Last year, Brightcove worked hard at trying to be both a platform and a destination. The former to large media sites that needed a robust video platform, the latter to compete for ad dollars against sites like YouTube et al.
Today, they throw in the towel on the latter, according to AdWeek, via Paid Content. Technically, they don’t shut down the site altogether, “It’s something that runs itself,” Adam Berry, VP of marketing and strategy, told Adweek.
“Runs by itself?”
I think they said that about the Titanic, too. In all seriousness, here’s a company that has raised $85M. I ask, oh wise ones, was that $85M a function of
- the opportunity for being a platform that is in fact a software subscription service, or
- the opportunity to also generate lucrative advertising dollars.
Investors include AOL, IAC, GE Finance, Hearst, Accel Partners and General Catalyst Partners etc. Yes, I’m jealous. Well, not jealous, but you know what I mean.
Here’s a wild forecast of my own: investors will not meet their IRR on that puppy…
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WatchMojo NewsletterToday, Yahoo! announced that it was buying Buzztracker. The amount was reported to be $5M.
A small, immaterial sum for Yahoo!, but having bootstrapped the project and having so many competitors (TechMeme, TailRank, Megite, etc.), the deal makes sense to Buzztracker’s founder.
Clearly, with Yahoo!, Buzztracker will scale in size and reach. They’re also apparently going to do something we suggested and dubbed TechMeme’s Killer Move.
The question is, did Yahoo! miss the boat by not going all in for TechMeme? Mathew Ingram asks the question everyone is wondering: did TechMeme’s Gabe Rivera (and Sphere) ask for too lofty a valuation?
The Beginning of Something New?
We’ll get to that later, first, let’s look at the deal. According to Alan Warms:
The decision to sell the business and move to Yahoo! was relatively simple. As anyone playing in the online space understands, online media is all about scale. The ability to garner real CPMs, the ability to sell ads directly, the ability to provide innovative solutions to advertisers, all depend on having tens of millions of unique visitors.
I definitely understand and appreciate that. At my last gig, I was the VP of ad sales for an online publisher, working with both small and large advertisers and global ad agencies and trust me, it’s not obvious. We had over 5M unique users, we were a mid-sized publisher but in the men’s lifestyle space, we were the largest one. Despite that, we still faced challenges getting through directly into marketers’ offices and indeed, unless you are Yahoo!, MSN, AOL, etc., you always will.
Ultimately, we sold to IGN, who was also in the men’s content space, albeit a different, larger one: video games.
The idea was we needed more scale, more resources. To my colleagues (who owned a large chunk of the shares), the deal made sense. We never had too many companies approach us, we had one Canadian media company come up to us in 2000 and then nothing from 2001 to 2004. During Euro 2004, IGN’s VP of Corporate Development emailed advertising@ourcompany, the email came my way… and so began an 11-month song and dance which culminated in the sale.
Oddly enough, some time in late 2004, we got an email from Insight Venture Partners, a NY-based VC who wanted to invest in our firm. I was for it, thinking we could raise some money, grow the business, and sell for more. But having been at the company for 5 years, constantly butting heads of items large and small, and frankly not having much upside to invest more time, I didn’t push that strategic option and went along with the sale. I considered staying but it was clear I was not needed, or wanted… so I left in December 2005 to start Mojo Supreme.
Selling Low vs. Selling Early
Anyway, at my old company, in our case, we did not sell too early, but the 2001-03 period was morbidly silent and inactive. Today times are different: since summer 2006 - a mere six months after we launched - our company has had 7 companies inquire about an outright acquisition. That’s a lot of activity for a company our size.
We’ve grown quite a bit, we’re growing, but that’s a lot of movement nonetheless. I’m not sure how many options a site like Buzztracker had, but if you’re going to sell, clearly Yahoo!’s not a bad pick. But Buzztracker’s decision to sell so soon and so low probably had a lot to do with demand and supply.
Entrepreneurs Need To Understand Demand and Supply
The reason, frankly, has to do with demand and supply. I always figure: “if you look for a company with 5M unique users, $5M in revenue or even $5M in EBITDA, you’ll have a lineup of 100 entrepreneurs going around the block, but if you look for a company like ours, I very well might be the only bloke sitting in front of you.” It’s a somewhat ballsy thing to say, but it’s true.
