Calacanis to Malik: How do you like them apples?
In an article entitled The Return of Monetized Eyeballs, Om Malik values BoingBoing at $34 million - calculated at $38 per unique monthly website visitor (the average purchase price per unique user of acquisitions during the past year). John Battelle, who manages BoingBoing, thinks that figure is off because it'd be hard to make that investment back on a site which has "fierce attitudes about content and the author/audience relationship".
Now Jason Calacanis, who recently pocketed a large sum of money by selling weblogsinc to AOL, has come out and said BoingBoing's value is closer to "between 500k and $3M". Jason wrote:
"Boingboing, like any other web property, is worth 1-10x revenue and 5-30x earnings. So, if BB does 30-50k a month/360-600k a year (which seems possible to me based on the ~5m page views a month) it would be worth between 500k and $3M (based on revenue since with five mouths and server hosting to pay for it doesn't really have earnings--yet!). Those numbers fall into line with my calculation of a really loyal user being worth $1-3."
Personally I like Om's numbers better, because it makes me a multimillionaire on paper. But I suspect Jason's figures tell a few home truths about what it takes to actually do a deal. On the other hand, eyeballs still seems to be the currency of choice in the Web world - bubble or not. How many current Web 2.0 companies are earning decent revenue? Perhaps that only goes to prove Jason's point, that it's all bubble talk.
I'll stop now before I get totally out of my depth - financial analysis not being my forte. But I'm interested in what people have to say about it. Who do you think is closer to the mark - Om (eyeballs, $34M for BB) or Jason (revenue, earnings, 500k-$3M for BB)?
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Jason is closer to current value, Om is closer to perceived future value. Actual future value is problematic as Battelle is correct on the cultural idiosyncracies preventing some monetisation options. I think a lot of it would be dependent on how easy it would be for the principals to leave if the company went in a more commercial direction than fits their views.
Jason is much, much closer to being right.
I would have to say Jason is closer to being right -- or maybe it's just that I think he should be right, since his quick analysis at least tries to value a business in part based on what it would take to duplicate it. But did eBay do that kind of math when it agreed to pay as much as $4-billion for Skype? It sure doesn't look that way. So there are definitely other views about value out there -- right or wrong -- and large sums of money chasing them.
Matthew,
eBay had to factor in other points when deciding on how much to pay for Skype. It is very easy to create a new website and start putting up good content - with the right "guerilla" marketing, you can get the word out. It is very easy to switch someone from website A to website B. It is not so easy when the switch involved installing new software, creating new accounts, getting friends and family to switch, etc.
I tend to agree with Jason's numbers. We are getting ready to post the second part of our podcast interview with him and we touch on this stuff just a bit.