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Herewith, a quick, dirty, and ultimately fruitless look at Friendster and its bubblet. Caveat lector.

Since I need a frame of reference, here’s a comparison of Friendster and eBay. Why? Because both by a not-very-painful stretch of the imagination are in the “social software” business, both rely on the economics of large user bases, and at some point Friendster will need to capitalize on the connections between its users like eBay does. Oh, and in the New New New Economy, everyone’s compared to eBay.

• Friendster. Close to $0 revenue, $53,000,000 market cap, 1,500,000 registered users. Close to $0 revenue per registered user, $35.33 market value per registered user.
• eBay. $2.1 billion expected revenue in 2003, $36.1 billion market cap, 85.5 million registered users. $24.56 revenue per registered user, $422.46 market cap per registered user.

Now, market cap per registered user isn’t by any stretch of the imagination a reasonable metric to be using to value or compare anything. In a perfect world, market cap reflects the market’s belief in the firm’s ability to generate future free cash flow (discounted back to current dollars, of course). But hey – the numbers are there for the comparing, and this is a weblog, not a corporate finance classroom.

Assume investors want a 10x return on their investment by the time they exit. Simply put – $53mm valuation today, $530mm valuation at exit. Next, we’ll be extremely generous and grant Friendster eBay’s very healthy valuation measures: price/sales (ttm) of 18.9, and a price/earnings (ttm) of 93.9. To earn a $530mm valuation, they’d need to be generating $28mm in revenue, clearing $5.6mm. Being a shade more realistic and cutting the price/sales ratio in half (earnings? who needs earnings?), and you’re at $56mm in revenue.

Leaving aside for a moment that to date Friendster has barely proven its ability to insert Doubleclick tags in its pages (468x60s? Please.) -- much less generate transaction or subscription revenues – $56mm from 5mm users isn’t impossible to envision. At 5,000,000 users (not impossible given their current 1.5mm user base), that’s about $1 per month per user. But given that pesky “future free cash flow” thing, a $56mm run rate isn’t enough – they’d need to be demonstrating their ability to generate significantly more revenue from significantly more users in the future. (eBay doesn’t have a p/e ratio of 94 because of their current operations, but because of the promise of their future operations.)

And I just don’t see that future potential. I can see 5,000,000 users paying $1 a month, but I can’t see beyond it. Maybe it’s my Missouri upbringing, but I’ll be the first to admit that I just don’t get Friendster. Tribe at least adds a layer of group organization, and Tickle-nee-eMode has their personality quiz for matchmaking; but after the initial thrill of finding your two- or three-dozen first degree friends, what’s the point? What is it that will keep me – and a dramatically growing base of 5,000,000 others – engaged enough to spend upwards of $12 per year of attention or cash with Friendster?

For me, all of this just confirms that folks must be looking at Friendster not as a standalone business, but as some sort of platform that could enhance another online businesses. That the exit isn’t a public offering of Friendster, but, like the spurned Google offer, a purchase by a bigger player. Which begs the question: if not Google, who? The big players online already have the userbase; the addition of any deduped Friendster customers would be minimal at best. Take away the users and you’re left with functionality (there are no other assets to speak of at this point – certainly not any significant revenue stream), and who in their right mind amongst the Yahoo, Amazon’s, Microsoft’s and eBay’s of the world would be willing to pay in excess of half a billion dollars for a social networking application, when your local team of geniuses could probably string one together for you for about a million bucks, and integrate it into your existing services for another million?

Am I looking at this all wrong? If so, enlighten me.

To expand on a comment I left at Steven Johnson’s post about his piece at Slate about Amazon’s new search feature: how much would you pay for searching privileges on your book collection?

Assume Amazon gave you instant access to a personalized search page for books you bought through them; essentially giving you limited digital rights to books they know you’ve purchased. If you had to pay for access to others, how much would you pay, and under what operating model? Would you add additional books to your search library at $x.xx per pop? (Would a searchable version of Johnson’s Emergence be worth $0.99 to you?) Or would you opt for an O’Reilly Safari model, where you subscribe to titles in a “bookshelf” model for a monthly or annual charge?

It’s not just about funding the technology and driving revenue from the service. It could end up being about passthrough to the publishers. Thus, the O’Reilly comparison. Many book publishers are looking to build more direct relationships with their customers; Amazon offering a book search service across a critical mass of publishers is yet another hook into the customer that the publisher would have a hard time setting on their own without other tangible benefits (access to extra content, unbeatable community, etc.)…

Reason #654 to love eBay: Collection of 26 Beanie Babies from Ex-Wife.

I know nothing about these stuffed Beanie Babies. I offer no proof of anything. It is a stuffed animal, get over it! I don’t think my ex-wife was in the Black Market Beanie Trade…but then again, I didn’t know she was having an affair either!

Welcome to friction-free commerce.

I typically feel that 200 page books deserve more than a two sentence encapsulation, but in this case I need to make an exception. Virginia Postrel’s The Substance of Style is best summarized as…

Design’s everywhere these days, because everyone’s a designer! Related finding: there’s no accounting for taste.

And I had such high hopes. (There is one interesting chapter titled “The Boundaries of Design,” which discusses, at length, the shifting role of city planners from zoning enforcers to taste enforcers, but I think it was interesting to me because of my long history with the people’s republic…)

Three related things from this morning’s news bin. First, David Weinberger’s writeup of Lessig’s talk at POPTECH. I heard Lessig last week (or the week before last?) at SFMOMA, giving what seems to be a similar talk, tuned for the art crowd. The refrain was “free culture,” where free was used both as an adjective and a verb. Second, Denise Howell’s writeup of Doctorow and Dyson’s panel at Digital ID World. Agree with the danger of unintended consequences of captured data (enforcing privacy policies is a human problem, not a technology problem), but find the potential RFID use case of smart furniture just a tad far-fetched. Third, Werbach on what is Internet infrastructure, which reminds me that end-to-enders need more case studies like Akamai to prove commercial viability of building smart apps on top of the dumb infrastructure instead of the other way around.

There’s a new version of POPFile out, which promises to dramatically improve performance (it’s never been that slow for me), through a migration the corpus from a flat text file to a BerkeleyDB database. But this caught my eye…

In a future version POPFile will add official support for message classification through the SMTP and NNTP (Usenet news) protocols.

POPFile + nntp//rss, anyone?

Bryan Boyer reimagines Chap Lap Kok Airport.

Security has become a lost concept. The impotence of metal detectors and x-ray machines has become such a point of shame that they have been adandoned altogether. Passengers are allowed to carry with them whatever they like, but they must first pass through the flooded terminal. There are no regulations on luggage because nothing survives the passage through this lake. One never quite manages to float their luggage to the other side, the change finds its way out of one’s pockets, and passports gets all wrinkled. Passengers no longer worry about forgetting toothbrushes or important documents: nobody wants a water-logged contract anyways. In the water one leaves their possessions, their identity, their worries…

One of the best things about today’s announcement from Apple? The copy on the front page of apple.com: “Hell froze over.” (Oh, and iTunes for Windows is nice, too, and the AOL deal won’t hurt ‘em any.)

File under: of course it works this way. Just discovered that cmd-double click on an URL in a terminal window opens that URL in a new Safari tab. How they managed the fit and finish of little details like that while completely blowing the dock is beyond me.

Relatedly, if they do launch iTunes for Windows tomorrow (and not just the Music Store for Windows in some web-based download-only hack, which, as I think about it, is a distinct possibility, if only to frustrate reverse switchers), it will be interesting to see how they manage the little details in a foreign environment…

Until a few days ago, I would have loved to have seen a Red Sox / Cubs World Series. But after the debacle of the AL’s game three and Dusty Baker’s press conference tonight, I’m not so sure. Even if the Sox and Cubs defy the odds, I’m starting to get that 1994 feeling in the back of my throat…

First, the Yankees / Red Sox fiasco. Those were very well paid grown men going at each other’s throats on national television. And regardless of the bragging rights, bonus dollars and emotions involved, outbursts like that don’t belong in a pennant race. Adding insult to injury, Ramirez, Zimmer, Martinez and Garcia were fined by the league for their behavior, but without any public acknowledgement by the league of either (a) why they were being fined or (b) the amounts of the fines. Memo to Selig: these are the playoffs, not some mid-June three-game road trip. Transparency into the disciplinary workings of MLB would go a long way towards re-establishing trust that the league actually cares about behavior like this.

Second, the foul ball. What a goddamned shame. Here’s a guy, clearly a Cubs fan – complete with hat and headphones – lucky enough to have a seat along the third-base line. Foul ball comes his way, and he does what any fan would do – he goes for the ball. Alou misses the catch, gets upset, and neighboring fans (the ones wearing identical Cubs hats) start pelting the poor bastard with beer and hotdog remnants. It’s one foul ball, one that would have been meaningless had the Cubs not gone on to blow the rest of the inning with subpar pitching and a critical error by Alex Gonzalez. (And for those of you not following along at home, the Cubs go on to lose the game, 8-3.)

Hey, it sucks to lose. And it sucks to lose if you’re a Cubs fan, if only because they’ve had so much practice. But the way this is being handled by the press is irresponsible, and even dangerous. In the broadcast immediately following the game, ESPN’s SportsCenter anchor essentially blamed the fan for the loss, and joked about whether he’d be safe inside the city limits of Chicago. At this moment the front pages of ESPN.com, The Chicago Tribune, Yahoo Sports, The New York Times and MSNBC all feature that heartbreaking photo. But the insult on top of the injury was Dusty Baker’s comments at the press conference after the game. When asked about the foul ball, Baker shook his head in disbelief and muttered that the guy – the one in the bright blue Cubs hat and headphones along the third-base line – must have actually been a Marlins fan.

I know it would be naive of me to tell these guys “hey, relax, it’s only a game,” since professional sports are anything but. For me, though, the images of Zimmer on the ground, the Cubs fan wiping beer from his face and Dusty Baker crying “fan interference” have tarnished baseball. Nine years after the World Series that wasn’t, it’s starting to feel like 1994 all over again.

Update: Andy Baio posts a summary of how The Smoking Gun and the Chicago Sun-Times have outed the fan’s name, his age, employer, little league team and neighborhood. He’s also tracking photoshop remixes of the photo. What a shame.

Update #2: Some quotes from Cubs players. Pitcher Mark Prior got it right…

“We didn’t lose the game because a fan jumped in (Alou’s) way,” he said. “Ninety-nine percent of the people here in that situation would have done the same thing. You can’t blame him. Hopefully, most people understand that. We didn’t lose the ballgame because of that.”

First baseman Randall Simon did, too…

“If something happens to that kid, it’s going to hurt us as a team. I am going to be praying tonight for nothing to happen to that kid.”

But Moises Alou hedged…

“I kind of feel bad for the guy,” Alou said. “Every fan in every ballpark, the first reaction they have is they want a souvenir. They don’t think about the outcome of the game or what could happen. Unfortunately, it happened. The guy saw a shot at having a baseball, and he went for it. Hopefully, he won’t have to regret it for the rest of his life.”

Update #3: The Dead Parrots Society has links galore, including this Editor & Publisher interview with Sun-Times editor-in-chief, Bob Steele’s piece at Poynter.org about the Sun-Times’ naming decision, and a link to a supposed eBay auction of the guy’s business card, which has since been pulled.

Reason to explore LASIK, #36: having a rambunctious almost-three-year-old with a knack for eyeglass-damaging couch moves.

Part of the genius of Sofia Coppola’s Lost in Translation was her ability to insert two subtle Bill Murray pop-culture (self)references and have them actually enhance the emotional tone of the movie rather than crush it under the knowing wink of irony. Exhibit A: the man who essentially wrote the book on over-the-top lounge singers doing a delicate karaoke rendition of Roxy Music’s More Than This. Exhibit B: the audience connecting the dots between the younger Murray on the golf course in 1980 with the elder Murray stepping up to a Mt. Fuji-framed tee and hitting a picture-perfect drive with a picture-perfect swing.

Tim Bray advocates an economic approach to the spam problem, where senders pay a nominal fee to an “SMTP4All, Inc.” to have their mail whitelisted by recipients. Sounds great in theory, but impossible in practice. First, you need a major ISP to be on board to get to critical mass, but then you’d have a first-mover problem: If any one of AMY (AOL, Microsoft, Yahoo) did it first, the others (and consumers, and the press) would cry foul – “why should our users have to pay to send mail to your system?” Second, if the market exists and there’s money to be made (especially on the float), then there’s bound to be more than one player jumping in, which leads to interop problems that put the current challenge / response mess to shame. With current c/r systems, all users have to spend is time to get whitelisted by their friends. In a heterogenous pay-to-send world, users would have to pony up money or credit to get whitelisted with several different brokers. Assuming that network effects would condense the market to a reasonably-sized oligopoly, you then have today’s equivalent of IM (border conflicts, anyone?) with an even stronger economic disincentive (the float) to interop.

What would Google want with Friendster? Through the “Google as advertising platform” lens, beyond the obvious pageview mill, what I see is an opportunity to more finely target advertising on Google and its advertiser sites based on the results of the ads that have been delivered to the friendsters in your network. “These ads have outperformed with Lance’s friends, so I’m going to serve Lance these ads.” Through the “Google as less evil” lense, the same network could be applied to personalized search results – “you searched for “Dora the Explorer,” here are results that people in your extended network have found useful.” (See also a 1997 bit about how text analysis could be used to present more relevant advertising, in the user’s own idiom…what if Google’s advertisers let Google rewrite their micro ad copy on the fly? Speaking of which, why isn’t Google inserting ads into their email news alerts?)

Apple launching iTunes for Windows could be the app that pushes me to a reverse switch on my machine at home. It’s the only iApp that’s keeping me on the platform – I’m not doing enough movie making to care about iMovie; iPhoto’s a dog compared to Photoshop Album -- and there are enough benefits on the other side (commodity hardware, integration with the tools we use at work) to make a $500 decision to buy a new PC an easier one than an $1800 decision to upgrade our aging iMac.

Flavorpill Productions deliver some of the best looking email newsletters around, and do a fantastic job of integrating their sponsors into the content. They’ve just launched earplug, “a newsletter dedicated to electronic music and its many dynamic styles and influences.” As you may imagine, I’ve subscribed to dozens upon dozens of email programs, and Flavorpill’s messages stand apart in my inbox and regularly get read. Not deleted, not filtered, not skimmed – read. Go subscribe.

Jeremy Allaire posts about Flash Paper, a Macromedia alternative to Adobe’s PDF. While I agree with the notion that we need alternatives to the ever-bloating PDF monster, Macromedia’s missing a key user modality with digital documents – email attachments. PDFs get saved, forwarded, marked up, forwarded on again, reused, repurposed, in a way that web-bound Flash paper documents couldn’t… Even if Macromedia gave away the Flash paper producer (unlike Adobe, which charges a hefty sum for it), they’d need to be in bed with the intranet / workspace providers to make sharing those docs as easy as emailing an attachment…and then they’d still have a problem with offline use and heavy inbox addicts…

Jerry Michalski posts a paper by Russell Ackoff titled “A Brief Guide to Interactive Planning and Design.” It’s essentially a business person’s guide for creative destruction; reimagining an organization in an idealized state in order to facilitate the achievement of that idealized state. Ackoff’s clear and present prose reminds the leader that incremental improvement is not the road to enlightment; instead, create the future state here, in the present, as best you can. Pages 10 through 13 are brilliant “suggestions” for questions that every organization needs to ask, including simple ones like “How should the organization go about determining if a competitor has introduced a new and superior product? How should the organization respond to such introductions?”

Like many before me, I’ve finally seen the light and moved operations over to Typepad. Gone are the worries over server uptime, database connectivity issues, patching MT every once in a while, etc. Not that it was that worrying; it’s just nice to be reminded that you can pay someone else to worry about those things, and still get damned good piece of publishing software that supports all the tags you’ve come to know and love. That, and the Typepad servers are speedy, the photo albums convenient, the posting by email useful, etc., etc. You know the drill. Here endeth the ad.

The New York Times has a fantastic Flash infographic that shows, by county, results of the recall, the replacement race, the voting systems used in each county, and the results of the 2002 race between Davis and Bill Simon. Instead of a geographic map, though, I’d love to see this data presented in a map of the market-style grid, where the size of the boxes represented the voting population, and the results were shaded based on the ratio of votes for and against the recall…

The recall shocker is that Schwarzenegger appears to have won with more than 50% of the vote. He only needed a plurality; despite the yard-long list of candidates on the ballots, the actor was able to command a majority of the electorate in an battle that saw record-high voter turnout. Arnold, for better or worse, appears to have a mandate. One could argue whether this is in spite of or as a result of the issue-free personality-driven campaign.

Haughey launched PVRBlog less than three months ago. It’s already such a popular resource for information about digital video recorders that the PR folks from MovieBeam offered up an exec for an email interview. And oh yeah, the site makes money, too.

Naval Ravikant injects some sense into the current blog-o-meme about the supposed “death of email.”

Sure, a few, tech-savvy people will get frustrated and try and use a different mechanism. Many will use webs of trusted whitelists (think sixdegrees on your address book) or challenge-response systems. A few will storm off to some new, secure communications mechanism, that authenticates senders and imposes a true cost on them. Even fewer will migrate to wholly new paradigms like “shared workspaces.”

(Just to be clear, I most certainly have a stake in the future of the inbox.)