So in our case, we didn’t get the best deal (it was extremely cheap by every metric) but we didn’t exactly sell too soon. We sold some 6 years after launching in late 1999 (I joined in 2000).
In Buzztracker’s case, the question should be asked: did they sell both too early and for too little? The public stance that “a larger media company makes sense for us” does not always make sense.
After all, Yahoo! has both a very good and very bad integration record (like all companies, I think).
Del.icio.us’ integration within YHOO? I’ve always wondered why they did not bundle Del.icio.us with Flickr, turn on the video switch and basically do YouTube? Well, because startups vs. corporations are very different, in other words, if you take every single element and variable of YouTube and put it in Google, you don’t get the legendary story that is YouTube, you get, well, Google Video. A worthy player but nowhere near the viral story that became, in our opinion, the most explosive startup of all time.
What about Webshots and CNET? Why doesn’t, for example, Webshots get promoted across stories etc.? I still don’t get that one. Maybe they have bigger plans. I wouldn’t know, I’m not in that room.
It’s the End of the Road…
The point is, once you sell to a larger company, don’t kid yourself, it’s the end. Sure, some startups, like Myspace, go on to triple within the new entity. But Rupert Murdoch and his lieutenants deserve credit for leaving MySpace alone where it counted (Tom is still your friend, the site is still wildly chaotic, etc.) and investing where it mattered (back end, under the hood, protecting children, etc.).
We’ve heard the MySpace story, Tom and Chris’ version that is. We’ve also read Brad Greenspan’s version. The truth is somewhere in the middle, I presume. Today I read that some bloke namedBrett Brewer invested in some company, so I looked him up. Apparently, he has a version of the facts, too:
Today, MySpace has an estimated 130 million users and was sold to Newscorp in October 2005 for about $675 million.
“We decided to sell based on the fact that we were a public company, so we had certain obligations to get the best return for our shareholders,” says Brewer. “Our stock was like $6 to $7 that summer and Newscorp paid us $12 a share, so to some degree, honestly, that was the biggest reason. But the other nice thing was Newscorp was the kind of company that could help it grow.”
Good news for MySpace users is that over the past year Newscorp has done a fantastic job at preserving the integrity and culture of the site.
(Source).
MySpace, of course, is a cultural phenomenon. It was also a major success story by the time it sold. I think entrepreneurs need to understand that once you sell, that’s it, you sell.
You are no longer in control of your destiny.
Independence Day
Selling or staying independent naturally boils down to a choice between wanting to remain boss and being an employee. Can you imagine Mark Zuckerberg now reporting to Barry Diller, or Terry Semel, or Steve Ballmer? He can’t, or couldn’t, and that’s why he stuck to his guns. Mind you, he was able to stick to his guns, because he had a demand vs. supply advantage to start off with, but his VCs avoided making the biggest mistake some VCs make.
I don’t care what anyone says, when you sell your company, it marks the end in many more ways than it marks the beginning. We’ve all heard countless jokes about how women (and men) change after they say “I do”, well, trust me when I say the same applies to selling your company.
When a company is pursuing you and wants to buy you, they will whisper sweet somethings in your ear for the first half of the conversation, then in the second half, when you start thinking of how much greener the grass is, they’ll start talking down your company to get a better price. You have to be very careful on both sides, but once someone really gets into thinking about the prospects of cashing out, it’s a fait accompli.
Then, you sign the deal, and fuggedabout it.
People…
Price and deal structure are just some of the dicey variables, the biggest consideration is the culture clash, potential turf battles. Large corporations have to put this atop their potential threats to make the deal a successful one. With startups, these are lesser examples concerns in some ways, but if you have a very driven and ambitious CEO selling, the chance exists that he or she intimidates or simply rubs off the buying party’s senior managers the wrong way.
In large companies, growth opportunities are slim, so if you come on board and have a lot of runway, you’ll be stepping on some toes and some egos will be bruised… so that will actually hurt the prospects of the merged entity and your career (if you wanted a career in the new entity).
Runway vs. Platform
Speaking of runway, it’s important to stress that deciding whether you wish to sell has a lot to do with how much runway your venture has.
