search capacities of Yahoo and Google. It’s pretty easy to lose track of all the different names Microsoft has tested for its search engine. There was MSN Search, Microsoft Search, Live Search and possibly Windows Live Search. Rumors have been flying around about the new name, which appears to be Kumo, which means “cloud” or “spider” in Japanese. So perhaps Live Search Products will soon be Kumo Products?

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