I just heard from a reliable source that Salesforce.com has told Oracle that it would be willing to be acquired at $75 per share. That’s about a 50 per cent premium from Friday’s close of $50.87.

I’m checking with other sources but I think such a deal would make sense. It would give Oracle a ready-made online apps delivery platform, and Marc Benioff, the Salesforce CEO would make a good successor for Larry Ellison, CEO of Oracle. Plus it would be great strategic positioning against slow moving SAP.

I’ve mentioned some other reasons here: Is Salesforce Worth $75/Share To Oracle?

What other synergies are there between the two companies? Would a potential merger make sense?

I popped into the MySpace Developer platform launch the other day and picked up a couple of interesting nuggets about MySpace.

A lot of the execs in the Santa Monica headquarters have personal assistants, and most are very good looking. My source tells me that at least two of the executives love to boast about their PAs as being former adult movie actors, including the names of their top movies.

It is wonderful that MySpace is an equal opportunity employer. Silicon Valley firms should learn from MySpace.

The MySpace launch was at 625 2nd St in downtown San Francisco. It’s very familiar to me because I used to have a desk there for a few months last year. My floor used to be packed with people who were part of a dozen or more startups also renting desks.

In December 2006 the Wall Street Journal ran a story about the building saying it represented a return to boom times for the south of Market neighborhood. [Please see:Epicenter of Web 2.0 boom]

Late last year everybody got kicked out of 625, so that MySpace could move in. All eight of them. Eight engineers in a space that once bustled with people.

“We’re hoping to hire more engineers, tell people MySpace is hiring,” I was told. OK. Software engineers! Come join MySpace, where each cubicle is 1000 square feet.

MySpace kicked off its developer program Tuesday by providing API’s and development tools to tens of thousands of developers, with some unique diistinctions, and restrictions, that it hopes will result in high quality apps.

Developers were invited to its “Sandbox” event in San Francisco to learn more about the rules and regulations for MySpace applications.

-All applications will be launched at the same time, one month from today. Kyle Brinkman, GM of the MySpace Developer Platform, said,”We want a level playing field and we think this will encourage quality over quantity.”

This approach penalises developers who work quickly and seek the advantages of time to market–a core principle within the Silicon Valley developer culture.

-All applications have to be vetted to make sure they don’t break strict privacy and decency standards. “Each time an application is changed, it has to go back through the vetting process,” said Mr Brinkman. I asked how long this process would take? “It will depend upon each application.”

This is a potentially huge bottleneck in the development process that could strand thousands of applications from reaching launch date. And it will seriously affect the quality of MySpace applications because developers will be discouraged from making improvements because they will have to go through the vetting process again, and again. It will extend the time to market for their apps. Diligent developers tweaking their apps to improve the quality will be penalized. This encourages a quick-and-dirty app strategy

-MySpace will not seek to discourage copycat application developers. Popular Facebook apps such as Zombies, and others, can be cloned with impunity. I asked MySpace CTO Aber Whitcomb about this issue. “We don’t want to get involved in any copycat disputes, we will leave that up to the developers to figure out.”

Some developers will be hard pressed to defend their popular Facebook application. Others have patents in place and other barriers against copycats. Michael Cerda, CEO of Jangl, an SMS and telephony application developer, said, “We have negotiated deals with the major carriers, it won’t be easy for others to do the same. We also have negotiated deals with major advertisers, we already have revenues. And we have core patents.”

Ben Dean, CTO at Jangl, said, “We’ve developed an internal development system that allows us to publish applications onto multiple platforms, that’s a key competitive advantage.”

I suggested Jangl should provide its tools as a web based development system for other developers, before others offer similar capabilities. Jangl could take a cut of revenues or better still, offer to hook up its developers with its advertisers. Developers get a rapid app development system plus access to a ready made monetization channel. They both nodded vigerously, “That’s exactly what we are planning to do over the next few months,” Mr Cerda said.

