In technology companies, you see a lot of hype pre IPO and even in the first few days of trading, however as time goes by a lot of companies lose the heat and buzz it had in the initial days of trading. We’ve seen Demand Media go as high as 27 and some change to as low as 5 and some change, currently trading around 6 something. Then we’ve seen juggernauts like Zynga who had a struggle out of the gate, but are now doing well- particularly due to Facebook’s S-1 filing stating ~12% of revenues come from Zynga.

This leaves a question, and a huge one at possibly $100B market capitalization; will Facebook be steamy enough for the public market post IPO? My thoughts are yes, it will be- here’s why:

• Facebook might do search
• Facebook might start their own ad network- “FaceSense and FaceWords” if you will.
• Facebook might get into entertainment

These are some thoughts I have and I think Facebook will get aggressive with these after their IPO. Lets take search first. 

Search is huge if it’s done right. That’s why Microsoft has invested billions into Bing and a lot of small startups try to do search. Search is also hard. Why? Because people naturally think Google when they think of search. Microsoft has the money to blow on Bing and so far, it hasn’t turned out all that bad, but you see a lot of startups come and go because search is also costly if you can’t attract and audience. It’s mainly hard for people to make the switch because in order for them to see a real benefit of leaving the big G, the search experience and results have to be more than 10-30% better. However, Facebook would not have this be a huge problem because people naturally spend time on their site for other reasons and there is a white bar just waiting for users to type something into. Currently, FB uses bing for their web results, but having a in house engine could be a huge cash cow, even if the results are not more than 10% better than Google. But those are the nitty gritty details of the outcome, shareholders will just be optimistic off the fact that they are taking a go at search in general because Google has built this huge empire off of it.

If Facebook did an ad network, that would also be a huge cash cow. This would go hand in hand with search. They already sell ads in house for their own inventory, so why not expand it to third party inventory? There’s no reason not to. Google has AdSense and AdWords, and Facebook could definitely take a jab at that business if they wanted to (which I’m pretty sure they will.) Given that Google makes a couple billion a quarter (don’t quote me on the exact number) from AdSense partners, this type of model would boost FB revenues significantly on an annual basis. And getting people to switch wouldn’t be that difficult if they made it lucrative and juicy for publishers, but even beyond- “cooler” with the “Facebook factor.” Instead of traditional ads, Facebook can essentially bring the whole Like system and more to third party ads. If you buy likes within Facebook right now, can you imagine buying likes on keyword specific sites? For example, say you are ShoeDazzle and you are targeting shoe maniacs; imagine the ability to buy new likes through Elle.com or some other fashion site. The problem with internet advertising is that you cannot always get people to convert to a sale, and if they  click and come over to your site and leave without buying, they are gone- forever! Instead, the ability to buy a like and then gradually convert them into a lifelong customer seems more valuable, especially when done outside the Facebook ecosystem on a third party fashion (or whatever else) portal.

Lastly, I think there is some level of expectation for Facebook to get into some kind of content business. Entertainment is huge online, whether it is through Netflix, iTunes, Hulu, etc. But people hate having to maintain multiple accounts on various platforms- it’s just too much work. Since people already spend a boat load of time on FB, If Facebook can figure out how to tie all this together and deliver content through FB accounts they can quite possibly disrupt Hollywood in a positive way. Getting people to rent on the platform through credits would be an ideal play in my mind. Rewarding people with credits initially to rent movies and then letting them pay for credits once they are into the idea of renting movies via Facebook. How much more targeted can it get? I think a reason why Facebook might increase the rate of rentals over sites like YouTube or even iTunes is for the simple fact that users spend more time on site, potentially swaying them to spend more money.

Anyways, these are just some thoughts I have on their future and I could be wrong.

Another hit out of Europe (Skype was from there) for sure, but more so one of the most relevant and useful tech companies of the past decade, Spotify, has all the buzz lately. And they deserve it. They’ve managed to create a radio meets iTunes client for online radio that everyone loves, myself included. There has always been different media players for consumers, but there hasn’t been one that lets you stream and listen to whatever song you want, for free in an iTunes like style, until Spotify.

