Category Archives: business

Facebook’s Incredible Potential as an Offline Retail Tool

Could Facebook Ads Replace the Circular for Retailers?

By: Dave Williams Published: November 09, 2012

With more than a billion users, Facebook has become a powerhouse in display advertising, but some continue to question whether Facebook ads can drive offline purchases.
That’s starting to change, as studies have indicated that online posts can have a huge impact on consumer action away from the platform. This correlation, along with Facebook’s commitment to new and improved ad products, means that Facebook is about to become the primary marketing tool for retailers and their brand co-marketing partners.
The long-awaited online to offline correlation comes from a study that recently appeared in the journal Nature that found that a single message sent to 61 million Facebook users influenced 340,000 of them to vote when they otherwise would not have. During the run-up to the presidential election, we saw major candidates, political parties, and a slew of advocacy groups turn to Facebook in an effort to sway undecided voters and drive voters to the ballot box.
It also implies that Facebook can influence offline shopping behavior, too, which is great news for retailers. Physical stores still account for 93 percent of total sales, and circular ads have historically been retail’s biggest tool for bringing consumers into stores. Retailers have been looking for a digital way to drive foot traffic.
Several companies have successfully built cooperative marketing structures online. Companies such as OwnerIQ, for example, enable online retailers like Crutchfield to retarget people who visit the web sites of electronics manufacturers, offering the flatscreen TVs they were just studying — at a discount. When it comes to driving brick-and-mortar sales from online, though, Facebook appears to offer the best solution yet. CPG brands gladly pay for retail circulars to help sell their products, and there’s reason to believe they could buy Facebook advertising to drive consumers into retail locations.

One company with which we work, ShopLocal, puts a retailer’s circular content into a database, including images and all the sale prices and details. In so doing it makes local data portable and extendable, so retailers can build online-only pages of the circular, or utilize QR codes to generate more content than exists in the print world.
The future of retail involves bringing circular content into as many channels as possible in a seamless fashion, to maintain consistent messaging across all media, including mobile, video, digital out-of-home. If the retailers or their brand co-marketing partners import that data into Facebook, they could reach a much wider audience with more precise targeting than typical display.
Facebook offers insight into consumers’ interests. So an advertiser using ShopLocal’s services could show someone who Likes a particular brand of soap an ad showing the product on sale at a nearby retailer.
Facebook users not only respond to offers, they actually share them. According to the social network, three-fourths of the 100 most popular “offers” claimed were not from users who were initially targeted, but from someone who saw the offer after it was shared. The offers create more awareness when they are shared, and even better is that they work.

BLiNQ Media was recently able to demonstrate an online-to-offline push to an ice-cream store on a day that normally draws very little foot traffic. By asking these Facebook users to mention the coupon, we could measure how many had come because they saw an ad on the social network.
The Election Day study in Nature validated our anecdotal experience. Local-level targeting gives retailers a huge advantage, enabling mom-and-pop stores to compete with big-box chains.
Another key challenge of course is measurement, which ties us back to the examples mentioned before. The Election Day story took years of research, while the ice cream campaign involved a single coupon good at one particular store. It’s complex to measure the effects of extending multiple offers that are valid at many retail chains in different geographic regions. For Facebook to succeed at driving offline purchases, retailers must feel confident that digital ads lead to in-store sales.
Third-party solutions are popping up, and Facebook is working closely with partners such as Datalogix, which uses robust in-store retail data to prove that ads work and to determine the right frequency, duration, messaging, and targeting that will produce the optimal offline results.

Showing Facebook users customized ad experiences based on the right creative message, targeting, and frequency localized for the consumer clearly helps drive in-store sales, which is the ultimate goal of every retailer. Retailers can take the first step by viewing Facebook as an excellent place to distribute weekly circular offers, expanding their reach beyond newspapers to drive awareness on the desktop, mobile and offers shared by friends.

ABOUT THE AUTHOR
Dave Williams is the CEO of Blinq Media.