Jared Kopf from Slide and Adroll said he wasn’t worried about copycat competitors. “We will have the best Super Poke app on MySpace,” he predicted. Slide is one of the top Facebook app developers and raised a stunning $50m in January 2008, giving it a valuation of more than half-a-billion dollars ($550m.) [Slide Slides Into Some Cash - Brad Stone, New York Times]

I said a quick hello to the still young, very rich, and extremely savvy Max Levchin, founder of Slide (and Yelp, and PayPal) and hit him up for an interview [coming soon…]

Bill Cromie, co-founder and CTO of New York based Nabbr, a distributor of media widgets loaded with premium content, had an interesting perspective on the differences between the SoCal culture of MySpace, New York, and Silicon Valley/San Francisco. “New York and San Francisco startup cultures are more similar to each other than they are to Southern California. The difference is that people talk in big pictures in Silicon Valley while New York is more focused on show me the money.” A hybrid culture would be a succesful culture, imho.

Nielsen Online released some new metrics in the wake of the MSFT/YHOO news:

Global Web Traffic

+————————————+————————+
| Parent | Unique Audience (000) |
+————————————+————————+
| Google | 273,896
| Microsoft | 262,085
| Yahoo! | 190,687
| Time Warner | 155,643
| eBay | 145,129
| Yahoo! + Microsoft | 289,029
+————————————+———————–+

US Search Share

| Yahoo! Search + MSN/Windows Live Search 31.5%
| Google Search 56.3%
| Yahoo! Search 17.7%
| MSN/Windows Live Search 13.8%
| AOL Search 4.7%
| Ask.com Search 2.2%

Ken Cassar, VP Industry Solutions Analytics, Nielsen Online, said, “The combined entity would be visited
by 86 percent of U.S. Internet users, account for 15 percent of all time spent online, and represent 59 percent of online display ad impressions sold, really the most significant revenue generator today for most online publishers.”

“Even though they have significant audience overlap and a combined search share that would not catch Google’s, they could be positioned to create the next generation of ad networks - one that rivals Google/Doubleclick - a diverse environment, made of up e-mail, search, original content and consumer generated media, where advertisers could maximize their buys over two of the most trusted online brands.”

Microsoft would get social media too…

Peter Blackshaw, exec VP, Nielsen Online, said, “The proposed transaction itself would give Microsoft one of the industry’s strongest portfolio’s in the growing social-media space that would include FlickR,
Delicious and Yahoo Answers, alongside its investment in Facebook.”

Microsoft estimates that the online ad industry will double within three years to $80 billion from $40 billion in 2007.

In a letter to the Yahoo! board of directors Microsoft described a bright future for the combined entity because of scale and combined engineering resources. The merger would also save $1 billion in annual operating costs because of synergies between the two groups. However, it warned that neither company had the “engineering scale” on its own to create “breakthroughs in search, and new advertising platform capabilities.”

Microsoft has been buying advertising network companies. In the summer of 2007 it acquired AdECN, which operates an ad exchange.

But its ambitions in online advertising have been hampered by its inability to improve traffic to its search service. The most recent numbers from Comscore, which monitors search market share, showed that in December 2007, Microsoft held 9.8 per cent of the market, unchanged from November 2007. Yahoo! managed to slightly increase its share by a 0.5 percentage point over the same period to 22.9 per cent.

Yahoo! would be able to provide Microsoft with the traffic volume it needs if it is to grab a significant share of the online ad market boom.

In a conference call with financial analysts following Google’s Q4 financial report, it said revenues from advertising on social network sites were less than expected.

Google earnings miss Wall Street estimates By Elinor Mills News.com

… the company had trouble making money off ads on social networking sites, including News Corp.’s MySpace, Google executives said. Under the MySpace deal, Google is committed to paying revenue even if advertisers don’t click on ads.

“We have found that social networking inventory is not monetizing as well as expected,” said Chief Financial Officer George Reyes.

GOOG stock fell by 8 per cent in after hours trading. You can bet that the private valuation of Facebook fell too. MSFT’s recent investment in Facebook valued it at $15bn.

This increases the pressure on Facebook management to justify its high valuation and to find a business model that won’t alienate its users. It is a tough problem for its 23 year old CEO and founder, Mark Zuckerberg.

Facebook recently had to retreat from a key monetization strategy after a large number of users complained about its use of personal information to market goods and services. Google’s failure to reach revenue goals on social networks raises the bar for Mr Zuckerberg.

