Category Archives: Twitter

Highlights from 2Q09 Software Equity Group Report

I’m not sure which better explains my recent decrease in blog post frequency: bit.ly or being out of the office. Either way, I wasn’t kidding a few weeks ago when I said I’m changing my sharing pattern. Much as popular business authors take one good idea and inflate it into a book, I now realize (thanks to bit.ly) that I have been taking what could have been one good tweet and inflating it into a blog post. While I’ve not drawn any definitive conclusions, thus far I’d say I’m sharing many more articles with significantly less effort than before.

Going forward, my guess is that steady state will be ~2 posts/week (instead of ~5), but those posts will supplemented by 5-10 tweets/day (RSS feed here). Because of this, I’ve added the Tweet Blender widget to my home page, made it quite large, and have set it up to include not only my direct tweets (@ramblingman) but all tweets that include the word ramblingman to catch re-tweets and such. This will probably result in the inclusion of odd items from time to time — apologies if anything offensive comes up — and if this becomes a problem I’ll change the setup.

I’ve re-enabled Zemanta after turning it off for several quarters because I found it too slow to justify its value. They’ve put out a new release, and since I’m interested in all things vaguely semantic web, I figured I’d give it another try. Finally, I’m still considering renaming the blog to either Kellblog or Kellogic, but doing so is a daunting project (think of all the links that break) which I’m not yet ready to tackle at present. So, watch this space.

The purpose of this post, however is to present highlights from the Software Equity Group’s 2Q09 Software Industry Equity Report. Here they are:

  • Consensus IT spending forecasts for 2009 predict 8% decrease in overall spending
  • Top five CTO spending priorities from the Goldman Sachs 3/09 survey: cost reduction, diaster recovery, server virtualization, server consolidation, data center consolidation
  • The SEG software index had a 23.7% positive return, bouncing back from a decline in 1Q09
  • Median enterprise value (EV) / sales = 1.4x, up from 1.2x the prior quarter
  • Median EV/EBITDA = 9.4x, up from 7.7x the prior quarter
  • Median EBITDA margin = 14.9%
  • Median net income margin = 3.9%
  • Median TTM revenue growth = 5.2%
  • Baidu and SolarWinds topped the EV/sales charts with values of 16.2x and 10.0x revenues, respectively
  • The great software arbitrage continues with companies >$1B in revenues having a median EV/sales of 2.2x while those <$100M have a mean of 0.7x. This theoretically means that the median big company can buy a median small one and triple its value overnight.
  • Database companies median EV/sales was 1.8x
  • Document/content management companies median EV/sales was 2.4x
  • Median SaaS vendor EV/sales was 2.6x, suggesting that $1 of SaaS revenue is worth $1.70 of perpetual revneue. (Though I worry the overall average includes SaaS so this could be understating it.)
  • Four software companies went public in 2Q09 raising, on median, $182M with an EV of $814M, an EV/revenue of 3.6x, and a first-day return of 17.3%
  • Five companies remain in the IPO pipeline with median revenues of $58.7M, net income of -$2.2M, and growth of 46.4%
  • 285 software M&A deals were done on the quarter with $3.1B in total value. This was down from 296 deals in the prior quarter worth $7.3B. (The lowest total value in the past 13 quarters.)
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Too Funny: Twitter Founders Interviewed in 140-Character Responses

Hats off to Maureen Dowd at the New York Times for the creative idea of interviewing Twitter founders Biz Stone (great name, reminds me of fishing guide Jack Trout) and Evan Williams in 140-character format.

Excerpt:

I was here on a simple quest: curious to know if the inventors of Twitter were as annoying as their invention. (They’re not. They’re charming.)

I sat down with Biz Stone, 35, and Evan Williams, 37, and asked them to justify themselves.

ME: You say the brevity of Twitter enhances creativity. So I wonder if you can keep your answers to 140 characters, like Twitter users must.

Clever idea. You can read the full article here.

Twazzup: A Nice Twitter Search Engine

As part of writing my previous post on swine flu, Twitter, and The Wisdom of Crowds, I ran into a nice, real-time, alternative Twitter search engine, called Twazzup, presumably as in, “what’s up?”

Most folks are probably aware of Summize, which was acquired by Twitter in July, 2008, and is now at http://search.twitter.com. I think Twazzup one-ups Twitter search in a few areas:

  • It shows you the TPH, presumably meaning tweets per hour, on a topic. Right now, “swine flu” is running at 6,667 TPH.
  • While they both show hot topics, Twazzup does a much better job of finding and suggesting related queries. For example, Twazzup is suggesting: Mexico, #swineflu, news, avoid. Twitter search is showing cool / nifty queries that aren’t related: #haiku, listening to, “is down.”
  • Twazzup shows a featured tweet (presumably using some authority mechanism), related pictures, and related news stories.

