Memo to Groupon: 'Hurry, This Deal Expires Soon'

PointCast . . . Yahoo! . . . Groupon??

Insiders say a tentative deal was struck in which News Corp. would acquire PointCast for $450 million. But before the papers could be drafted, issues surfaced over PointCast's revenue projections and the price tag, insiders say. The offer simply went away.

--"PointCast, The Rise and Fall of an Internet Star" ; Bloomberg BusinessWeek (April 26, 1999)

So, apparently Groupon's founders have passed -- for the time being -- on Google's $6 billion buyout offer ("Groupon's Sales Price: No Bargain?").

Owning shares in neither Google nor Groupon, I "don't have a dog in this fight," as they say.

Nevertheless, it's hard not to draw historical parallels with earlier technology trailblazers like PointCast and Yahoo!

In both cases, each company attracted -- and rejected -- rich takeover offers from much, much larger but behind-the-curve players (News Corp., Microsoft) who viewed an acquisition as a way to leapfrog competitors.

When PointCast and Yahoo! overplayed their hands, the deals went away -- and so did their (momentary) industry-leading positions.

Driving home the point: an email in my inbox just this morning, whose subject line trumpeted: "Hurry! This deal expires soon - 80% off Cleaning, Exam, and X-rays!"

Groupon?

Try, Angie's List.

(Can you say, "low barriers to entry??").

P.S.: On a personal note . . . want to know why Yahoo! named its (now-defunct) monthly magazine "Yahoo! Internet Life?"

Yahoo! approached yours truly in 1997 about buying Off-Line, my copyrighted newsletter covering online Investor Relations at the time.

I declined.

As they say, "Oops!"

(I never did find out how much it was worth to them. I suppose it's possible the answer was, "not very much").

Groupon's Sales Price: No Bargain?

Google is near a deal to acquire Groupon, the pioneering online discounter, for as much as $6 billion.

--The New York Times (11/30/2010)

There's got to be not a little irony in Groupon being bought out at something like 15x its annual revenues of $350 million.

By contrast, established consumer goods companies can sell for 2x-3x revenues.

Selling Wall Street Journal Subscriptions Against My Will

City Lakes Real Estate Blog 2.0:
Due Early 2011

A capitalist will sell you the rope to hang him with.

--Lenin

I suppose the blogging equivalent of Lenin's famous line is, "a blogger whose ads are served by Google will end up promoting that which they denounce."

Which explains all The Wall Street Journal ads bracketing my last post (Google samples key words, and serves ads that appear to be related -- never mind the context).

Amongst other upgrades (Wordpress platform, "jumps," customizable format, etc.), the new-and-improved version of this blog will have better control over ad-serving.

Look for it in early 2011!

P.S.: Personally, I always thought that The Journal should charge for its (time-saving) annotations, and give away the unabridged articles. Instead, it's the other way around.

Dear Google: Please Get Your Sh*t Together

Message to Google (See Above*)

Don't be evil.

--Google corporate motto

I suppose it's the blogging equivalent of losing an election to a deceased opponent, or "none of the above" on a ballot.

What am I talking about?

Routinely being buried on Google's search engine rankings by dozens of other Twin Cities real estate blogs.

That's quite an accomplishment, given that there aren't dozens of such blogs; charitably defined (see next), I come up with no more than 8-10 real estate blogs locally (including some truly excellent ones, by the likes of Aaron Dickinson and Teresa Boardman).

What constitutes a "genuine Twin Cities real estate blog?"

My three criteria are: 1) regular posts -- if not daily, at least multiple times weekly; 2) original (vs. "borrowed" or syndicated) content, with a consistent point of view; that 3) regularly discusses and analyzes the local (Twin Cities) and national housing market(s), respectively.

Bone to Pick

So, if you search "Twin Cities real estate blog" on Google this morning, what will you find?

Here's a (partial) roll call of putative Twin Cities real estate blogs that currently out-rank "City Lakes" (which, for the record, pops up 17th in response to the query, "Twin Cities real estate blog"):

--"Living Twin Cities" (#9): last three posts are Oct. 5, Aug. 11, and July 20 (less content than I've posted this weekend).

--Pete Aplikowski's Real Estate Blog (#7), featuring all of three posts in October, and none yet in November.

The blog's solitary September post largely consisted of this zinger:

If you know anyone who needs help renting their property, please let me know. Sometimes it makes more sense than selling it given the current market conditions. I can handle all the details, showing property, drafting lease, etc.. The fees for this are very minimal compared to selling.