I won’t rant on about how awesome Spotify is, instead, I’m making a bold statement and predicting that Google will acquire Spotify. Why? Well, there are many reasons and I will get to them, but my main thought is that Google will go head and head with iTunes, Google’s efforts combined with the boost of users Spotify already has, who have downloaded the desktop client, that will make them a big threat to Apple.

Aside from going head to head with Apple, there are other things that can benefit Google from acquiring Spotify, like their Google Music endeavors, a killer music experience for Android products and most interesting of all, tying Spotify in with Google+, particularly, the +points system.

I want to talk a little bit more about how Spotify is a huge threat to iTunes. If you think about it for a minute, iPod sales are on the downturn, that is mainly because people just use their Android or iPhone, as an mp3 player, that can do more than just play music. There is also a situation with the fact that each track generally costs $1.29 to buy on iTunes now, instead of $.99. In addition, people who buy more than 8 songs a month, are probably better off streaming the same music and more for $10/month with Spotify’s Premium plan. And the last point being that syncing will be irrelevant and people won’t need to deal with it if they stream their music, since their playlists are all available through one login on Spotify.

Now that we’ve established that Spotify is a threat, and a bigger threat to iTunes when Google acquires it, even though Spotify is not selling music and just streaming it, let me discuss why it will be a great move for Android.

Android is no doubt becoming more and more of a juggernaut, with 550,000 activations per day. But the Spotify experience seamlessly integrated with all Android phones and tablets? Now that’ll be a bigger scare for Apple. It’s kind of like Netflix, but 100x better because all of the new music available on iTunes is on Spotify, unlike Netflix where there is just junk for streaming (for the most part).

The combination of social (Google+) with a music streaming service like Spotify, will probably give Facebook a tough time. If Google makes all the playlists users have available in Google+, that would drive more people to be social for a longer amount of time, since their music is playing and it helps them waste more time through the day being non-productive (only kidding, but you know it’s true— how many people are on Facebook at work instead of actually working). The possibilities are endless, from people discussing their music to sharing, maybe even having a Google+ date with elegant music playing in the background (why not? It’s the digital age).

In fact, the whole acquisition could be expressed as an integration play. Integrate the Spotify service into every Android device natively. Integrate it into Google+. Plus it being on the desktop, would give Google a desktop presence and in turn they could integrate Google+ into Spotify’s desktop client, allowing users to surf their Google+ service on the client itself.

Obviously acquiring Spotify wouldn’t be cheap for Google, given Spotify’s raised about $150M and about 33.2M Euros, but with Google revenues around $9B for quarter 2/2011, it doesn’t seem that difficult.

Now there is a reason I didn’t predict Microsoft or Facebook would acquire Spotify for two reasons.

First, Microsoft wouldn’t acquire them because they are still probably working on integration of Skype, but more so because they are focused on other things like trying to eat Google’s lunch, with Bing and trying to 1 up Apple OS X with Windows 8.

Facebook simply does not have the cash to acquire a service like Spotify since it is not public, and while I’m sure they would throw in a bid during an auction, they won’t be the highest bidder, that said, you never know if Microsoft will pull another Skype and outbid Facebook and Google and just pick up Spotify so their competitors can’t have it. But if we start thinking like that Apple has been sitting on a pile of cash for years and hasn’t made many acquisitions and Spotify would assure their stability in the ecosystem for a little while, but I’m sure in that case the anti-trust brigade would come knocking.

People might say they’d still rather download music because of data caps on their cellular carriers data plans, etc, but the fact is that WiFi is available in many places than not, so that doesn’t seem like a big issue, more so because if you download more than 50 songs a month, it is still cheaper to pay for Spotify Premium, additional bandwidth for data on some carriers and still come out ahead. And if you can use Google Rewards like +points for a service like Spotify, I don’t see it doing anything but destroying Apple’s iTunes business. All in all I believe Apple has done a great thing and made everything digital for the world, but Google will make it’s move and it will be staggering.

