No way, says Steve Case, a not disinterested party in the debate. He’s an investor in LivingSocial, so of course he thinks these big group buying sites are worth billions.
But, he thinks the reason these sites aren’t just bubblicious fads is they have something that’s better than adwords, better than magazine ads.
LivingSocial and Groupon drive people into your business. Maybe some of them don’t come back, but many do. That’s a powerful business.
Case made these points on stage at our Ignition conference. Below, are our live notes from his talk with Henry Blodget:
Hello! Our own Henry Blodget is taking the stage with Steve Case this morning to talk about the future and past of media.
We’ll be taking some live notes. Click here for the latest, or just refresh your browser.
8:33: Henry is introducing him.
8:34: Here we go! SC: “At the Time Warner centre, how about that?”
8:34: HB: LivingSocial — people obsessed with the idea that Google has gone into bubble land with Groupon, what’s going on?
SC: I think it is next generation local, it’s a great space. Easy to attract customers in a predicible way. Living Social doing over $1 million in revenue a day, it really is win win win. Better than adwords, better than magazine ads. This brings customers into the store. Obvs. not everyone coming back, but many will.
8:36: Social commerce isn’t new, but now is the right time. Social media, you can drive the viral spreading. I think it’s real.
8:37: The other thing that’s interesting, it’s about making the right pivot. We help incubate these startups, they wanted to do apps for Facebook. Quickly had 80 million people using apps. They werent making money, they pivoted into the social commerce space.
8:39: Reminds me of AOL, we slammed down accelerator on marketing in late 80s to fend off coming of Microsoft. LivingSocial was one of the great pivots.
8:40: this is a business where you want to be big or you want to go home. If Google buys Groupon, then LivingSocial number one indepedent company. Not even sure who is number three. People see the numbers are surprised and impressed, more under the hood than you think. We’ll do easily over $500 million.
8:41: There are markets that are profitable, there are markets that aren’t, as they invest. (Doesn’t sound like its “spewing cash” despite big revenue.)
8:42: Onto twitter…when I first did it, “I don’t really get this.” What happened, the users took control and drove it in a different direction. It’s about what you care about, the sharing of links has become the big driver for me, a way to curate context. Context adn community blur on Twitter.
8:43: They can’t move too aggressively shutting out developers, but at the same time they can’t just be an API company. I think they’ll figure it out, though. Twitter can’t be a walled garden like AOL.
8:45: HB: They’ve ruffled feathers by picking their spots, what is it like for the developers?
SC: (Investor in POstUp, a Twitter ad play.) PostUp is rolling up 3rd party stuff around Twitter. We can become Twitter’s biggest partner, like EA is to Nintendo. Twitter legitimately struggling with a tough strategic issue.
8:47: I think they can’t create a big business. AIM should have morphed into Skype, but Time Warner was protecting other assets. AIM was a big missed oppty. Twitter can’t just slap banner ads on it. They’ll figure it out.
8:48: If they don’t figure it out, then someone else will.
8:49: HB: What is it like to look at AOL now?
SC: It’s a mixed bag. Our team worked hard to build it…really build the internet. Goes back to reading the “3rd wave.” I always believed in interactivity. Even then in the 80s and 90s. We were first to go public, telling people what a PC and a modem was, the fact that AOL a decade ago was dominant, I remember MSFT tried to stop the merger, Murdoch was suing us. We were building a portfolio of great businesses. It’s “disappointing” and frustrating the company isn’t like that anymore, “no question about it.”
8:51: My view was a good idea poorly executed for the merger. What we said at the time has proven to be the case. Broadband acceleration, etc. I knew it was the future. There was a risk of being locked out, merging with Time warner Cable was a good idea, and the assets of Time Warner would be good. Also, the $150 billion market cap was tough to sustain. So merger would help. It made business sense, strategic and financial diversification made sense, but these things are hard. The market deteriorated. The boom bust.
8:53: there are companies that are attackers adn companies taht are defenders. AOL was an attacker. Time Warner was a defender. When AOL lost that attacker mentalility it lost its way. Disruptive companies have a mentality that is about risk taking. Fortune 500 is about risk mitigation. It’s about protecting against the downside.
8:54: Car business (for example) went south because it became a defender with lots of attackers around it.
8:55: HB: Has internet matured? SC: Sure, but it’s not going to be stable. Google still has the attacker mentality. The board has the risk taking mentality. Waaay to much time is spent playing defence in other companies. I give Facebook credit, they’ve executed brilliantly. I think they’re both well positioned.
8:56: One thing that’s slowing down Google is the regulatory, EU is looking at them, ITA is under review. AOL got to this point, so did Microsoft. At a certain scale you have to operate differently. You can’t be tone deaf, but I don’t think Google has been.
8:57: HB: You have a theory we build Internet as a platform, now we have possibility for next 25 years…
SC: Yes, you can use the Internet all throughout the day, and it’s wonderful. Next 25 years is around how you change all aspects of life because of the internet. ZipCar is good example, only possible because of the Internet. Last 25 years, making internet part of daily life? CHECK. Now it’s embedding it into daily life. Every aspect of our lives is improved because of it.
9:00: And that’s a wrap.
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