--"Minneapolis Real Estate Blog" (#5): Visit this one and you'll see that the author abandoned the blog in favor of a new-and-improved one last April; the post prior to that is from July.

July, 2009.

Search Engine (Dis)Optimization

Honestly, I'm delighted that anyone reads my blog.

And I certainly wouldn't expect every Realtor-blogger out there to generate original, quality content on a daily basis.

Or for Realtors to blog at all.

But that hardly explains getting lapped by less active (or defunct!) local realtor blogs.

So what does (explain it)?

Pay-for-Play

I'll leave the search engine algorithms to Google's quants, but you'd certainly suspect one (or a combination) of these explanations: 1) Google searches can be gamed; 2) Google searches aren't so smart after all; 3) they're bought and paid for.

Can you say, "pay-for-play?" (or more to the point, "Google Adwords").

If it's #3, how about ditching the false piety (see, corporate motto) and providing disclosure to that effect ("our search results are dictated by corporate sponsors")?

And to think, all this from the search engine not owned by Microsoft (don't even get me started on "Bing").

*The graphic above shows the number of visitors and page views for City Lakes Real Estate from Sept. 15-23.

The "spike" (statistical middle finger) was Monday, Sept. 20, when my post on Elizabeth Warren ("The Wall Street Journal Whiffs on Warren") got picked up nationally.

The RE Biz & "Inferior Goods"

McDonald's, iTunes --
and Real Estate Signs

In economics, the term "inferior goods" means anything that you consume more of as you have less money.

Historically, foods like hamburger (vs. steak), potato's, rice and the like qualified; today, that would be fast-food chains like McDonald's, and all the Dollar store chains that appear to be doing brisk business.

"Inferior goods" applies to other things, too.

So, demand for entertainment is also surprisingly recession-resistant.

That's because people tend go to the movies more, not less, even as they cut back on luxury goods and services.

Or perhaps makes that "download more, not fewer, iTunes."

Real Estate Equivalent

In the real estate business, the equivalent would be good, 'ol-fashioned real estate signage.

Even as Realtors pare back expensive media advertising (how do you think Google makes its billions?), they are stepping up -- or at least maintaining -- their purchases of "For Sale" signs, sign riders, banners and other hallmarks of boots-on-the-ground marketing.

At least, that's the take I got this am from the sign company I've done business with for years.

"Know Your Customer" Rule -- Real Estate Version

Googling (Facebooking? Zillow-ing?)

Your Buyer/Seller

Financial institutions are subject to something called the "Know Your Customer" rule, to prevent identity theft fraud, money laundering and terrorist financing.

I'm starting to think that real estate has something equivalent, called the "Know Your Buyer (or Seller)" rule.

By that, I mean that I'm increasingly seeing clients "Google" -- not to mention "Facebook" (is that a verb yet?) -- their transaction counterparts to glean important, personal tidbits.

Like, what kind of job do they have?

Where are they from?

Where do they currently live -- and what's it worth?

I haven't encountered the following yet, but I'm sure it's just a matter of time: "They're only offering $X for my house!?! But he/she just made partner!!"

Misgivings -- and Misinformation

The trend is clearly accelerating, so it hardly matters that I have misgivings about it.

But I do -- two, in particular.

One. It feels voyeuristic and intrusive.

OK, it is voyeuristic and intrusive.

But I suppose that's precisely what's driving the exponential growth in social networking sites generally.

If you don't want your personal information out there, don't participate -- or, take steps to safeguard it.

Two. Publicly available information yields only a partial -- if not misleading -- picture of someone's finances.

As I've blogged before ("Taking Trulia for a Spin", "Automated Valuations on CyberHomes, Zillow, etc.), third party Web sites are notoriously unreliable when it comes to appraising homes.

They rely on stale tax data; don't know the interior of a home (floor plan, aesthetics, etc.); and are clueless about things like updates (or not), additions (or not), and local price trends.

Even if they were spot on, they still don't tell you what someone owes on their home -- or what they have in their bank account.

Plenty of people who look flush are actually maxed out, living on their credit cards; conversely, others without big jobs, homes, and cars have perfect credit scores and can borrow whatever they want. Or can pay cash.

Which is why, ultimately, all the personal info in the world matters much less than what a lender, vetting an actual Buyer, has to say.

For now, at least to a Realtor, the rest is just (occasionally titillating) noise.

