When they released fourth quarter earnings data last week Netflix broke out their streaming and DVD businesses for the first time. A quick analysis of the data reveals that in the US the revenue and profit per month for each streaming customer was $21.94 and $2.40, whilst the average DVD subscriber paid $33.04, which yielded a profit of $17.32. Lower revenues are combined with lower margins with the result that the 34% less revenue per streaming sub translates into 86% less profit. Netflix hopes to make up for the lower amounts per sub by growing the digital business fast enough to more than offset the declining physical business, and by increasing margins.

Attached are my thoughts on the Facebook S-1 along with some quick stabs at valuation.  Brief disclosure, Benchmark Capital has a minority position in Facebook as a result of the acquisition of FriendFeed, a company that was incubated in our offices.

I thought it would be useful to look at Facebook using the scorecard from our May 24 blog post, “All Revenue is Not Created Equal, the Keys to the 10X Revenue Club.” For those that want to save time, the key point of this piece is that there is a broad disparity of Price/Revenue multiples for global Internet stocks, and that only a very small fraction of these companies achieve a multiple over 10X. We also created a list of 10 factors that public investors consider when trying to qualify if a company is deserved of such a prestigious and lofty valuation.

INDIANAPOLIS, IN— Live events make a surprising amount of money.

In the post-newspaper world, online blogs like TechCrunch, AlwaysOn, GigaOm, and VentureBeat depend on producing live events. One good conference or event can eclipse their entire advertising revenue in a year.

AlwaysOn has officially kicked off its third annual OnDemand Top 100 Private Companies Competition. We're looking for the top emerging on-demand and SaaS companies that are creating new business opportunities in high-growth markets. This includes private companies that are demonstrating significant market traction and pursuing game-changing technology in the following sectors:

I believe that science fiction is reality catching up to the future. Others say that science fact is the science fiction of the past. Regardless, the gap between science fact and science fiction is fascinating to me, especially as it applies to computers.

My partners and I spend time at CES each year along with a bunch of the founders from different companies we’ve invested in due to our human computer interaction theme. In addition to a great way to start the year together, it gives us a chance to observe how the broad technology industry, especially on the consumer electronics side, is trying to catch up to the future.

Bruce Li kicks butt.

But the guy is like a small Shanghainese dude the size of a Shih Tzu. He kicks massive ass. How does he do it?

Bruce Li says stuff like "resist like water," but here is how he does it: He uses you to kick your own butt.

Your strengths?! Hurt you.

I am co-teaching a class at Harvard Business School on entrepreneurship called "Launching Technology Ventures" along with my friend and colleague, Professor Tom Eisenmann.  The class kicked off this week with two cases:  Dropbox and Aardvark.

As I reflect on the class discussions, one of the interesting tension points that arose is the challenge an entrepreneur faces in selecting their primary product design approach.  Should they follow the Steve Blank, Customer Development Process school of product development or the Steve Jobs "vision" school?  In other words, should they pursue a user-centric design paradigm -- setting priorities based on rigorous tests and listening excercises that determine what users want -- or should they pursue a more top-down approach akin to Steve Jobs, who famously said: "It is hard to design by focus groups because most of the time people don't know what they want until you show it to them. "

The AlwaysOn X Fund portfolio advanced 3.4% last week, while the NASDAQ was up 1.1%, and the S&P 500 was up 0.1%. For the year, the AO X Fund is up 9%, the NASDAQ is up 8.1%, and the S&P 500 up 4.7%.

Apple had an extremely strong quarter, with earnings growth of 116% and revenue growth of 73%. iPhone sales were the main driver, with 34 million iPhones sold during Q4, up 128%. iPad sales were also strong with 15.4 million units sold, up 111%, and Macs grew 26%, with 5.2 million sold. iPod sales continued to decline, down 21%, with 15.4 million sold. Retail revenue was up 37% vs. last year, and Apple generated $17.5 billion in cash from operations and now has $98 billion in cash on its balance sheet. For the week, AAPL advanced 6.4%.

Consider two hypothetical restaurants: type one and type two.

Restaurant type one: Imagine yourself wandering the streets of a new city. You could be on Ocean Drive in South Beach, or Piazza Navona in Rome. You're thinking about dinner, and you come across a restaurant conveniently located on a busy stretch of street. Outside, it displays its panoply of meal choices in wax replica splendor, or "freshly cooked" under Saran wrap. On the sidewalk, an aspiring tan model flanks a manager-host, who wears a loud tie to go with the even louder voice he uses to solicit passersby. "Would you like to come in and eat 'world famous x'? Or maybe try the daily cocktail special?"