Keith Teare5 Comments

Technology Blog Valuations – Getting to be Real!

Update 2:Rafat has a comment to this post pointing out that by just looking at paidcontent.org I am doing the valuation of ContentNext a disservice. Of course he is quite right. ContentNext has other sites and also events. It is also true to say – although Rafat doesn’t – that valuation has many variables, including the quality of the people etc. Rafat is very good at what he does and he has a great team. So … fair point Rafat.

In my own defense, this post is not intended to be a scientific analysis of valuation. I did a “back of the envelope” comparison. I didn’t take into account any of the other sites that GigaOm has, or TechCrunch, or ReadWriteWeb. I also didn’t take into account TechCrunch events. All I was saying is, there are probably (by relative comparison of the web sites) some pretty valuable businesses out there right now. Hope you agree with that Rafat.

Update: Kara Swisher is speculating who’s next. Jeff Jarvis is hoping she’s wrong. Now there’s a Techmeme discussion.

The news that Rafat Ali’s ContentNext, owner of PaidContent.org, has been acquired by the UK’s Guardian Media Group got me to thinking. What does this mean for the valuations of other Tech blogs?

I did a quick back of the envelope calculation based on the numbers published and the Compete.com stats for June 2008.

By this math PaidContent.org got something like $139 per unique reader or $56 per visit as an acquisition price. Of course the Compete stats will not be wholly accurate (although Quantcast has Paidcontent.org at only 40,000 unique visitors, so Compete could be high)

Using Compete.com for 4 other significant technology Blog services we get some interesting numbers. TechCrunch should be valued at between $200 and $450m; GigaOm at between $46 and $55m; ReadWriteWeb at between $63 and $65m and Venturebeat between $50 and $53m. I’d say a merger between these 4 would bring them collectively up to about $350-500m even without the synergies and growth prospects of being one. I also looked at the search analytics data from Compete.com. 4,563 keywords for TechCrunch, 585 for GigaOm, 913 for ReadWriteWeb, 581 for Venturebeat and 363 for PaidContent.org Interesting indeed.

I am adding some graphics from Compete.com (all from this URL).






Disclosure: I am a shareholder in TechCrunch – along with Mike Arrington.

Keith Teare1 Comment

Building to sell?

Paid Content has an item today that comments on del.icio.us having gotton an investment from a group of notables, including Esther Dyson, Mark Andreesson and others its here.

At the bottom of the piece, following a reminder that some of these investors were also in Flickr – recently sold to Yahoo, is the following commment:

“Hard not to wonder if they’re in for the long haul or if this is a build-and-sell gig.”

The implication – which I must admit I am imputing – is that there is something unsavoury about building to sell versus being “in for the long haul”. Man, how wrong can you be?

Here are my top ten reasons for selling:

1. You have built a feature not a product.
2. There are no known business models for what you do.
3. You have a technology but not a product
4. You are not solving a widespread problem
5. You can’t make a living from it.
6. It is sucking up a lot of your time because people like using it.
7. It has costs associated with scaling that it can’t meet itself.
8. It’s the only way to get the funding to make it what your vision knows it can be.
9. $x [fill in the blank] is a lot of money and I can do a lot more things with it.
10. Somebody wants to buy it for their own portfolio of features and you like them.