It’ll be interesting to see what strategy he and his management team come up with. Facebook’s investors have a keen interest in making sure that Mr Zuckerberg will be able to articulate and execute a business strategy in line with its lofty $15bn valuation, plus more. But Google’s problems in monetizing social networks indicate that there is no easy solution. It is a situation that would challenge any CEO, let alone a 23 year old with no prior experience with much of anything.

I don’t think Mr Zuckerberg wants that job anyway. It is clearly time for Facebook to bring in an Eric Schmidt… Who could be Facebook’s Eric Schmidt?

(Bill Gates isn’t doing much these days, except saving the world. But I heard that’s just Tuesdays and Thursdays. It would make for a cool story…)

I love companies that are challenging the establishment telephone companies. And Ribbit is one of those companies. It has completely rethought telephony within the context of our modern world.

Ribbit offers a telephony platform that enables developers to craft innovative telephony solutions within current applications, and also create completely novel applications. A good demonstration of what can be done with this platform is Ribbit’s Amphibian service, which was sneak-peaked this week at the Demo conference.

Through a web browser, Amphibian (name chosen to show it lives in two environments) provides users with services such as visual voicemail, you see a picture of the person, plus you can choose to view a transcript of the voicemail. The transcript can be emailed to you along with the MP3 sound file. Or it can be viewed through SMS.

When a call comes in, Ribbit goes out to the Internet and brings back information about the person calling, such as blog posts, videos, photos.

If you don’t answer your mobile phone, the caller is routed to Ribbit which will record a voicemail or route it to another phone, or allow the user to take the call from the web browser on a “virtual phone.”

You can also call out through the Ribbit virtual phone and it will carry your mobile phone caller ID, which is very useful since many people won’t pick up ID-blocked calls or numbers that are unfamiliar.

Very nice app. But the impressive thing is that Ribbit also offers developers an e-commerce system that lets them charge users for their applications. Developers need only focus on creating great apps, Ribbit provides them with the e-commerce infrastructure. Brilliant.

But why stop there? It wouldn’t take much to extend that e-commerce platform to enabling the sale of other services and products enabled by the telephony apps. Ribbit could easily create a type of Ribbit PayPal that extends beyond collecting telephony revenues…

I have the best intentions to read all my email messages but my road to hell is paved with them… Which is why I have 37,240 unread emails in my gmail account, my main email account.

They have accumulated over a 2 year span. And they are spam free (GOOG has a great spam filter.)

My problem is that I write for a living and I could easily spend all of my day reading and writing emails. But I only have a limited number of keystrokes at my daily disposal. Which means I have to make sure I use some of those keystrokes to write articles and posts. Which means I don’t get to read and answer all of my email.

It makes me feel guilty because I always intend to go back and do the right thing. But the longer I leave my unread emails the more they pile up. And the less I’m inclined to go to my inbox. Sometimes I wish I could just blow up my inbox and start fresh.

Please forgive me if you’ve sent me an email and I haven’t responded–it is not personal. It is just my inability to manage my inbox and the rest of my attention…

I won’t be going to the DEMO conference this coming week in Palm Desert, California. But it feels as if I already went and came back because I’ve had pre-DEMO briefings with top execs all week, plus access to many announcements.

I can’t discuss the details of the briefings and announcements because they are held to a specific release date but I can tell you about some of the companies to watch for and about some of the trends that will emerge from the conference.

One key trend is telephony. And the hottest company in this area just has to be Ribbit. It wants to be “Silicon Valley’s 1st Phone Company.” Or, as Ted Griggs, CEO of Ribbit likes to put it, “If you were going create a phone company today, you would do it completely differently.”

And he is right. Ribbit ,and others such as Jajah, and of course Skype, and a fast growing sector of telephony startups, have opened up voice as an innovative platform. And voice applications are increasingly important in the enterprise area, as a component of existing applications. Look for some very interesting announcements from Ribbit next week.

Also in the telephony arena is Toktumi which is using a “Skype” type approach to target the long tail part of the small office market. Super quick set up for small businesses. More next week….

Internet 1.0 was about the information age, now with Internet 2.0, we live in the conversation age.