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Five Billionaires Who Live Below Their Means

by Katie Adams
Thursday, April 1, 2010

At least once in your life – maybe even once a week or once a day for that matter – you have fantasized about coming into a lot of money. What would you do if you were worth millions or even billions? Believe it or not there are millionaires and billionaires among us who masquerade as relatively normal, run-of-the-mill people. Take a peek at some of the most frugal wealthy people in the world.

Warren Buffett
Millions of people read Buffett’s books and follow his firm, Berkshire Hathaway’s, every move. But the real secret to Buffett’s personal fortune may be his penchant for frugality. Buffett, who is worth an estimated $47 billion, eschews opulent homes and luxury items. He and his wife still live in their modest home in Omaha, Nebraska which they purchased for just $31,500 more than 50 years ago.

Although he’s dined in the best restaurants around the globe, given the choice he would opt for a good burger and fries accompanied by a cold cherry Coke. When asked why he doesn’t own a yacht he responded “Most toys are just a pain in the neck.” (Find out how he went from selling soft drinks to buying up companies and making billions of dollars.

Carlos Slim
While most of the world is very familiar with Bill Gates, the name Carlos Slim rarely rings a bell. But it’s a name worth knowing. Slim, who is a native of Mexico, was just named the world’s richest billionaire – that’s right, richer than the uber-famous Microsoft founder. Slim is worth more than $53 billion and while he could afford the world’s most extravagant luxuries he rarely indulges. He, like Buffett, doesn’t own a yacht or plane and he has lived in the same home for over 40 years.

Ingvar Kamprad
The founder of the Swedish furniture phenomenon Ikea struck success with affordable, assemble-it-yourself furniture. For Kamprad, figuring out how to save money isn’t just for his customers, it’s a high personal value. He’s been quoted as saying “Ikea people do not drive flashy cars or stay at luxury hotels.” That goes for the founder as well. He flies coach for business and when he needs to get around town locally he either takes the bus or will head out in his 15-year-old Volvo 240 GL.

Chuck Feeney
Growing up in the wake of The Depression as an Irish-American probably has something to do with Feeney’s frugality. With a personal motto of “I set out to work hard, not get rich,” the cofounder of Duty Free Shoppers has quietly become a billionaire but even more secretively given almost all of it away through his foundation, Atlantic Philanthropies. In addition to giving more than $600 million to his alma mater Cornell University, he has given billions to schools, research departments and hospitals.

Loath to spend if he doesn’t have to, Feeney beats both Buffett and Kamprad in the donation category, giving out less grants than only Ford and the Bill and Melinda Gates Foundations. A frequent user of public transportation, Mr. Feeney flies economy class, buys clothes from retail stores, and does not wast money on an extensive shoes closet, stating “you can only wear one pair of shoes at a time”. He raised his children in the same way; making them work the same normal summer jobs as most teens.

Frederik Meijer
If you live in the Midwest chances are good that you shop at Meijer’s chain of grocery stores. Meijer is worth more than $5 billion and nearly half of that was amassed when everyone else was watching their net worth drop in 2009. Like Buffett he buys reasonably-priced cars and drives them until they die, and like Kamprad he chooses affordable motels when on travel for work. Also, like Chuck Feeney, rather than carelessly spending his wealth Mr. Meijer is focused on the good that it can provide to the community.

The Bottom Line
The dirty little secret of some of the world’s wealthiest people is that they rarely act like it. Instead of over-the-top spending, they’re busy figuring out how to save and invest to have that much more in the future. It’s a habit you might want to consider in order to build up your own little storehouse of cash.

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If Steve Jobs Had Applied His Talents To Energy And Climate Change

FC Expert Blog

By Boyd Cohen

Steve Jobs created innovative products that change the world of technology. Imagine the other industries he could have disrupted.
The anecdotes and stories of Steve Jobs’ career continue to pour in, with the sad news of a life cut too short by cancer. Like many Fast Company readers, I have been a fan of what Steve Jobs and Apple have managed to do over the past decade or so. I also own an iPad 2, an iPhone 4, and a MacBook Air. As has been written many times, Jobs’s genius helped Apple to reinvent at least three different industries (computing, mobile phones, and music).

