These are four fairly popular lists I published in the past 2 years. I realized, however, that I do need to update the first three (I updated the fourth one today).
- Top 10 Web Acquisitions of All Time
- Top 13 Explosive Web Startups of All Time
- Top 10 Web/High Tech Stocks of All Time
- Internet Company of the Year: 1994-2007
Enjoy… over the next few weeks I’ll be updating the Top 10 M&A, Explosive Startups and Stocks lists and refeature them.
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WatchMojo NewsletterLast year I forecast that Web ads will overtake TV ads by 2021.
In that analysis, I had web ads at about $38B by 2011. Today I came across a report by Yankee Group on Paid Content that suggests I was being conservative:
— Online ad spend doubles in five years: According to the Yankee Group, the U.S. online ad market will hit $50.3 billion in revenue by 2011 - more than double 2007’s revenue. The underlying reasons for this rosy picture rests on the disparity between current media usage and spending by marketers. The web claims roughly 20 percent of overall media consumption in the U.S. right now - but advertisers currently invest only 7.5 percent of their budget online. The gap will start to be bridged by 2011, when Yankee predicts that online will comprise nearly 25 percent of all media consumption and 15 percent of the ad spend.
That is pretty impressive. I had web ads taking in 25% as of 2020 and only 10.5% by 2011, but the more I think about it, that is too low cause in 2008 it will be about 8.9%…
Yankee sees the shift from offline to online accelerate much faster (which is welcome news to a web entrepreneur like me, mind you).
Slide.com raised $50M in a $500M round. Wow. That’s a lot of money. How much?
The $500M represent s85% of MySpace’s price tag or 33% of YouTube’s price tag. It’s also the same valuation Facebook got when Greylock invested in Facebook in April 2006.
More importantly, I think, is that this is 33% of what Paypal sold to eBay for. That’s important because Levchin is maniacal on building a company that will sell for more than what Paypal did. Then again, as Business Week’s Sarah Lacy reports, Levchin is aiming for an IPO, and not an M&A.
Time will tell if this is as prescient as the Facebook deal (which technically remains to be seen) or the MySpace acquisition (definitely a smart move in hindsight). But Slide is indeed a way to monetize the social networks, or rather, a theory on how to monetize social networks. I must say (not to compare WatchMojo.com to Slide.com at all) but I tend to agree that building the most valuable apps for social networks will be able to generate high returns. Where my philosophy differs is that I personally do not think that slides and what not are what marketers will really want to advertise, and conversely, users won’t want brands advertising on their personal images; we do it via high-quality video programming… but right now, that is moot.
I must say, reading the following made me chuckle:
No doubt the valuation will revive talk that we’re in the midst of a bubble. How could a widget company be worth half a billion dollars? What is the revenue model? How could it ever make a profit on slide shows running on other people’s sites? The naysayers have a point, but I’ve long thought Slide was a far more valuable property than the Silicon Valley masses gave it credit for.
Why? Does this cover remind anyone of anything? Also written by Lacy:
Too funny. It will be interesting to see if 2008 adds momentum to digital media asset prices. I tend to think that yes, because there is a bull market somewhere at all times and in an otherwise slow offline landscape, online seems relentless in its growth.
Allen & Company helped with the round, incidentally, the funding came from Fidelity Investments and T. Rowe Price.
Told you, Max doesn’t mess around.
We updated our Annual Internet company of the year list. The winner for 2007 was Facebook, who was both the editor’s and readers’ choice. Facebook joins the 13 other companies we had selected from 1994-2006, see the entire list.
Who will be the Web’s company of the year in 2008?
It depends on many variables. The macro environment will affect the outcome, for sure. As more and more companies lay employees off to account and adjust for the slowing economy, expect networking tools like LinkedIn to gain momentum.
Business social networking is gathering steam regardless of the economy, but as people get pink sleeps, the first place they will head will be to LinkedIn to connect with their network, then they will update their resumes. I must admit, I have come full circle on LinkedIn. In fact, I owe an apology to Reid Hoffman and his entire team: LinkedIn is in fact one of the most useful, indispensable tools for business. Mind you, that has a lot to do with the evolution of LinkedIn and the fact that they executed their business plan and became so widely used. But what was a somewhat crass tool has now become a must for entrepreneurs, investors, executives, members of the press and any stakeholder imaginable.
But LinkedIn will remain a niche tool for business types, and net-net, the slowing economy will probably hurt LinkedIn a tad more than it will help it.
Another very niche tool that many will jump at to suggest is Twitter. I do not think Twitter will gain mainstream adoption, and in fact, another company could very well overtake Twitter’s lead. It won’t be the first that a first mover gets surpassed by someone else. Lastly, let’s face it, Twitter is a fringe tool. Blogging is just entering the mainstream, and even there, most of the normal population is not vain enough to narrowcast their lives for the world to see. Sorry, just being candid (though not judgmental, since I am rather open myself).
Speaking of blogging and blogs, a wild card pick I have is none other than Gawker Media. Yes, Nick Denton’s empire did face a reduction in pageviews to close out 2007, but judging by the most recent figures, it’s back up… to record levels.
