SkyMall's SkyFall
priceonomics.com
priceonomics.com
a) Xhibit has built a solid digital agency team on the back of nutraceutical affiliate marketing offers, and enough revenue to support a trailing $300 - 500m valuation. But they realize their business isn't sustainable, and want to unlock the value of their team & experience with a larger play. They have failed at doing this with their own projects.
b) Najafi Companies, that originally owned Skymall, recognizes that the continued move to digital will eventually, and probably quite rapidly, decimate what is effectively a print advertising business in Skymall. They need a forward looking strategy, and a team that can execute said strategy ASAP.
c) Given that both companies are in Phoenix, a fit is recognized, and Skymall's recently appointed CEO Kevin Weiss is named CEO of the merged organizations. They sign him to a 5-year agreement to develop the digital strategy for Skymall and, given his background at "Author Solutions" which shows his experience in transitioning print-to-digital, this makes sense.
d) They hatched this plan when Xhibit's CEO met Skymall's CEO standing in line to use the restroom at a Phoenix Sun's game (a team that Najafi Companies has an investment in).
"I personally refer to Xhibit as a multi-dimensional digital ad agency. Our gaol was to build a company with combined strengths of design, development, and distribution, to be a one stop shop for a clients digital marketing and advertising needs. Our synergistic array of software suites, tools, and offerings have been engineered from the ground up to help companies maximize results from digital strategies. I really want to emphasize results, Nick. Since we build our concepts from the ground up to help businesses maximize revenue, I always have the belief that if a client made money from a marketing campaign, they will in turn spend more money. This is why we have integrated some performance result models into our work today. The long term success any business or product relies on monetization."
What an appropriate misspelling - gaol is a British term for prison.
I've tried to figure out why it is that some of the jargonized business talk seems more concentrated there than other places I've worked -- and the bigger the brand names involved, the more concentrated it seems to get.
My guess when you earn your bread and butter being the third party vendor that management turns to solve their problems, you do better in the marketplace when you speak the language they do.
Skymall has distribution and provides entertainment. (See my comment below about finding a porn magazine in a hotel room vs. online)
a) You made a lot of speculative statements that are based on no facts of any kind.
Not only are they marketing deceptive products, they were too stupid to do it successfully and now their merchant accounts are frozen. I choose the word stupid because there is a strong history of the FTC going after other companies selling these exact same products in this manner since about 2009. (The biggest being Jesse Willms, $359m http://www.ftc.gov/opa/2012/02/willms.shtm)
So, yes, Skymall & its original owners got scammed.
Did you even take a look at Xhibit's SEC Filings? http://finance.yahoo.com/q/is?s=XBTC - their quarterly finances are a mess.
Skymall may be in a rough place, but the idea this should have been a merger of equals is ... no words. So stupid.
EDIT: Read the executive bios and ask yourself if you'd hire a single one of them to do anything: http://www.reuters.com/finance/stocks/companyOfficers?symbol...
Since then, the stock price of the acquiring company (XBTC) has fallen roughly in half.
http://finance.yahoo.com/echarts?s=XBTC+Interactive#symbol=X...
A big portion of the PPC industry has always been shady. I build software for diabetics and constantly came across highly-optimized landing pages promising to cure diabetes for $99. With highly questionable diets or videos.
They buy up all the expensive adwords health keywords (competing with big pharma), so they must be raking in money.
I also have friends who worked as adwords marketers for people making millions selling non-FDA approved health products (for ex. cleansers and skin bleaching products).
I've noticed a lot of them advertising on Facebook.
What an insulting joke.
Looks like their Twitter account was suspended: https://twitter.com/TwitYap
Elancer from Punjab who put the app together has a couple screenshots: https://www.elance.com/samples/twityap-android/71857479/
Totally funny stuff...
Last updated Sep 19, 2011
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10-50 installations
How is that even possible? Less than 50 installations in two years?
Plus you'd still read Skymall during takeoff/landing where electronic devices are banned.
Sure, from the looks of today it might not seem like a big disruption for SkyMall but it will.