I began to reflect today on what Steve Jobs meant to those industries he reinvented. Even competitors like Bill Gates have praised Steve for how he has innovated and changed the face of so many industries. He set a high bar inside Apple and forced his competitors to “innovate or die.” Given that my focus is on profitable innovations for the low-carbon economy, I thought it would be interesting to consider what the U.S. would look like if Steve Jobs had applied his passions to reinventing the energy industry and related systems.

Passion and Commitment to Change the World
The first thing we know is that Jobs would have been relentless in his pursuit to reinvent the ways that we interact with, consume and produce energy. Steve Jobs only spent mental energy on big ideas that could change the world that he was truly passionate about: “The only way to do great work is to love what you do. If you haven’t found it yet, keep looking,” he said. And: “Try to make a difference in this world and contribute to the higher good. You’ll find it gives more meaning to your life and it’s a great antidote to boredom.”

Telling the Right Story–It’s Not About Climate Change, Stupid
One of the biggest failures of the environmental and climate change movement has been its lack of proper storytelling. One of the best attempts to tell the story about climate change was Al Gore’s Inconvenient Truth book and movie project. I have to give him props for raising awareness of climate change by trying to explain, sometimes with some technological wizadry, why the climate is changing and why humans are partially to blame.
However, if Steve Jobs were Al Gore, he would have done this completely differently. He would not try to scare people with the doom and gloom of climate change. If Steve Jobs wanted to change the dialogue and collective consciousness about this challenge, he would have done it in a way that inspires optimism and excitement about the convenient solutions that will make our lives better. My friend Peter Byck has tried to do this through his documentary, Carbon Nation, and my co-author Hunter Lovins and I tried to do the same with Climate Capitalism. But imagine if Steve Jobs were telling the story about how much better his new GPS and smart grid-linked EV mass transit system would allow us to get anywhere we wanted to go, faster and smarter than we ever have before.

He Would Make Public Transit Exciting
North Americans generally think that public transit sucks. And to be honest, most of our public transit systems are pretty bad–we often see long waits for buses that are frequently late at stops that are exposed to the elements, and are usually still stuck using the same roads that all the other vehicles use (meaning they aren’t very fast, either). I am convinced that if Steve Jobs had been in the role of, say , Mayor of Los Angeles, he would have introduced some radical innovation to the public transit system, making it cooler than using your own car.
Trying to channel Steve Jobs is impossible, but whatever his solution, I bet it would be faster than single occupancy vehicles, make more use of smart technology, be powered by renewables, generate more energy than it consumed, and send excess energy back to a brilliant grid.
And what would a discussion about Steve Jobs’ talents be without considering how he might bring his design aesthetic to any innovation? Transit would be cool because he would design it to be so. It would be sleek and sophisticated, yet simple. Touch screens would allow passengers to know exactly when their transit vehicle was arriving and when they would arrive at their destination, thanks to GPS and other tools we haven’t thought of yet.
A Brilliant (Not Just Smart) Grid
I recently wrote about the challenges of smart grid adoption in the U.S.–something that poses the potential to revolutionize how we produce, distribute and consume energy. If Steve Jobs were the CEO of an energy company, even a mainstream oil and gas company like Shell, I think he would have seen the writing on the wall a long time ago and made a major shift into renewables as well as the convergence of IT and energy. He would convert a company focused on outdated paradigms into the next big thing, turning the potential smart grid into a brilliant grid.
In his words: “Innovation has no limits. The only limit is your imagination. It’s time for you to begin thinking out of the box. If you are involved in a growing industry, think of ways to become more efficient; customer friendly; and easier to do business with. If you are involved in a shrinking industry-get out of it quick and change before you become obsolete; out of work or out of business. And remember that procrastination is not an option here. Start innovating now.”
And of course there would be large scale adoption of the brilliant grid technology because again, it would be easy and maybe even fun to use. The design of the systems used by consumers (i.e. smart meters and appliances) would be so intuitive and elegant that no one would even think about complaining about low-level radiation from smart meters technology. Smart meters would become the thing everyone needs to have in their home.
I know that Steve Jobs had his critics. But more often then not he proved them wrong. He was a once-in-a-generation genius at reinventing industries. Through his storytelling and innovation skills, he easily could have reinvented the dialogue about climate change, changed public perception and use of public transit, and accelerated the adoption of a super smart grid. Maybe there is someone else on the horizon who will be the next generation’s Steve Jobs, prepared to tackle some of the world’s most pressing problems– water and food shortage, climate change and energy. If there is, they probably wouldn’t use focus groups either.