Picking Stocks (& the Case for Indexing)

A Realtor's Investing Primer

In addition to advising clients on real estate transactions, I occasionally get asked what I think about stocks (that's what you get for following the market for 40 years -- in my case, literally since I was 10 years old).

Unfortunately, I don't get paid for the latter, which allows me to remind people that "you get what you pay for."

With that caveat out of the way, my standard advice to most would-be investors is to consider low-cost, broad-based index funds -- as opposed to picking individual stocks.

That's because, to do the latter well, you have to get 3 things right.

One. Forecast which markets are poised to grow the most.

Just to take one example, consider whether smart phones are a good market to be in the next 5-10 years.

You'd certainly guess that unit sales are going to go up.

But that doesn't mean that the revenues and profits of companies selling smart phones will go up.

Just look what happened to PC makers.

Even though PC sales are higher today than ever before, PC makers (Apple is much, much more than that) have largely been "dud" investments because PCs have plummeted in price.

So, Dell's stock today is less than half of what it was -- 10 years ago.

Two. Pick the winner(s) in a growing market.

In retrospect, it seems obvious that Google was destined to emerge as the "winner-take-all" in the online search and advertising category.

But that was hardly apparent back in 2000.

Then, dozens of companies were vying for that position.

Companies like AltaVista, Excite, Lycos, AOL, C/Net, CompuServe, Yahoo!, Microsoft and literally dozens of others.

Ask investors in those companies how much money they made (if they remember, and are willing to talk about it).

Admission: my negligible position in Microsoft is worth -- yup -- half of what I paid for it a decade ago. At least I got a tax loss out of it along the way, by doing what's called a "wash sale."

Three. Buy (and sell) the winner(s) at the right price.

Speaking of AOL . . . my all-time home run was buying it in 1997 at a (split-adjusted) price of 29 cents a share.

Not being greedy, I unloaded my position for a huge profit between $5 - $10 share.

The stock ultimately went to $90(!) a share before collapsing -- along with the entire Internet bubble -- in 2000.

Perils of Stock-Picking

To go back to Google, even though the company continues to enjoy explosive growth and bountiful profits, its stock is well below its all-time high of $700-plus a few years ago.

So is it a buy now at around $500?

Search me.

None of the above is to say people shouldn't be in the stock market.

Rather, the right strategy for most people is be in all of the market (including overseas), so they're positioned to gain when stocks inevitably advance again for real, sometime in the future.

Google vs. Bing

"What's Sauce for the Goose . . ."

Is it my imagination, or did Google's home search page just become a Bing look-alike?

The latter -- Microsoft's entrant in the all-important "search category" -- has famously showcased spectacular natural settings and other arresting scenery on its home page.

And now Google does, too.

My copyright law is pretty rusty, but it's hard to see how a company (Microsoft) that has made a (very nice) living "lifting" its competitors' best features and integrating them into its own has much ground to complain, legal or otherwise, about what Google is doing.

Untapped Market: The Un(der)employed

"Rich in Time," or,
Making Lemonade
Out of Un(der)employment

No, they don't have a lot of disposable income -- that's kind of the whole point, actually.

But it turns out that the nation's 20 million-plus un/underemployed represent a huge, untapped market -- and companies with a recreational and/or social networking angle are catching on.

Apple Computer sure has.

It makes sense, actually; after all, how much reality TV can one person really watch?

How many resumes can you launch into the ether on Monster.com?

(Hey, they didn't have those things during The Great Depression -- not to mention iTunes, the Internet, Google, flat-panel TV's, Facebook, etc.).

Consider this headline from today's Wall Street Journal:

TGIFF: Some Idled State Workers Find "Furlough Fridays" Can Be Fun: Forced to Take Time Off, Some Hit the Ski Slopes; a Discount on Sushi

It turns out that some California ski resorts are offering steeply discounted lift passes to state workers every Friday, when literally tens of thousands are now "furloughed."

Making Lemonade

Instead of wallowing in one's idleness, why not use it, productively?

To educate one's self.

To get in (better) shape.

To spend quality family time.

To prepare cheaper, healthier food (at home, of course!).

To connect with friends -- or make new ones.

Why not, indeed??

None of the above activities needs to cost a fortune (skip the health club and go hike in a state park); some -- like cooking at home -- actually save money.

And, of course, more companies are targeting such consumers with discounts and other price breaks.

"Furlough Friday"

Stigma loses it power when everyone is similarly affected.

So in the housing markets that dropped the most -- places like Las Vegas, South Florida, etc. -- "strategically defaulting" on one's mortgage isn't such a big deal.