P.S. It is good to note that Google has had discussions with Spotify in the past, offering $1B to acquire the company, but the issue was that the contracts Spotify has with the major music labels, would be renegotiated if the service is acquired, which throws a curveball for whoever is acquiring the service. So why will Google circle back in the future? Because Spotify will be able to grow under its current conditions to desktops (and mobile devices) around the world, and once there is a surety of number of users, the risk will be less, even if the service ends up costing the acquirer more money.

Before you read any of this, I have to say that if you think Google+ is “social”, it is a big understatement of the product.

Remember when Google said “social is a layer?” Well they weren’t kidding. People went as far as thinking Google was clueless about social, but the fact is the average Googler is smarter than the average human (source: myself).

I’m guessing if you are reading this you have heard of Google+, but if you haven’t it is a platform that Google is building that is going to be much bigger than social- (what many think it is). Don’t get me wrong, it is “social networking,” but there is a HUGE curve ball coming.

Before you continue, I’m going to paint the picture here for you. Think social+entertainment+commerce=Google+. By the way, a little birdy told me this…

Lets touch on social first. Social is obviously what everyone thinks Google+ is today and what people think it will continue to be in the months to come, but are mistaken. It doesn’t matter whether you are for the service or think it is just trying to steal Facebook’s game, and refuse to join, because in the end, you will want to join so bad, you might even pay for it. In my personal opinion, I already think some of the features Google+ has are 10x better than Facebook, for example Google Hangouts v. Facebook/Skype. The primary example being, you don’t need Skype branding to have a video calling service and it should have been on Facebook a few years ago, and group video calls with up to 10 people will drive more people to use Google’s Hangout functionality than one on one calling, especially in a commercial environment.

Now lets touch on entertainment. Here is the obvious, Google+ and YouTube will be linked together and the whole YouTube experience will happen inside Google+, for those who want it. But there’s a further step that most people don’t consider today. It’s YouTube movies. Now this might not make sense yet, but keep reading. People will be able to also play games inside Google+ and be rewarded for it, with REAL rewards (called +points). This is no new concept to the world, as many companies are currently rewarding its users with real tangible rewards for playing games, but the way Google is approaching this, makes all that seem irrelevant. By real rewards I should be more clear, Google won’t be giving away product X for playing a game, instead they will have a rewards system - the oldest form of rewards known to man kind. Google’s rewards (+points) will be able to be used to rent movies on YouTube movies, but more so it will play a killer role for the commerce business Google will bring to the social experience.

Here is where you start thinking Amazon. Everyone loves Amazon, for one big reason: it saves the consumer money most of the time. Google Commerce will use the +points earned from playing games inside Google+, among other ways of earning, like getting a certain number of people to engage with your Google+ posts, to discount items purchased through Google Commerce. Google also recently launched a product called Music. Currently you can’t buy music through Google Music, but that will change (with the cooperation of labels). However, just like +points could be used for YouTube Movies, they’ll play a gig in Google Music, once Google can ink the deals with record labels. There is also Google Offers, which these +points could be used for. Imagine buying a daily deal and not spending money on it. Playing a virtual game, getting points, and getting an end tangible satisfaction out of the whole system…sounds good to me.

So the killer question for all of this is: WHY? Why would Google give rewards to people for playing games and doing other things on Google+? It’s simple. People love it. It keeps the user lifecycle going in one big circle. Think about it this way, people are being social; playing games; connecting with friends, which they do already, and Google is giving +points for that. With +points, Google’s other business endeavors live on because who doesn’t like discounts or free things that they’d pay money for? In addition, the +points given to users, won’t eat away at Google, because they will earn revenue from the sources the points are given away in anyways. And the loop keeps going on and on as people spend more time on the platform.

All of this will only leave one question flowing in your mind…IS GOOGLE+ WHAT GOOGLE’S NEXT MAJOR BUSINESS IS? Everyone knows Google has been trying to innovate outside search, because in all fairness they may not be able to sustain what market share they have today for the next 10 years.