On most flights I go on I'd say about 10-20% of the folks have a tablet device. That trend will also go up and continue to decrease the effectiveness of SkyMall.
I can't site a research paper to back this up though.
Instead of doing that, maybe they could have hired technical staff and built a mobile app themselves?
I know it's possible because the last flight I was on did it for Ebay. You could surf Ebay for free without having to pay for Wifi.
I wouldn't be on this approach working for SkyMall though.
The cost is closer to $12-15 for a long haul and as little as $5-7 for a mobile device or shorthaul or with a coupon pack.
> Internet access will be available for $8 all day, per device and will be displayed once you launch your internet browser and connect above 10,000 feet*.
This trend will continue and expand.
http://arstechnica.com/tech-policy/2013/06/stow-it-no-more-f...
If this happens, then SkyMall's market just disintegrated like a wet telephone book -- they're competing with Amazon et al from boarding to arrival at the destination gate. Even without in-flight wifi, travelers who forgot to pack a book or magazine are no longer going to be a captive audience, so that 70% eyeball share will crash.
The product that skymall is selling is entertainment.
The value of being able to leaf through a magazine and see some interesting products. And maybe buy something you would never think of.
Just like HN is a venue to read things you might not come across in your own browsing. Skymall pushes product into easy viewing site because they are a printed magazine right at your fingertips.
Now of course you can do that online but you are in a confined space and a captive audience and that magazine has appeal plain and simple no matter what you can take a look at online. And of course you have plenty of entertainment on your tablet or laptop. But this is in a different format and it deserves at least a look.
Let me make up an outlandish example.
You have hotel wifi and a tablet in your private hotel room.
You then spot a magazine of pornographic pictures in a drawer and that type of stuff turns you on (as it does most men, right?). Even if you can view the porn online you are still going to leaf through the magazine because it's easy to do and just "take a look" for the entertainment value. (That's quite different from actually buying the same magazine in the store in the hotel).
Their advantage over amazon may be the entertainment value, but it seems improper to say they're "selling entertainment" when realistically they're selling ads. I don't see the connection to porno magazines since they're completely different business models.
SkyMall has four main assets, in two classes:
1. deals with airlines to put their magazine in the plane seat pockets (stable), and with companies to advertise in their magazine (ephemeral); and
2. cultural expertise in dealing with airlines (rare), and with selling advertising in a magazine (commonplace).†
Even though advertising is, of the two, the revenue-generating asset, the other one is a monopoly (it's an exclusive contract with a lot of venues, sort of like Ticketmaster.) So, if advertising stops working out for them, and they're going to pivot, I would imagine they'd keep the monopoly--their magazine getting put in seats--and try to find a new revenue-generating content-stream to fill that magazine with. Deciding to instead keeping the advertisers, and the advertising "business", and trying to find a new way to use them, sounds kind of braindead.
...in fact, if I were them, and I was pivoting, I'd sell off the advertising "aspect" of the business to a company that wanted some built-up advertiser relationships... hmm.
Here's some speculation: Xhibit bought SkyMall on a PE trading system, right? If Xhibit is internally thinking of itself as a PE firm in this action--and if SkyMall was frank with them about their worries that their advertising revenue-stream will go kaput--then Xhibit might be trying to split SkyMall: to absorb the advertising part of the company into itself (where they can use the advertiser relationships in digital-media industries), pivot the magazine into something else, make it profitable doing that something else, and then sell off the magazine, like any other PE firm.
This also, sort of, explains why Xhibit has so many nascent ventures; what could be going on is that, since they're absorbing SkyMall's advertiser base, they're just asking those advertisers what extra services (beyond just magazine ads) they would pay for--and then setting out to build them.
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† (Also, expertise in the logistics of getting a magazine printed and into the hands of airlines, but that's not much relevant either way.)
A secondary issue: most people don't look at the ads in magazines for entertainment unless there's no other entertainment option available. SkyMall had the privileged position of being the only eyeball candy to hand for millions of flyers who weren't allowed to use their laptops or tablets or phones at certain times, and who hadn't thought to buy an emergency magazine or paper book. (Full disclosure: I'm often one of them.) I suspect games or ebooks or emagazines will prove vastly more attractive than a SkyMall catalog, so what's going to drop is the number of eyeballs on pages, which will eventually bite into the first-time-buyer stats for the advertisers, with indirect knock-on effects on the SkyMall business as a whole.