Boyd Cohen, Ph.D., LEED AP, is a climate strategist helping to lead communities, cities and companies on the journey towards the low carbon economy. Dr. Cohen is the co-author of Climate Capitalism: Capitalism in the Age of Climate Change.

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Do You Have Everything Except a Marketing Strategy?

Communications Tactics Will Not Take You Far Enough

By: Al Ries Published: August 02, 2011

Who decides: 1) What products and services to offer; 2) What to name those products and services; and 3) What distribution channels to use to sell those products and services?
In my opinion, these are primarily marketing issues. Yet in our work with companies large and small, we don’t see many marketing people calling the shots on 1) Products; 2) Names; and 3) Distribution.

Instead, marketing people tend to focus on “communications” issues. They spend most of their time figuring out how to interest prospects in their companies’ current product lines. Sure, communications are important, but they are only the tactics of a marketing program. The other half, the more important half, is strategy.

The two are related. In order to improve the communications, it often is necessary to make changes in strategy. In products, names, pricing, distribution, etc. And who is in a better position to suggest such changes than an experienced marketing person?

Yet who is calling the shots on marketing strategy? Mostly top management people.

What’s the strategy of Hewlett-Packard?
As best as I can determine, here is H-P’s new strategy as outlined in an interview The Wall Street Journal conducted with its new CEO Leo Apotheker.

  • Invest more in software, networking and storage.
  • Emphasize systems that combine these functions.
  • Increase spending on research.
  • Focus on cloud computing.
  • Build a business helping companies build cloud-computing setups.
  • Increase sales to telecom firms.

This is typical of a top-management approach to strategy. Let’s increase sales by expanding the brand in all directions.
Now, how is marketing going to execute Hewlett-Packard’s new strategy? By positioning the company as a leader in “software, networking, storage and cloud computing”? And, of course, personal computers.

Most companies take a similar approach. What’s the strategy of Dell, the world’s third-largest seller of PCs? Same as H-P. Expand the brand in all directions.

What’s the strategy of Wells Fargo?
According to the Journal, “Wells Fargo plans insurance growth.”

“The effort comes at a time when loan demand remains tepid and, given the size of Wells, growth in banking is hard to achieve,” reported the Journal. “Other units the bank is expanding include securities brokerage and investment banking.”

Insurance makes up a tiny portion of the bank’s revenues, last year, about 2.5%. Didn’t Wells Fargo study what happened when Citicorp merged with Travelers Group to form Citigroup? (Four years later, Citigroup spun off Travelers in an IPO.)

Maybe this is heresy in a world smitten with the line-extension religion, but why doesn’t Wells Fargo focus on banking? It’s the smallest of the big four, after Citigroup, Bank of America and JPMorgan Chase.

I would think Well Fargo would want to move up the banking ladder before trying to climb the insurance ladder.

What’s the strategy of Romney, Bachmann, Cain, et al?
So far, there are eight Republican presidential candidates: Mitt Romney, Michele Bachmann, Herman Cain, Ron Paul, Newt Gingrich, Tim Pawlenty, Rick Santorum and Jon Huntsman.

Do you know the verbal position of any of these eight?

I don’t think they have any.

