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L018: How Microsoft Spent $7B on Skype and $1.5B on a Facebook-Killer Freeroll

by Jason McCabe Calacanis with LAUNCH Analyst Kirin Kalia

Certainly Microsoft bought Skype for its tremendous 600M+ member strong VOIP and video conferencing business. However, the company is also freerolling (poker speak for a free chance at winning more) on a potential social network built off a beloved Internet brand.

We were actually Skyping with Steve Ballmer yesterday and he sent a mockup of my new Skype page, which features the folks I Skype with most up top.*


Skype’s purchase made Microsoft a leading horse in the hotly contested race to a billion members of any internet service. Facebook is currently at 600M. While Google doesn’t have forced memberships like Skype and Microsoft, it does have at least hundreds of millions of global users.

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L017: PunchTab Creates Killer Frequent Flyer Program for Your Site (or "Flooz 2.0!")

PunchTab [ ]

LAUNCHERS: Co-founders Ranjith Kumaran, former co-founder of super-simple file-sharing system YouSendIt, and Mehdi Ait Oufkir, intern-turned-web-app-lead at YouSendIt.

WHAT: A "frequent flier" program for your website or iPhone app.

HOW: After adding PunchTab to your website, you can reward users with points for common behaviors such as commenting on, Liking and tweeting your content. You can also reward users for coming back each day. After accumulating a certain number of points, users can then cash out for schwag, gift cards or other premiums.  

LEVERAGE: Eventbrite found that a Facebook Like drives an average of $1.34 in ticket sales, compared to only $0.80 for a tweet. If those numbers carry over to other consumer verticals, publishers should be doing everything in their power to get more users to click that little blue thumbs up. Luckily for them, PunchTab takes just seconds -- install the widget, put the word out about their new rewards program, then sit back and hope/watch the likes roll in.

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L016: Facebook Sandbagging, 2011 Revs Really $12B Not $4B

While the chattering class wonders if there’s an upper limit to Facebook’s valuation (and throws around that “bubble” word again) our LAUNCH analysis suggests the company is holding back on the throttle.

We believe they may actually be under-monetizing by a factor of three or more.

If so Facebook’s true 2011 revenue could potentially blow away the ~$4B figure that’s been widely leaked by as much as 3x -- for a truly staggering $12B.

Carrying forward to 2012, $6B in revenue could actually be closer to $18B. That would put the then 8-year-old company at nearly half of Google's 2012 projected $40B. Assuming a 35% margin, this would imply net earnings of $4.5B in 2011 and $6 billion plus in 2012.

Combine that with a 20x forward-looking EBIDTA multiple, as appropriate for such a fast-growing company -- and Facebook cruises neatly to a $120B valuation.

And that’s just next year, 2012.

Suddenly the question of why Goldman’s a buyer despite the $50B valuation (not to mention rich civilians paying even more on the secondary market) may make a little more sense.

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L015: Flickr Founders' Farmville Finisher; Glitch in Beta

Glitch [ ]
LAUNCHERS: Stewart Butterfield | Cal Henderson | Eric Costello | Serguei Mourachov (all from Flickr). The mother company, Tiny Speck, was founded in March 2009.

WHAT: A free, massively multiplayer online (MMO) game designed to appeal to stay-at-home moms and kids -- not just hard-core gamers. Glitch lets you customize your character, a typical MMO game element, but there are no battles with Orcs (i.e., nothing to kill). Instead, you are in the minds of 11 giants, in Super Mario-looking environments doing two of the most powerful gaming mechanisms ever created: farming and leveling up. You learn skills and complete quests as you aim to build community and shape the world.

LEVERAGE: Glitch is built on a platform, so a public API is certainly coming. It took a long time to build (Stewart started in March 2009), but by doing so Tiny Speck will be able to make changes and introduce new content quickly. Zynga launches a new Farmville, Frontierville or Fishville every couple of months, so new Glitches (or at the very least more brains inside of Giants) should be coming down the pipe. Don't be surprised if some cost 99 cents.

WHEN/WHERE: In alpha since April 2010, in beta since Wednesday. In Vancouver (creatives) and San Francisco (engineers).

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L014: Ian Rogers: The Unsung Hero of Digital Music


In addition to covering notable product launches, we thought we would also start covering the exceptional folks that actually produce stuff.  

We're starting with Topspin Media's Ian Rogers -- the unsung hero of digital music.

all the best, Jason + LAUNCH Team


Ian Rogers: The Unsung Hero of Digital Music

: @iancr,,, On This Week in Startups.

TAGGED: music, mp3, digital, beastieboys, yahoo, oldskool, skateboarding, santamonica, indiana

WHY HE'S IMPORTANT: Ian has been working in digital music longer than any single person in the Internet industry: 20 years without a break.

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