The advertiser-relationship side of the business is indeed likely to stay viable, and Xhibit has bought a buttload of goodwill business, but the magazine is almost certainly going to become non-viable as soon as iPads are legal during take-off and landing and especially if a price war breaks out between airlines over in-flight wifi.
You might argue that the SkyMall people could sell their stock now. But if Xhibit is as much of s sham as the authors say, then it's going to be hard or impossible to cash out at a good price. Once you start selling the shares of an artificially inflated company, the price falls fast. You might unload a few at a high price, but just a few.
That means they issued a 10% bond sale that four dumbshits, already holding common shares, bought into. A 10% bond!
When spain was on the verge of insolvency, they were issuing bonds at 7%
"fixed interest charge of ten percent (10%) regardless of the time of repayment"
Does that mean, as it sounds, that the interest is $37,500 whether they pay it back in ten days or ten years? I realize it's due March 31, 2014, but if it's not paid by when it's due, no more interest accrues?
If they don't pay it back they continue to accrue a [presumably compounded] 10% charge.
There are all sorts of ways you can find yourself holding a worthless investment(myself, via the entreaties of an overly enthusiastic and gullible friend) but once you have it, the rationalization machinery is going to kick in deeply, because now you're a sucker, and you really don't want to feel like one.
That's why there's often a lot of online noise generated around obviously bad companies like Xhibit - it only takes the slightest big of hope to keep people in as the price plummets.
People are free to try to locate that "shiny garbage" and buy it cheaper but yet some people continue to purchase those things from skymall either because they are a) in a hurry b) money is no object c) product is unique enough that it can't be easily found
Here's a question. One of the problems people have is app discovery. What if there was a magazine onboard airplanes where you could advertise cost effectively and get distribution for an app? Wouldn't you see that as providing some value just like any advertising?
I say good riddance.
Where are you drawing this conclusion from? Perhaps there are people who like to spend money and buy things because it gives them a rush and makes them feel good. Same as people will spend money on other feel good things (like a ball game or a concert, a movie or a play or play an online game).
What exactly is wrong with buying "shiny things"?
And they don't lack competition as many of the things in the catalog can be located elsewhere. After all you still need to order and have it shipped to you.
Look stores in the terminal have a business model that depends on a captive audience as well and the pricing for many items is certainly higher than it would be in other locations. Why shouldn't it be? This is capitalism and there is nothing wrong with it at all.
Personal experience.
>Perhaps there are people who like to spend money and buy things because it gives them a rush and makes them feel good.
I feel bad for these people.
>What exactly is wrong with buying "shiny things"?
https://en.wikipedia.org/wiki/Consumerism#Criticism
>This is capitalism and there is nothing wrong with it at all.
This is a non-sequitur. I can be against Consumerism and still be a proponent of Capitalism.
The more I see of "valueless crap" the more I'm amazed at how much value people see therein.
We have no hard numbers. Magazine advertisers often don't pay list price for ads and their expenses are private deals with the airlines, who are likely to drive a hard bargain if they can. And I'd be skeptical about how many people actually read them regularly; a survey commissioned by the company could be exaggerated or flawed in some way.
Creating an empty-shell companies based on buzzwords, bandwagon effect and spikes of mass hysteria in order to gain ballooned valuation via media campaigns and staged "acquisitions" is a normal practice nowadays. The nonsensical valuation of companies such as Zynga are canonical examples.
Using just appearance and media manipulations to create an association between few buzzwords, a brand and ignorant snap-judgement - "oh, that is a cloud virtualization mobile stock" or, you know, MongoDB - "instant gratification and productivity (of ignorant)" is a new-normal.
The exit strategy could be a fail fail due to "bad economy", while pocketing all the money, or, if lucky, sale to a bigger fool, but first one is much easier.
It's sad that this might work to get people to part with their money.
Don't sell horses heads in the magazine do they?