Doesn’t anyone remember “Change we can believe in?” After Barack Obama’s victory in 2008, I would have thought that any future presidential candidate would summarize his or her campaign with a few memorable words. But so far, no one has.

Apparently, nobody wants to be tied down to a single idea or concept. Everybody wants to be free to expand their campaigns in all directions, depending on which way the wind blows.

Take Jon Huntsman. “He resigned just 11 weeks ago as the U.S. ambassador to China,” reported The Journal, “but already Jon Huntsman has a logo, a musical theme, a small arsenal of promotional videos, a Hollywood narrator and a line of travel mugs, lapel pins, baseball caps and T-shirts emblazoned with the distinctive H of his infant presidential campaign. He even has a generation named after himself. Generation H, his campaign calls it.”

Jon Huntsman has everything except a marketing strategy.

What is strategy anyway?
Dictionary definition: “The science of planning and directing large-scale military operations, specifically maneuvering forces into the most advantageous position prior to engagement with the enemy.”

And what is the most advantageous position? According to Carl von Clausewitz, the world’s most-famous military strategist, “Keep the forces concentrated in an overpowering mass. The fundamental idea always to be aimed at before all and as far as possible.”

Strategy is like a garden hose with an adjustable nozzle. Turn it one way to increase the concentration and out comes a powerful stream of water that could knock down a child. Turn it the other way and out comes a fine mist that wouldn’t harm a butterfly.

Almost every military strategist recommends “concentration of forces,” while almost every business strategist recommends “scatteration of forces.”

We used to run a series of seminars entitled “Marketing Warfare.” One of our luncheon speakers was William Westmoreland, the four-star general who commanded U.S. military operations in Vietnam. After watching some of our presentations, Gen. Westmoreland expressed surprise that marketing people found anything new in our lectures. Everybody knows these military principles, he said.

Not so.

Hewlett-Packard has just 17.5% of the world market for personal computers. One would think the company would focus on making Hewlett-Packard a dominant brand like Windows (90%) or Google (75%) or iPod (70%) before trying to expand in all directions.

Everything about marketing strategy parallels military strategy. The principle of force. The superiority of the defense. The advantage of flanking. And most importantly, the principle of focus.

There is one difference. Marketing is about brands, not companies. You can successfully expand a company, but not usually a brand.

Apple has become the world’s second most-valuable company, not by expanding the Apple brand, but by launching new brands: Macintosh, iPod, iPhone, iPad.

Marketing: A discipline in decline?
Is this what marketing has become? A discipline that execute strategies designed by somebody else. If so, I have a message for marketers, borrowed from Tennyson.

Forward Marketing Brigade!
Was there a person dismay’d?
Not tho’ marketers knew
Someone had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do and die:
Into the valley of Death
Rode the six hundred.

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Ad Age Digital A-List: Buddy Media

Succeeding at Bringing Big Business to Big Brands via World’s Biggest Social Network, CEO Mike Lazerow Knows It’s Good to Be Facebook’s Buddy

By: Michael Learmonth Published: February 27, 2011

Back in 2007, when Facebook was only a few years removed from being called “The Facebook” and had a mere 20 million users to MySpace’s 150 million, Buddy Media CEO Mike Lazerow made what seemed a risky bet. Even though it appeared that there would be multiple winners — or at least multiple players — in social networking, Mr. Lazerow went long on the startup from Palo Alto.