Jack Welch would equate runway with one’s potential. If you have a lot of runway, you are better off remaining independent. If your runway is limited, then you need a greater platform. I think Buzztracker’s runway was limited because TechMeme.com seems to be a hit, and for Buzztracker to make up the lag, they’ll need a great platform. These things are intertwined, naturally, if Alan Warms has a tremendous amount of runway, then a platform should in theory only help him.
But, that has a lot to do with whether Yahoo!’s management team can handle him, and whether Yahoo! can successfully integrate Buzztracker. As we’ve seen, neither one of these things are a fait accompli.
How M&A Fundamentally Differs from VC
When a company buys you, you take a back seat to the company. That’s great, for some. If your runway is considerable, that might not be optimal. It all boils down to timing, mind you. How an M&A path is fundamentally different from a venture capital route is the following: a VC really does not want to compete for your job, and he knows you won’t be competing for his. As such, all they want is to give you the tools and resources to make them as much money as you can.
In other words, it’s ok to aim big and aim high, no one’s egos will be bruised.
Of Bulls, Bears and Hogs
When the dust settles, the simplest way to look at it is this way:
- if you are a bull on your prospects: you raise VC.
- if you are a bear on your prospects: you sell.
- What makes you a hog? That’s for another post.
I also don’t want to pretend that what works for one entrepreneur or company applies across the board. I myself was torn for some time in this debate, but ultimately, I think it’s a simple decision for me: if you raise VC, you can always sell later on; but if you sell, that’s it, you cannot stay independent and deliver on your potential.
So I venture off to TechMeme to learn more about YHOO’s acquisition of Buzztracker, thinking it would be a good foundation to pen something on determining price for a startup, etc. I see fellow stock market investor Howard Lindzon chiming in on the deal, so I click through to his site.
My eyes veer off to the upper right area of his site, to his recent Twitter comment. What does it say?
goldman sachs on fire…I would short it here with a tight stop…if i cared. The wasps are in control while the jews pray.
Madness. That makes the cut for a Crazy Post mention…
To many, Winamp was synonymous with MP3s and online music. The popular software turns 10 next month… which means I’m getting old. Surprisingly, it’s not dead: according to their PR team and this post, 62M people used it last month, and despite iTunes’ assault on the market, AOL (who now owns Winamp after it bought Nullsoft from Justin Frankel right before the end of the century) will be unveiling a new version, here is the beta.
Features include:
- Album Art Display
- Enhance your music collection with album art. Winamp finds it, you enjoy it
- The Media Monitor
- Enjoy the best music on the web. Save it, playlist it. It’s music to your ears
- iPod and other MP3 Player Support
- Manage music and videos and create playlists on your iPod or other MP3 player
- Dynamic Song Recommendations
- Get a custom playlist of songs like your current favorites with a single click
- Artist and Song Smart Search
- Get instant concert news, artist bios, web videos and more with Smart Search
- Acoustic Fingerprinting
- Get the most accurate information about your music with acoustic fingerprinting
- MP3 Surround Sound Support
- Get the full effect of surround sound music with MP3 Surround
- Winamp Remote: Access Your Music and Videos - When and Where You Want
- Enjoy your media on the web, on mobile, on TV through the Wii, and more
- Winamp Toolbar: Control Winamp From Your Browser
- Play and manage your music and videos from your browser toolbar
- Access Thousands of Online Radio Stations, Videos and More
- The fun never stops with thousands of Radio stations, videos and MP3 downloads
Enjoy it folks. In that vein, here are the Top 10 Downloads of All Time.
When we relaunched, part of the reason was to slicken the site, which we did. Another, larger reason was to go viral.
Well, if there was any doubt as to whether that was a good call, here is some food for thought.
Yesterday, our streams were 2.05 times higher than on August 18, the first day we relaunched. Not freaking bad.
I got a couple of emails yesterday from readers asking me why I wasn’t being “regular” (their words) with the crazy post of the day. Basically, a random post from a newspaper site or blog that catches our attention. We’re up to #4, and I promise to be, well regular.
Yesterday’s winner was this one by AlleyInsider, but not because of the post itself, but one of the comments.