There is also another question. If Google executes on all of this in a successful fashion, it could certainly put a handful of other competitors in a sticky situation. How can anyone compete with Google’s “social layer” with rewards, leading toward cheaper or even free products for consumers? Google being in multiple spaces with Android, Google Offers, movie rentals on YouTube, a future commerce platform, Google Music, this could be really, really disruptive in the whole tech ecosystem.

Whether you hate or love Google, you still probably use one of their products on a daily basis. If it is Google search, Gmail, YouTube, whatever it is, they have a large user base.

Google launched Google Offers last week. This is going to mess up everyones business in the deals space. Why? I’ll tell you why.

1. Google has an endless barrel of cash. They can put billions into this project, and not feel it.

2. Google owns Adwords. Take a minute and search for daily deals, daily coupons, or any other query in Google. See some ads? Yeah. Google can just use their endless pit of money to fund Adwords campaigns to convert people to subscribers for Google Offers. If you go across the web, you will see a lot of ads from the other big two in the daily deals space.

3. Google can just link Google offers from Google.com. Remember when they launched the Nexus One? They put up a link under the search box, and people bought the phones. It really is that easy for Google.

4. Feature YouTube videos of people’s experiences as consumers using deals at restaurants or anything else for that matter. I mean really feature ‘em. Take a camera crew and make videos of people skydiving or whatever. I feel a lot of people (outside the tech space) don’t “get” the concept of daily deals. Google can bring in YouTube into this and just put videos of people enjoying their Google Offers experiences on the YouTube homepage, and people will view that and be inclined to subscribe and/or purchase from Google Offers. That 1 big ad on YouTube costs advertisers something like $500k a day (give or take a few), so Google can obviously afford it. This would be the best filter to set Google Offers apart from anything else available. People are more inclined to convert (buy/subscribe) with their eye’s, not ads (marketing the service). Showing “Google Offers is awesome” to future customers is way better than just saying it “it’s better.”

5. Hire a brilliant team. With money comes power. With power comes talent. And Peter Parker didn’t say that. When you have talented people running things, prosperity comes about. Everything from the sales people to management, Google HAS to have the best of. This will be a major factor in the success. They will also have to deliver the BEST of the BEST deals available.

6. Google can also afford to “offer” the best of the best deals by cozying up to merchants. Since Google has the funds, they can afford not to make money for a long time. Remember when they bought YouTube and they kept spending endless amounts of cash on running it and never turned a profit? This enables them to give merchants 100% revenue proceeds from the deals that are run through Google offers. So mix in a whole lot of subscribers, add 100% revenue proceeds to merchants, and then add in Google’s team to that, WHY would a merchant go with anyone else? In fact, I’d go further:

To be really specific, if I ran Google Offers, to kickstart the product I would do something like: put in $2 billion into marketing the service (online and in the real world, tv, etc.), and put another $4 billion into getting the best deals the world has ever seen. In fact, I would pay elite merchants 100% of the difference between the deal and the retail cost of the deal, to feature them, so that would be like telling a merchant: “we’ll give you free leads, and it literally won’t cost you a penny.” 

Essentially if I ran Google Offers, I’d rank merchants by three types. Regular, Elite, and Really Elite.

Regular merchants would get 100% of the net deal value. If it was a 50% off deal for $50 in value, being sold for $25, the merchant would get $25 and Google would take no cut.

Elite merchants would get $50 from Google Offers for each sold. So Google loses (or pays) $25 per sold. This type of deal would come around every so often.

And the Really Elite (something like a restaurant Gordon Ramsay owns, or a Trump hotel), would get $X on top of $50. So it’s an incentive to run a deal for these merchants. This wouldn’t come around too often, but when they do- people would make sure they are on top of the service daily to get them before they are sold out. In a way it encourages users to always check that Google Offers email, so they know they aren’t missing out, ever.

P.S. - Google: don’t mess this up.