Michael Lazerow: ‘How do people vote? With their money and with their time.’
Why? Unlike MySpace, Facebook shared its source code with developers, meaning companies could build real businesses on the platform. What sealed the deal was when Facebook launched “Pages” in 2009, which allowed brands to have a presence on the network beyond individual apps.
“It was by no means a done deal that Facebook would emerge, but that opening would fundamentally change consumer relationships with each other and with brands,” Mr. Lazerow said.
Buddy stopped building apps altogether and started building software. It was a big shift — a “pivot” in startup parlance — but the idea that people would interact with branded apps was flawed. But with “Pages,” Facebook became a much friendlier place for brands.
What happened in the intervening years no one could have predicted: Facebook ballooned to 650 million users worldwide, including 150 million in the U.S. Today it accounts for 12% of all time spent online in the U.S., and a staggering 23% of all ad impressions, according to ComScore. It has become cliche to call it a “parallel internet”; rather, Mr. Lazerow argues, it’s a better internet, free of the anonymity, abuse, spam, comment trolls and viruses that plague the real web. Indeed, Facebook is the only major web property still in growth mode, and it’s happening at the expense of all others. “How do people vote? With their money and with their time,” Mr. Lazerow said. “If you look at the time, people are saying this is the better internet.”
In short, what looked like a narrow world in 2007 is starting to look like the game, or at least a big part of it. Just as no consumer brand would consider opting out of a web page, very few would consider opting out of Facebook, which is great for Buddy Media. Buddy isn’t an agency, and it doesn’t “manage” Facebook pages for brands. Rather, it licenses software so the brands can do it themselves. If Starwood Hotels wants to help 1,000 of its locations — whether it be the St. Regis, W, Meridien or Sheraton — have compatible pages (they do), Buddy licenses an app for that. Want each to have booking capability? A calendar of events? A shopping cart? Buddy’s already built it; its part of the stack.
Buddy is working with hundreds of brands and agencies, including eight of Ad Age’s top 10 brands. It has raised nearly $40 million, including $5 million from WPP, and has more than 130 employees. There are plenty of other tech enablers for brands on Facebook, such as ContextOptional, Involver and Vitrue (now featuring former Facebook sales chief Mike Murphy as an adviser) but none with Buddy’s client list — and none with as many Facebook fans (33,000). That’s a lot, as Mr. Lazerow said, for a brand that no consumer should care about (much less know anything about unless they happen to see one of Buddy’s ads at JFK).
Facebook doesn’t earn any money directly from Buddy Media, but all of Buddy’s clients end up Facebook advertisers to direct traffic to their well-honed “pages.” In that sense, Buddy — and other companies like it — is actually on-boarding advertising clients for Facebook, while helping them create something worth advertising about. EMarketer estimates Facebook brought in $1.86 billion in ad revenue in 2010, much of that ($1.12 billion) from small, self-serve clients, meaning big brands are spending pennies a year to reach Facebook’s 150 million U.S. users. Mr. Lazerow believes it is a matter of time before the marketing spending starts to better resemble usage.
“There is this clarity in the market about what marketers can do,” Mr. Lazerow said. “With Twitter, who knows? There is a lot of uncertainty out there, but with Facebook we know where everyone plays.”

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Facebook Investor Peter Thiel: Palantir Is The Next Facebook Or Google

By Oliver Chiang

Feb. 28 2011

Palantir CEO Alex Karp
Who isn’t looking for the next big tech company?

For a FORBES magazine story I recently wrote on cyber-security software-maker Palantir Technologies, I spoke with billionaire Facebook investor Peter Thiel, who said that Palantir is “tracking like the really great tech companies, like Facebook or Google.” Thiel thinks the company is the “most undervalued company in Silicon Valley” and will be worth around tens of billions of dollars in a few years’ time. Of course, Thiel is Palantir’s largest stakeholder, and his venture capital firm The Founders Fund has bankrolled much of the startup’s initial costs. But beyond the hype is a company that has accidentally stepped into the middle of controversy, is attracting some of the brightest engineers from top schools, and is making more money than anyone suspects.

Let’s start with the controversy. Up until a few weeks ago, only “Lord of the Rings” nerds knew what a “palantir” was (a seeing stone the company is named after). But recently, Palantir has found itself in headlines for putting together a proposal, along with HBGary and Berico Technologies, to launch cyber-attacks and other “dirty tricks” against Wikileaks and its supporters, on behalf of Bank of America, and against website ThinkProgress on behalf of the U.S. Chamber of Commerce. Pro-Wikileaks hacker collective Anonymous found the proposal and emails by hacking into the account of HBGary’s chief executive.