How long until being under/unemployed is viewed similarly?

Unfortunately, it just doesn't pay so great . . .

Is Goldman Sachs Following in Microsoft's Footsteps?

Who Will be the "Google" of Wall Street?

Anyone else feeling a sense of deja vu here?

The last time a corporation -- U.S. or otherwise -- inspired as much sheer disdain, disgust, and outright hostility as Goldman Sachs does now was Microsoft almost 20 years ago.

At the time, Microsoft was beginning to practically gush money (hmm, reminds me of another company) from its monopoly on PC operating software (illegal monopoly . . hmm, more deja vu).

Lifted from an inattentive IBM for a veritable song, DOS, the original PC operating software, gave Bill Gates unparalleled power and control over the PC desktop -- and the burgeoning PC market.

Gates shrewdly -- and ruthlessly -- wielded that power.

By 1999, he'd amassed the biggest fortune the world has ever seen: at the peak of the tech bubble a decade ago, Gates was worth something north of $100 billion. Even though Microsoft's stock is more than 50% lower today, Gates is still the richest man on the planet.

The U.S. v. Microsoft

Unfortunately, what was (very) good for Gates and Microsoft was manifestly bad for everyone else.

When it became increasingly obvious that Microsoft's growing monopoly power threatened to smother the PC business -- and perhaps even tech innovation generally -- the U.S. Justice Department finally acted, suing the company for multiple violations of U.S. antitrust law.

Over the next decade, the government and Microsoft basically fought to a draw.

Given that Microsoft had more lawyers working on the case than the Justice Department did -- and that Microsoft spent millions lobbying to have the Justice Department's budget gutted in the middle of the litigation -- that was no small accomplishment for the government lawyers!

Notwithstanding the murky legal outcome, there's a case to be made that the government's lawsuit did achieve its ultimate aims.

While Microsoft's de-fanging (sort of) came too late to save Netscape, it arguably bought Google enough time to mature beyond infancy.

By then, it was too strong to be destroyed, and too far ahead to be caught.

Will Goldman Sachs suffer a similar fate?

It's certainly possible that I read too many blogs, but I don't think I'm wrong that there is a lot of latent anger in the country at the moment -- over the economy, over the housing market, over the direction of the country generally.

All it really needs is a lightning rod.

If things continue on their current course, the leading candidate to be that lightning rod is . . . Wall Street.

Next for Goldman Sachs: A Legal Quagmire?

Given how powerful the financial industry is, it's likely too much to hope to see it vanquished outright.

However, it's easy to imagine public anger at Goldman Sachs morphing into a spate of proposed legislation, lawsuits, and the like that -- over a period of years -- sap the company's energy and coffers.

And perhaps most importantly, distract management.

There's no way to prove that a focused Microsoft -- vs. one distracted by the government's antitrust suit -- would have captured Google's market before Google did (who knows, Microsoft still might).

But it couldn't have helped.

It's equally plausible that a just-so-slightly chastened Microsoft refrained from pouncing on Google, knowing that it was under such public scrutiny.

It's easy to imagine Goldman Sachs suffering a similar fate.

If so, that means Goldman Sachs' "Google" is already out there, somewhere, plotting its next move . . .

P.S.: even Bill Gates acknowledges the uncanny parallels between Microsoft and Goldman Sachs, commenting once that Microsoft's biggest competitor for "talent" was Goldman Sachs.

Switching Phones vs. Switching Homes

A Case of, "If it 'Aint Broke? . . .""

Are would-be home Buyers sitting on their hands for the same reason I'm still using my (almost) three-year old Palm Treo?

Granted, I'm not the typical cell phone buyer.

As a Realtor, I want my cell phone to have an infrared sensor so it can double as a "Smart Key" (what Realtors use to get into houses), just like my current phone does.

It also needs to seamlessly "hot synch" with Outlook, so that I can keep track of my appointments and my existing, 1,500 contacts (give or take a couple hundred).

My wife also needs a phone, so suddenly I need to become an expert on all the major carriers' "family plans."

Finally, both my wife and I have corporate discounts through our respective companies.

So, every time I research a plan, the sales rep has to go through an online rigamarole to find out what the applicable discount is, what's covered ("activation charge"), what isn't (hardware), etc.

Phew!!

Paralysis

Having navigated all the foregoing, whenever I'm just on the verge of replacing my Treo -- which still works pretty well, by the way -- there always seems to be "something new," just around the corner: a more generous calling plan; another "latest and greatest" phone about to make its debut; some new "killer app" or software.