Conversation overload is our new malady, in the same way information overload tortured us ten years ago. Now we have both.

Our communications technologies and numerous platforms mean that we have conversations everywhere, and often with lots of people at the same time: email, IM, SMS, Facebook, Twitter, Seesmic, and many subsets of those.

I’ve noticed that the more conversations I have, the fewer opportunities I have for original thinking.

And Silicon Valley is rife with conversations. Companies are moving here everyday to become part of the great conversations we have here.

But not all companies. Last year I met with the Japanese founders of Lunarr, which has a unique collaborative tool (I have alpha test invites if you contact me tom at siliconvalleywatcher.com). Hideshi Hamaguchi and his business partner Toru Takasuka, are in the top league of Japanese entreprenuers. Interestingly, Lunarr is not based in Tokyo or Silicon Valley, it is based in Portland, Oregon.

[Please see: Lunarr: A Once in a Blue Moon Company with a Unique Collaborative App]

I asked why Portland? They said it is a place that allows them to think.

I love that answer. Because here in Silicon Valley we get sucked up into many conversations. It’s great but it makes it difficult to engage in original thinking.

it is difficult to avoid being influenced by the many influencers we have around here.

Yet my job is to try to come up with original thinking, unique story angles, and ideas you might only find here. My job is to provide you with content you can’t get anywhere else. And that’s tough. I don’t want to add to the white-noise of the bloggo/mediasphere.

The way I do it is by deliberately withdrawing from all conversations. I won’t check my email for hours, sometimes days. I switch off TV and radio, and I limit how much I read online and offline.

My best ideas come to me when I am alone and quiet, when I’m walking down the street, when I’m not in conversation with anyone. That’s when I can notice my inner voice and that’s when tons of great ideas come bubbling up.

I’ve realized that our brain works on complicated tasks and problems quite happily in the background. When it is done processing, it looks for a lull in our day, an opportunity to throw the result into our consciousness.

And that’s why I carry my super slim moleskin notebook with me at all times, to write them down, to catch those ideas.

The trick to having great ideas is…

My favorite quote comes from Linus Pauling, the US two-time Nobel prize winner, for Chemistry and Peace (he refused to work on the Manhattan Project unlike other self-proclaimed pacifists: Einstein, Fermi, and Oppenheimer.) He is considered one of the world’s 20 top scientists with an incredible body of work produced during his 93 years.

How did he do it, how did he come up with so many great ideas? He said that the trick to having great ideas is to have lots of ideas.

It’s true. A lot of the ideas that I write down, I throw away later, but there are enough left behind that make it through to the next stage. (But you have to write them down otherwise they disappear as quickly as the most vivid morning dream.)

As I researched Linus Pauling for this article, it turns out that he is from Portland. (He clearly had time to think :-)

Portland on fire…

Hideshi told me that there is a great new site launched in Portland just this year, that helps introduce the entrepreneurial community to each other. The site is called “Portland On Fire - A daily discovery of PDX people.”

Interestingly, there is another serendipitous Linus Pauling conection: Hideshi has a degree in Physical Chemistry, (I have a degree in Chemistry too, and so does Om Malik.)

Here is an extract from Hideshi’s profile on Portland on Fire:

What do you like most about Portland?

- Rain, Shower, Mist, which covers Portland one third of the year.

- Human Chemistry, which covers Portland half of the year. (in daytime)

- Serendipity, which covers Portland all of the year.

I like something that covers the all thing constantly without anyone’s permission.

Serendipity requires three essential elements:

(1) Prepared minds, (2) the bucket for those minds w/ the appropriate size, and (3) some catalyst to start the reaction.

Portland has them all.

I am sure more and more interesting things will happen here. But we have to be careful so that we should not lose any single element.

Could you describe your secret process to come up with unique concept / strategies for variety of businesses?

Step 1: Get information - as minimal as possible

Step 2: Draw and play with lots of diagrams

Step 3: Touch, think, talk, and thank.

Step 4: Take a walk

Step 5: Shake head, squash hair, hit the wall

Step 6: Take a shower

Step 7: Enjoy the moment of “what if…!?” and “a-ha!”

What is your creative process?