Palantir responded by issuing an apology and severing ties with HBGary. It has also put the 27-year-old engineer Matthew Steckman — who may have been responsible for putting the offensive tactics on the proposal (according to the emails) — on leave and launched an internal investigation. Some have implied that Palantir’s senior staff must have known about the proposal, given the importance of the clients. But Palantir chief Alex Karp says that’s not how the company works: “The idea that a 27-year-old wouldn’t have the ability to make a decision about our proposal is very foreign to how we work. It would go further up the chain if it was a proposal, but it wasn’t.”

Indeed, the 330-person company is largely comprised of 27-year-old “forward deployed engineers” who are given a lot of free rein to make decisions. But in an industry like cyber-security, young engineers may not have the experience to make the best judgment calls. Even Karp concedes, “There was an oversight breakdown on the proposal phase of our work and we regret that.”

Palantir will need to do some PR clean-up, especially among its applicant pool. The company competes with the Googles and the Facebooks for top talent. Palantir’s Co-director of Engineering Bob McGrew, a third-year Stanford Ph.D. candidate in computational game theory, turned down a job at YouTube offered by co-founder Jawed Karim to go to Palantir. McGrew says the company’s save-the-world “mission” sets it apart. Stanford computer science student Jake Becker says Palantir’s exclusivity in hiring the best of the best makes the company an attractive employer. But Becker also says that the Wikileaks flap “is seriously damaging their reputation on campus.”

Meanwhile, competitors sniff and say that Palantir isn’t doing anything particularly new in the industry. “They are taking a different approach which is trying to bring the Silicon Valley-esque to the beltway,” says i2 CEO Bob Griffin. A primary competitor to Palantir, i2 is a 20-year-old company whose cyber-intelligence software is known as the Microsoft Word of the industry. “The reality is at the end of the day there is no different approach. It’s all the same: it is what is the tool that allows customers to do what they do best.”

Recently, i2 and Palantir settled a lawsuit, in which i2 accused its competitor of corporate espionage. Griffin says only that he was “very satisfied” with the settlement.

But these controversies will likely wash over in time. Some investors have been betting big on Palantir. The company’s last round of funding of $90 million last June, led by an unnamed private equity firm, valued the six-year-old company at a whopping $735 million. Dave Kellogg, former CEO of business intelligence software maker MarkLogic, speculates in a blog post that “dumb money” might be involved here. “I think it means that… The company is trying to build and/or sustain a hype bubble and wants to be seen as hot. Most VC-backed companies do not disclose valuations,” he wrote. Kellogg also thinks Palantir is executing a “go big or go home” type strategy like PayPal did in its early days (Palantir was founded and backed by PayPal Mafia members), but he says he doesn’t see the same “landgrab market opportunity” here.

Other analysts and companies in the space agree, saying that Palantir’s revenues were probably around $25 million to $50 million last year. Gartner analyst John Pescatore says the market for “situational awareness tools” like Palantir’s is in the tens of millions of dollars, a fraction of the overall security intelligence services’ budgets, which are dominated by the likes of Raytheon, Boeing and Lockheed Martin.

But Karp says that he sees a “clear path” to $1 billion in revenue within the next five years. How close is he to that? Palantir’s 2010 revenue was “significantly north of $80 million”, said a highly reputable source familiar with the company who did not wish to be named. Karp says that Palantir’s revenues have been tripling every year since 2008 and that it became cash-flow positive in 2010.

Still $80 million or so is a long way from $1 billion. A lot will depend on how Palantir expands beyond its cyber-security niche. The signs could point either way here. It would not be a surprise if Bank of America did not end up using Palantir’s services anytime soon, given recent happenings. On the other hand, Palantir has already been able to line up a number of other top banks and hedge funds. One of these is JPMorgan Chase. Palantir signed a multi-year contract with the bank in December 2009 in the $5 million to $20 million range, and JPMorgan Chase Chief Information Officer Guy Chiarello gushes about the company, calling Palantir “the best bet I’ve made in quite a while.”