When using Twazzup, John Battelle’s database of intentions springs immediately to mind and frankly, because it’s real-time and it’s not just search phrases but little proclamations, I think Twitter/Twazzup does a much better job of sticking a thermometer in the public consciousness than a log of Google search phrases.

Using that thermometer what, besides swine flu, is on the public’s mind at present? Apophis, which is evidently an asteroid that might hit the Earth in 2036.

Gosh, folks are in an apocalyptic mood.

Stephen Arnold covers Twazzup here.

The Madness of Mobs: Twitter and Swine Flu

In talking about web 2.0, we often think about ideas like mass collaboration, a participatory web, the web as a communication platform, and generally speaking The Wisdom of Crowds in building and establishing knowledge.

I’m a big believer in the power of functional (or wise) groups to make better decisions than even the most talented individuals. I learned this first-hand years ago when I took LDP at the Center for Creative Leadership and we did a survival exercise similar to the one detailed in table 4 of this document. In our exercise, every individual — including a Brigadier General — was outperformed by the group in prioritizing a list of items necessary for wildnerness survival.

So I believe that groups guess jellybean jar counts better than individuals, that PageRank generally works for finding web pages, that feedback (used to) work on eBay (until they said sellers can only say positive things), that Diggs are useful way to identify interesting content, that Wikipedia is a great way to build an encyclopedia (particularly a technology one), and generally most of the other stuff I’m supposed to believe as good, web 2.0, Silicon Valley guy.

I believe this so much that we invited James Surowiecki, author of The Wisdom of Crowds, to keynote our user conference coming soon on May 12-14, 2009. So I’m on board with the program.

But I also wonder about the opposite, what I’ll call The Madness of Mobs. From financial bubbles to looters to Spring Breakers to a dozen other examples, we can all find examples of where everything cuts exactly the opposite way: where a wise crowd transforms to a mad mob.

So I was quite interested to find this article, Swine Flu: Twitter’s Power to Misinform, which talks precisely about how the “mass brain” of Twitter appears to be shorting out when it comes to the topic of swine flu. Excerpt (edited for brevity, and bolding mine):

Thus, Unlike basic internet search — which has been already been used by Google to track flu trends — Twitter has introduced too much noise into the process: as opposed to search requests which are generally motivated only by a desire to learn, too many Twitter conversations about swine flu seem to be motivated by desires to fit in, do what one’s friends do, or simply gain more popularity.

In such situations this, there is some pathological about people wanting to post yet another status update containing the coveted most-searched words – only for the sake of gaining more people to follow them. And yet the bottom line is that tracking the frequency of Twitter mentions of swine flu as a means of predicting anything thus becomes useless. (However, there are plenty of non-Twitter options summed up nicely on Mashable)

Hum. I should probably cop a maybe-guilty plea on blogging on swine flu. Like moths to a flame, we bloggers are drawn to hot topics.

The article continues:

If you think that my concerns about context are overblown, here are just a few status updates from random Twitter users:

I’m concerned about the swine flu outbreak in us and mexico could it be germ warfare?

In the pandemic Spanish Flu of 1918-19, my Grandfather said bodies were piled like wood in our local town….SWINE FLU = DANGER

Good grief this swine flu thing is getting serious. 8/9 specimens tested were prelim positive in NYC. so that’s Tx, Mexico and now Nyc.

Be careful of the swine flu!!!! (may lead to global epidemic) Outbreak in Mexico. 62 deaths so far!! Don’t eat pork from Mexico!!

Swine flu? Wow. All that pork infecting people….beef and chicken have always been meats of choice

Be careful…Swine Flu is not only in Mexico now. 8 cases in the States. Pig = Don’t eat

If my reading list on Twitter was only restricted to the individuals who had produced the posts above, by now I would be extremely scared … In moments like this, one is tempted to lament the death of broadcasting, for it seems that the information from expert sources should probably be prioritized over everything else.

Now, I’m pretty sure the counter-arguments to The Madness of Mobs goes like this:

  • Not all groups are wise. The Wisdom of Crowds relies of wise groups.
  • You can’t cherry-pick the scariest contributions to argue that The Wisdom of Crowds doesn’t work. Much as the abortion page on Wikipedia is the result of a rugby scrum of passionate, oppositional forces, so will be the mass brain of Twitter on swine flu. You need to look at the whole picture.

In fact, Surowiecki outlines failures of crowd intelligence and finds root causes which include groups that are too homogeneous, too emotional, too centralized, too divided, and too imitative.

Hopefully, we’ll hear more from Jim on this topic at the user conference and, in the meantime, before enslaving yourself to The Wisdom of Crowds, ponder if your crowd is a wise one, and whether you’re actually dealing with The Madness of Mobs.

Related Information / Stories

Swine Flu Tracker Map

View H1N1 Swine Flu in a larger map