The post in question shed light on the supposed beef between Heavy.com and Takkle. The usual, company A hires from company B, so company B starts talking shit about company A… what makes it a winner, frankly, are these two comments:
Comment #1 from Anonymous Person #1:
Peter,
Here is some info for you:
heavy total users: 121K
heavy new users: ~500/daytakkle total users: 202K
takkle new users: ~700/day- takkle has very low pageviews compared to heavy
- both have a very low active user base
according to my sources:
- both have major technical problems with their technology inhouse
- both had people leave the company very recently
- takkle’s being run like a sweatshop by a bunch of MBAs with no industry experience while heavy’s senior management is completely clueless about technology and had allowed Frank Speiser (who is a real asshole according to people who have worked with him by the way) to drive people away from the company before he was fired and eventually picked up by takkle
Let’s hope that takkle can survive the lawsuits that are coming and that heavy’s new senior management can bring about changes to take it to the next level.
Comment #2 from Anonymous Person #2:
As someone very close to the situation, let me just say that the only statement in the above comment that is not complete BS is the word “the.”
That’s precious. Should be pointed out that investors of:
- Takkle include Investors include WMG Investments, the investment arm of Wasserman Media Group LLC, Greycroft Partners, LLC (founded by legendary venture capital investor Alan Patricof), IJ Smith Enterprises LLC, and Jack Schneider, Managing Director at Allen & Company, Inc.
- Heavy.com include Polaris.
I am sure the founders are all gentlemen and scholars, but if what the commenters say are true, then score one for due diligence, baby!
The Inquirer runs a headline: “Google Readies Powerpoint Killer.”
Hmm… that might very well be true, but right now, it’s hard to take Google Docs very seriously when there is a 500 KB file limit folks. I use Google Docs because sharing a document is easier than attaching it and having a myriad of outdated versions sitting on different PCs, but right now, Google Docs wouldn’t kill a fly.
Google and MSFT are fantastic companies in their own right, and yes, the world of software and advertising, technology and media are blurring so these two technology companies will clash more than less over time, but saying that Google has anything “killer” in the Office domain is as ludicrous as claiming that MSFT has a Google search killer in the pipeline.
Yeah, told you that was ridiculous.
Note to self: double-check Google Docs account to make sure files are still alive and well.
On a daily basis, we’re too close to really pay attention, but the line between traditional, print media and new, online media is both blurring and becoming more glaringly different.
While Time Warner reports disastrous print numbers, from AdAge, via AlleyInsider.com:
“During the first half of 2007, ad pages dropped 17.5% at Fortune, 18.2% at Fortune Small Business, 25.7% at Money and 34.1% at Business 2.0.”
You read that blogs that started off as one-man operations are becoming more and more akin to the print businesses they are siphoning traffic away.
Case in point: today Marshall Kirkpatrick, a highly respected and liked writer leaves his job at Splashcast to join ReadWriteWeb, a blog I refer to as think-tank meets. Kirkpatrick left his high-profile writing gig at Michael Arrington’s wildly successful Tech Crunch blog to join Splashcast.
So this initially begs the question: what gives?
Kirkpatrick explains his move here, succinctly saying that he prefers the life of a consultant and reporter more than that of a marketer. I don’t think there is a greater reason than that. Interestingly, on that note, Allen Stern has an insightful commentary on what Kirkpatrick’s impact was at Splashcast.
I’ve been blogging since 2003, but in this form since 2006, when I left my cushy job (read: pushed out of my cushy job). I personally could not envision being only a dealmaker or a writer, I like both and have found a way of doing both. Sometimes I have to shut my mouth even if I have big news, but that’s a trade-off I can live with and accept, cause it gives a good insight in what I do publish and think that ultimately readers accept that as fair game.
Print Is Dead - Long Live Print
I’ve never adhered to the print is dead talk, but increasingly, apart from the odd flight or “thinktank session” I wonder: why print? I’ve argued that print should go free, as the only viable way to boost readership and get more ad dollars.
But I think - in the context of both Kirkpatrick joining RRW and Rupert Murdoch hinting at impending layoffs - one major reason why print might very well be heading towards death, is that a lot of traditional print media writers are going to start jumping ship to the very same blog-based publications: Paid Content, Tech Crunch, Gawker Media’s Valleywag, Read Write Web.
When News Corp. was trying to buy Dow Jones and Barron’s Eric Savitz was publicly voicing his opposition to the deal, I was going to pen an open letter offering him a gig.
Bottom Line:
Marshall Kirpatrick joining RWW is one small news item for traditional print media, but one giant storyline for its writers.
PLAY