There’s no doubt that Palantir has a lot of bright young engineers working for them, but to really kick it up to the level of a Facebook or a Google, the company may need to start growing up.

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Filed under Billionaires, Branding, business, Development, Entrepreneurs, Google, Money, success

Five Billionaires Who Live Below Their Means

by Katie Adams
Thursday, April 1, 2010
provided by

At least once in your life – maybe even once a week or once a day for that matter – you have fantasized about coming into a lot of money. What would you do if you were worth millions or even billions? Believe it or not there are millionaires and billionaires among us who masquerade as relatively normal, run-of-the-mill people. Take a peek at some of the most frugal wealthy people in the world.

Warren Buffett
Millions of people read Buffett’s books and follow his firm, Berkshire Hathaway’s, every move. But the real secret to Buffett’s personal fortune may be his penchant for frugality. Buffett, who is worth an estimated $47 billion, eschews opulent homes and luxury items. He and his wife still live in their modest home in Omaha, Nebraska which they purchased for just $31,500 more than 50 years ago.

Although he’s dined in the best restaurants around the globe, given the choice he would opt for a good burger and fries accompanied by a cold cherry Coke. When asked why he doesn’t own a yacht he responded “Most toys are just a pain in the neck.” (Find out how he went from selling soft drinks to buying up companies and making billions of dollars.

Carlos Slim
While most of the world is very familiar with Bill Gates, the name Carlos Slim rarely rings a bell. But it’s a name worth knowing. Slim, who is a native of Mexico, was just named the world’s richest billionaire – that’s right, richer than the uber-famous Microsoft founder. Slim is worth more than $53 billion and while he could afford the world’s most extravagant luxuries he rarely indulges. He, like Buffett, doesn’t own a yacht or plane and he has lived in the same home for over 40 years.

Ingvar Kamprad
The founder of the Swedish furniture phenomenon Ikea struck success with affordable, assemble-it-yourself furniture. For Kamprad, figuring out how to save money isn’t just for his customers, it’s a high personal value. He’s been quoted as saying “Ikea people do not drive flashy cars or stay at luxury hotels.” That goes for the founder as well. He flies coach for business and when he needs to get around town locally he either takes the bus or will head out in his 15-year-old Volvo 240 GL.

Chuck Feeney
Growing up in the wake of The Depression as an Irish-American probably has something to do with Feeney’s frugality. With a personal motto of “I set out to work hard, not get rich,” the cofounder of Duty Free Shoppers has quietly become a billionaire but even more secretively given almost all of it away through his foundation, Atlantic Philanthropies. In addition to giving more than $600 million to his alma mater Cornell University, he has given billions to schools, research departments and hospitals.

Loath to spend if he doesn’t have to, Feeney beats both Buffett and Kamprad in the donation category, giving out less grants than only Ford and the Bill and Melinda Gates Foundations. A frequent user of public transportation, Mr. Feeney flies economy class, buys clothes from retail stores, and does not wast money on an extensive shoes closet, stating “you can only wear one pair of shoes at a time”. He raised his children in the same way; making them work the same normal summer jobs as most teens.

Frederik Meijer
If you live in the Midwest chances are good that you shop at Meijer’s chain of grocery stores. Meijer is worth more than $5 billion and nearly half of that was amassed when everyone else was watching their net worth drop in 2009. Like Buffett he buys reasonably-priced cars and drives them until they die, and like Kamprad he chooses affordable motels when on travel for work. Also, like Chuck Feeney, rather than carelessly spending his wealth Mr. Meijer is focused on the good that it can provide to the community.

The Bottom Line
The dirty little secret of some of the world’s wealthiest people is that they rarely act like it. Instead of over-the-top spending, they’re busy figuring out how to save and invest to have that much more in the future. It’s a habit you might want to consider in order to build up your own little storehouse of cash.

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