In the last month, that would be 'Droid," the would-be "Linux" of the cell phone world (an open, non-proprietary platform pushed by Google and others).

There are probably a couple other considerations as well . . . but you get the idea.

In fact, the software industry long ago discovered the paralysis-inducing effect of promised, new products, and coined the term "vaporware" to describe rumored, new products or upgrades whose sole purpose is to keep would-be competitors' customers on the sidelines.

Mastering Today's Housing Market

Substitute "tax and finance" for "technology," and how much different is all this really than the housing market confronting prospective Buyers today?

For at least two years now, buying a home involves explicitly weighing many (if not all) of the following variables:

--current tax incentives (federal, state, & local);
--possible future tax incentives (federal, state & local);
--risk of home prices falling further;
--risk of home prices increasing out of one's reach (a real consideration for entry-level Buyers);
--one's credit scores and eligibility for a mortgage;
--direction of interest rates;
--the risk that the home one selects won't appraise;
--economic outlook, and in particular, one's job security;
--direction of property taxes (and inheriting an inflated property tax bill for the first year or two).

One more time: phew!!

In my experience, most of my Buyer clients today are much less focused on making a killing than on avoiding getting killed.

If the housing industry really wants to attract more Buyers, reducing the number and complexity of the variables they need to consider would be a good start.

Bing, 'Bot's & Blog Rankings

Bing vs. Google: No Pay, No Play

It is a bit of an understatement to say that this blog's rank on Technorati, one of the third-party sites that track such things, has bounced around.

In the almost two years that I've been blogging (yeah, it's a verb), Technorati has ranked City Lakes Real Estate Blog somewhere between the high 400's (as in thousand), and and 1.7 million.

Until now.

I checked the other day, and this blog now ranks just over 24,000 worldwide (thanks, regular readers!).

You'd guess that has something to do with my stellar posts (IMHO); as I wrote last month, there are now more than 50(!) posts from this blog that rank (or did) in Google's "top ten" hits, worldwide ("City Lakes Hits").

However, over on Microsoft's search engine, Bing, this blog -- and presumably, many others like it -- don't exist.

What gives?

Bing vs. Google

Bing's rankings are for sale; Google's aren't (or at least, less so).

To take just one example, my post titled "How Big a Premium for Small Lakefront" currently ranks #1 worldwide on Google.

Type in "lakefront premium" on Bing and what do you get?

Literally thousands of (paid-for) hits for lakefront properties for sale. Meanwhile, I stopped searching for City Lakes Real Estate . . . ten screens in (10 posts per).

The blogs touting lakefront properties for sale are both buying key words directly from Bing, and in many cases, using sophisticated software called "bots" to attract the search engines' attention and drive up their placement.

P.S.: the other way I know this blog's rank is climbing is that I'm getting more and more unsolicited email from SEO ("search engine optimization") consultants promising to put me on Google's home page.

Thanks, guys, I'm already on it!

Blog Rankings

The Twin Cities' 40th Best RE Blog? Really??

Run a Google search on "Twin Cities' best real estate blog" and what do you find?

Not this blog.

At least, not in the top 25 hits ("City Lakes Real Estate" was actually 40th as of this morning -- at least before this post pushed it up several notches).

Instead, you'll find a (mostly) motley collection of stale blogs, non-blogs, and completely inactive blogs.

Case in point: according to Google, the 19th-highest rated Twin Cities real estate blog is something called "Broker Eric Kodner's Twin Cities Real Estate Blog."

Last post (out of less than ten total)? February, 2009. That's how many fresh, topical posts (if I say so myself) there have been on this blog in the last week.

Dear Reader: Any Suggestions?

Nothing against Mr. Kodner, but it's hard to compare his blog with one that's been mentioned or quoted in The New York Times, realclearmarkets.com, Star Tribune, Pioneer Press, etc. numerous times the last year.

[Sorry, had to get that off my chest -- can you say, "Google" and "pay-for-play"??]

P.S.: to be fair, included in the top Google hits are some excellent local real estate blogs, including Teresa Boardman's St. Paul Real Estate blog and Alex Stenback's Behind the Mortgage.

P.P.S.: if you regularly read this blog, and have a suggestion on how to remedy this problem -- at least one that doesn't involve my paying buckets of money to Google -- please feel free to call (612-925-7701) or email me at rosskaplan@edinarealty.com. Thanks!