management

Jumping into social media marketing before you're ready can be devastating to your business. The argument that people are already talking about you through social media channels has been used to push brands into social media marketing before they're ready.

It's a myth that you'd be better off participating than not participating. The voice you create for your brand can have echoing repercussions.

There are 3 questions you need to ask yourself before you 'take-the-plunge' into social media marketing. If you can't answer yes to these 3 questions you need to do some work before participating & engaging with your audience through social media channels.

1. Do you have social media balance?
2. Do you have the right corporate structure?
3. Does your T.V. know what your computer's doing?

Question #1:Do you have social media balance?

This refers to your understanding of the social media space, and what kind of goals you need to define. There are 4 things participating in social media will affect:

Brand Awareness

I had to chuckle the other day when I read a post entitled “Why Twitter is underhyped and is probably worth five to 10 billion dollars” by the infamous Robert Scoble.  I am somewhat of a student of technology company valuations.  While Twitter may someday be worth $5 billion, it’s not going to be any time soon.  If Mr. Scoble thinks they are worth $5 billion then perhaps he might need to take a drug test since there is no way that Twitter is worth $5 billion today or even next year.

The best way to gauge the value of a company is to look at what how the markets value a company’s stock.  For private, venture backed companies like Twitter there is no daily market for their stock, but we can look at publicly traded technology companies to get a feel for how the real world values them.  Later in this post we’ll take a look at how the market values technology companies and see how Twitter stacks up.  First, let’s take a look at Mr. Scoble’s ideas about why Twitter is worth $5 to $10 billion.

 “The experiences I'm having with business owners in every city makes me understand some things:

1. Twitter has taken over the business world and this should be very worrying for other companies like Google, Yelp, Facebook, Microsoft, Yahoo and others.

2. Twitter is underhyped. I'm now convinced that Twitter has locked up a whole raft of businesses and that Twitter is actually worth five to 10 billion dollars.

Earlier this week, the makers of Wisk (the ‘ring around the collar’ folks) announced a Facebook application to help you remove pictures on Facebook that you really don’t want the whole world to see.  Most active users of social media services like Facebook, Twitter, or MySpace have at one time or another inadvertently posted something they regret or even worse, had one of their friends post something that in the cold harsh light of day they regret.  The makers of Wisk are not the first company to offer such services.  A Google search for ‘social media reputation repair’ shows over 297,000 links.  Even the ubiquitous and wise Dr. Phil has a solution for this problem – ReputationDefender – a company that he heartily endorses on his show and their website. 

Online reputation management is important in today’s job market.  As the WSJ’s Sarah Needleman noted in a recent piece:

Preliminary numbers are in for 2009 private equity backed bankruptcies and not surprisingly the numbers are up significantly from 2008.  As reported by peHUB in 2008 there were 46 Chapter 11 filings for PE-backed firms, through November 30, 2009 there were 83.  This was a sharp increase in comparison to the two PE backed firms who went bankrupt in 2008.

My first exposure to private equity was in 2003 when I became an operating executive for a portfolio company of Golden Gate Capital and Cerberus Capital Management.  This was at the beginning of the private equity boom that lasted through 2008.  At that point in time it was inconceivable that a serious private equity backed firm would ever go bust.  It was also inconceivable that a portfolio company’s debt would ever trade at a discount.  Such events would be considered professional suicide – a bankruptcy or downgrade would seriously impinge a firm’s ability to raise debt or equity in the future.  In 2010 the world has changed and the stigma of bankruptcy simply is not what it once was.

As shown in the following table the pace of PE backed bankruptcies in 2009 significantly accelerated in the first half of 2009 and then tailed off dramatically:

The types of firms filing for Chapter 11 protection should be no surprise:

Morgan Stanley’s Mary Meeker, the “Queen of the Net”, is famous for her in-depth analyses of technology markets.  In 2009 Mary and her team have been heavily promoting Mobile Internet as the next big wave in the technology market.  Several copies of her 68 slide October “Economy & Internet Trends” presentation from the Web 2.0 Summit have circulated around the web.  Recently Morgan Stanley released the 671 slide presentation, the Mobile Internet Key Themes Report, that underlies Mary and her team’s research.  If you were ever looking for the definitive research primer on why Mobile Internet will be the most dominant theme of the technology market for the next 5 years look no further.  You can download the entire presentation via this link.  You can also view it below.

Here are several links to stories that I never got around to commenting on this year.  Enjoy:

Best and Worst Industries of Decade, or, Why Children’s Clothes Makers Need to Get Into VoIP.  Paul Kedrosky, Infectious Greed

Stealth Startups, Get Over Yourselves: Nobody Cares About Your Secrets.  Vivek Wadhwa, via TechCrunch

The Startup Visa And Why The Xenophobes Need To Go Back Into Their Caves.  Vivek Wadhwa, via TechCrunch

Rangel Puts Carried Interest Back On The Agenda.  Wall Street Journal Private Equity Beat

Memo to Congress.  There are legal issues with taxing carried interest as ordinary income.  Paul Koenig, peHub

15 Google-y Perks That Will Make You Jealous.  Nicholas Carlson, Silicon Valley Insider

Why Don’t Fortune 100 CEOs Care About Social Media?, JCM at SpataillyRelevant.org

Disney's four funnels.  Forget fairy dust. M&A in the Magic Kingdom is all about process.  Richard Morgan, TheDeal.com

Barack Obama Has Better Things to Do Than Tweet.  Ryan Tate, Valleywag

Sometimes Twitter Accounts About Sh*t Your Dad Says Get You TV Deals.  MG Seigler, TechCrunch

Things VCs Never Say . . .

The folks at ZL Technologies just can’t help themselves.  Earlier this year you may recall that ZL Technologies sued Gartner for over $1.6 billion in damages after being placed, for the fifth year in a row, in the Niche Quadrant of Gartner’s Email Archiving Magic Quadrant.  The Federal District Court for Northern California dismissed ZL’s lawsuit in early November.  In their original lawsuit, ZL raised seven claims, all of which were dismissed.  In an effort to quash further litigation, Gartner has asked the Court not to allow ZL to amend their original complaint.  On five of the seven claims the Court did that, but they left a small window open for ZL to take one more bite at the litigation apple.  On December 4^th ZL did just that by filing an amended complaint citing defamation and trade libel.  You can read the entire amended complaint here.  To avoid another dismissal, ZL will need to prove that Gartner’s statements were “made with actual malice, hatred, ill will, improper and malevolent purpose and with knowledge of falsity or with reckless disregard for the truth.”  For anyone who has read the actual Magic Quadrant report you’ll see how high a hill ZL will have to climb to prevail on their allegations. 

Perhaps ZL should consider suing in the UK where libel laws are different.  As the New York Times’ Sarah Lyall noted in her recent article ‘Britain, Long a Libel Mecca, Reviews Laws’: