As you can guess, the website traffic for everytrail.com is growing at a healthy clip. When i came in to help with engineering, the first order of business was to tackle that. We were hosting a grid hosting company layered.com. The issue with this grid hosting company is that we had to pay for compute units we got “provisioned” and invariably it seemed that we had to provision a lot of compute and memory resources for our site. As we were growing we need to add more compute units. The idea seemed great but 3tera’s software which powered this grid sucked. We were ending up paying way too much money for the value we were getting.
I pressed early on to move to Amazon EC2, mainly because i knew how to set up things on there, and partly because 3tera’s system seemed like a lot of overhead. Somewhere the number of compute + memory resources and the performance we were getting from those were not adding up. It seemed ridiculously low.
The move to EC2 went way smoother than i thought it would. A lot of different software available, and easy to setup and upgrade! The results were even more amazing. We noticed significant improvement in the site performance as we measured it, and even just browsing to the site, but even more impressive are google bot stats from google webmaster site. As you can see, early december we moved amazon ec2 and the load time for each page is down and the number of pages downloaded is up
.

Needless to say, our servers have been humming since, and handling 60%+ month over month growth since december. All this at a cost saving of approximately 60%!! Moving to EC2 cut our hosting cost by 60% (this may quickly catch up to old number if we keep growing this way), and increased performance. It sounds like i am getting paid by amazon for writing this post, but really - no. I am just a satisfied customer.

When the movie started, i was shocked how “real” the movie was. All movies/showbiz dress up reality. It is hard to believe that a UPS delivery man lives in a 2 story independant home in chicago or the sometimes unemployed friends can afford a spacious luxurious multi-bedroom apartment in Manhattan. Bollywood movies too dress up “slums” in india. Whether it is “Company” or “Satya” or “Kaho na Pyaar Hai” or any other indian movie, Poor folks in india seem to have decent, spacious apartments, clean, crisp clothes, nice hair & teeth, gorgeous bodies. Danny Boyle - for the purposes of this film - focused on the real real slums in india. So the movie’s initial segments focus on the slums, the dirtiest and trashiest parts of the slum specially. I have not seen another “real” view at the not-so-pretty parts of india since Salaam Bombay.
As the movie follows the early life of these two slum kids, the situations they face very harsh and shocking. All the scenes are shot with extra touch of cruelty and harshness. Even the brief moments of levity this movie provides are hard to laugh with. This is indeed the life (or very cloe to) of thousands of kids in India. It was very disturbing for us and what ever the uplifting part of the movie was, it seemed moot and trivial. I am not sure what has been bothering us more, the way this movie is shot, or the realization that this movie is not that far from the truth.
Everytime i remember that Jay leno called the slums and this movie “beautiful”, i just feel worse. What was beautiful about the challenges these kids are subject to ? I guess it is the way to justify the joy one feels (if one feels any joy) at the conclusion of the movie.
While danny chose to be “real” about depiction of the slums and the kids, he definitely chose to be bollywood about how the movie ends.

All the press release from yahoo seems to say is that they are going to be looking for a new CEO and when the new person is found, Jerry will transition the role. Are you pulling a Steve Jobs and staying on as “Interim CEO” for couple of years? I hope so.

Jerry - Now that you announced that you will step down once a competent CEO is found, let’s hope that your detractors shut up and let you focus on running the business. I hope you can continue your good work and kick butt with YOS ( which i think needs a lot more resources and lot more focus ). Keep the company focused on product innovation and process automation.
Also, I request you to fire those losers at tech ticker. It doesn’t help to have your employees publicly rail about every one of your little steps in the name of reporting.

I, for one, is looking forward to the change. Barack Obama’s Presidency is going to be great for US image across the world and most importantly, I am hoping his presidency will be good to citizens of USA.

Entrepreneurs are not liking the negative coverage and are acting like cry babies. They make up some weird excuses about how coming up with new business models is hard and how “efforts should be lauded”. Tech crunch is on the defensive, explaining how reporting the failures is also part of their job.
I have two words for these whining entrepreneurs - GROW UP.

Startups enjoyed their day in the sun, getting good coverage for building simple features, getting good runway to experiment with new business models on someone else’s cash. The reward for coming up with a new business model that scales/works is financial. You turn into a millionaire. If that business model doesn’t work, investors loose their money. Your resume looks great no matter what. Now, if you are not liking a little bit of the negative attention you are getting - deal with it. This is real life and real business. Techcrunch and other bloggers are not here to “laud” your efforts if you not adapting to changing markets and falling on your face. They are not here to sugarcoat company’s events even if you are gallantly trying to adjust to changing markets. What’s wrong with calling a spade a spade? I know it doesn’t put an entrepreneur’s company is the best light. So what? Why should they? Hire a PR firm if you want that.

Techcrunch is not obligated to tell anyone if they themselves have hard times financially. But i expect they will be open. If they are not, There are other blogs/bloggers who can take that responsibility.

As for “throwing the deadpool in deadpool” - my suggestion is that if you don’t like what’s on techcrunch and other blogs - unsubscribe. If people don’t want to hear about this news and a lot of people unsubscribe then techcrunch will follow the market. I - for one - definitely want to know about all the news regarding startups, even if it is negative. In fact, this real, no spin version of events is really what everyone wants when they look at a startup’s success or failure. If you ask any entrepreneur, all of their startups would be some sort of success.

Here is where i think he misses the point. The assumption underlying with Mr. Blodget’s analysis is that even after cutting people yahoo! and its processes can retain the same revenues, and support the operations for those revenues. Not only that, with reduced r&d they will be able to continue to innovate, keep the product line competitive and ensure future revenue growth.


First lets tackle sales & marketing. Google’s clear advantage is the AdWords interface and automated solutions. Also, bulk of their revenue comes from search advertising selling a single product. All their other products make way less revenue when compared to the search business. I contend that the big reasons why their sales & marketing costs are lower is because

• CPC text link advertising needs much lesser touch & sales cycle than banner + display advertising. Yahoo has a large display advertising business when compared to Google.
• Adwords along with their apis, are able to support small and mid sized buyer at a lower cost. Despite the efforts, Yahoo! still is behind in self serve products and does not have market share here
• Selling one product to various customers needs fewer sales/marketing people than selling 50 different products and competing in 50 markets. Yahoo! derives it revenues from a lot of different, diverse verticals apart from search - Automotive, Finance, Games, Jobs, Movies, Shopping, Sports, Travel. Each of these verticals do not make billions of dollars, but they make sizable revenue. In fact, in each of these vertical businesses, Yahoo! is understaffed, competing against much larger competitors with much fewer resources. Each of these verticals need their own marketing budgets and staff as well.
• Sophisticated & integrated ad programs take more human ad operations and support folks. Yahoo! runs quite a few integrated ad programs while google has close to none.

Now, What will happen if sales/marketing staff are simply let go? Unless by some miraculous surgical means, they are able to product same revenue with approximately 25% less staff. It is realistic to assume that yahoo! has not been working any process, or system for this amount of productivity gain. It also realistic to assume that the remaining 75% of the staff won’t be super motivated to raise their productivity. So more than likely future revenues will suffer. This means even for the future quarter, the margin will suffer. To keep up margins, Yahoo! will have to let go more sales people. All this is just a vicious spiral downwards.

Now the cuts in R&D staff have much worse impact on the longer term health of Yahoo!. The main reason why advertisers come to Yahoo is because Yahoo! has a large audience. If Yahoo! does not invest in keeping products fresh and engaging, Yahoo is going to loose its core asset - users - and turn into AOL. In my opinion, the main reason why yahoo! came to today’s situation - after being dominant portal through 2002 - is the lack of investment into new products. Investment into search did not start till late. Investment into social networks and open platforms hasn’t started till recently. If yahoo! makes this mistake again, I believe it would be the end of Y!.

So, if the staff not be cut, what should be the way for yahoo!? If Yahoo is right sized or undersized - why isn’t Yahoo! winning?
First of all - Yahoo is a profitable company. Their net margins are 7% not 0 or negative. It is not as profitable as Google but still profitable. I have clear cut ideas about how Yahoo can emerge as a stronger company through this turmoil. Those should justifiably be in a separate set of posts.
Staff cuts may be needed, but they should be based on what yahoo! sales as revenues it is making because of current economic turmoil rather than trying to match competitor’s margins.

However, going through and laying off Yahoo! staff to match Google’s margins would be a blunder.

All the people I know @ yahoo! are super talented and I hope yahoo does not make the mistake of letting them go. Nonetheless, these are tough times, and my prayers with everyone of them and yahoo!.
When i recently talked to few friends at yahoo!, the mood was optimistic, and positive. I hope this continues and yahoo emerges stronger than before.