Either way, as Gawker evolves, they’ll focus on quality of readership rather than quantity. Two weeks into the new year, Gawker has tried to shake up the compensation system in publishing, its Gizmodo blog has been kicked out and banned from CES, and in the context of the macro landscape, in an election year where mainstream media will continue to fail to actually do any reporting, blogs will do well and as the leading blog network and publishing empire, I think Gawker Media will shake the foundations enough to gain mindshare. Case in point, the Tom Cruise video on Scientology that many other media have yanked remains - at least until now - live on Gawker here. I think Gawker Media’s properties and Nick Denton in particular will become an ongoing subject of conversation, interest and fascination… especially given the company’s status as a privately held company.
Of course, it seems unfair to mix technology and media, but that is the future: a meshing of the two as demonstrated by acquisitions of aQuantive by Microsoft and 24/7 RealMedia by WPP. As the world of media and technology mesh, one company seems to be in the lead, and that is Apple. In fact, were it not for Facebook’s awesome 2007, Apple deserves much consideration. I think it will be very challenging for Apple to do more in 2008 than it did in 2007, especially with the launch of the iPhone (which garnered 20% market share) and saw its stock double.
Other companies will be in the news, for sure:
- IAC breaks up into five distinct units.
- Yahoo! will probably face some kind of shareholder revolt, with its stock at a 52-week low.
- Google will have a hard time to maintain its stratospheric rise again. But YouTube remains a shining star.
- Second Life will get its mentions here and there as the virtual world hype train continues and curious mainstream journalists cover the story.
- News Corp. will only get stronger: with Dow Jones under its wings how could it not?
Last year I called Facebook the company of the year as early as April 2007 and it was an easy choice… 2008 is way too premature to call, but those are some of the companies I expect to be in the limelight come end of year.
Who do you think will be the Web’s company of 2008?
This morning I saw BreakingViews.com’s take on Yahoo!, via Valleywag via Paul Kedrosky, which builds upon Sanford Bernstein’s report that Yahoo! is not exactly maximizing value.
I have been covering Yahoo! (note: I own shares in the company) for some time and outlined my own strategic options, which include:
- status quo (a $100B market cap by 2010?)
- merger with eBay
- merger with Viacom
- merger with CBS
- acquisition by/merger with Microsoft
- taken private
- sale to AT&T
- can Google buy Yahoo!?
- Spin off ad network unit
Frankly, I’ve argued that Yahoo!’s main problem is simply operating in the shadow of Google, but I digress, Wall Street does know best and Yahoo!’s stock is in the gutter. Jerry Yang is a great guy, I am sure, but 200 days into his stint, something needs to change.
The chorus is growing louder, the momentum is growing fast: something is bound to happen in 2008, especially at these prices. Yahoo! is now worth $28B. That’s nothing to sneeze at, but then start to peel off the layers and something is wrong.
In the past month, more and more people are pointing out the obvious.
In December 2007, Valleywag asked “Is Yahoo really worthless” and highlighted:
Yahoo Japan, of which Yahoo owns a third, is worth $25 billion, putting Yahoo’s stake in it at nearly $9 billion. Alibaba.com, a Chinese e-commerce company in which Yahoo directly owns a 10 percent stake, is worth $17 billion. Tack another $1.7 billion on. That figure doesn’t include Alibaba.com’s parent company, Alibaba Group, which runs Yahoo China and in which Yahoo owns a currently illliquid 40 percent stake. Estimates of its value are running between $8 billion and $16 billion. Yahoo has other investments like G-Market. Add it up, and you realize that Yahoo’s wholly owned operations in America and Europe are valued by the market at next to nothing, especially compared to the multiples other Web companies are getting.
Then in early January (cause we’re obviously now in “mid-January), Sanford C. Bernstein added:
At $24.09, Thursday January 10th’s closing price, Yahoo has a market capitalization of $32 billion. When Jeffrey Lindsay, an analyst for Sanford C. Bernstein looks at the company’s $2 billion in cash, along with its holdings in Yahoo Japan, Alibaba (the Chinese e-commerce firm) and other entities it doesn’t run, he comes up with a value of $13.24 a share. That leaves a value of $10.51 a share for the actual business of Yahoo, making the value of Yahoo’s core business about $14 billion, or 7 percent of Google’s $200 billion market value.
Yahoo! is yesterday hit a 52-week low. Yes, I know, the economy. No one is immune to the economy, granted, but the counter thought is that there is always a bull market somewhere, and digital media is it, and display/banners and video will grow above average and this all means Yahoo! should too.
Yahoo! will face a shareholder revolt in the form of a hostile takeover some time in 2008. It might not be very hostile, frankly, because many of Yahoo!’s most senior shareholders have left, including its Chairman and former CEO Terry Semel. Furthermore, Yahoo!’s current CEO, co-founder Jerry Yang is the largest single individual shareholder and unlikely to want the chief Chief gig for very long.
What will happen in particular? I don’t know. But seeing Jana Partners et al. circle CNET and build up a 20%+ stake off the radar I suspect the same thing with Yahoo!, soon.
Any takers?
Disclaimer: Long YHOO
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