From Forbes:
Valuing tech startups is an art. But as a rule of thumb, late-stage VCs limit valuations to two to three times projected 12-month revenues, discounted 20% to 30%, says Joshua Tanzer, managing director of investment bank Revolution Partners. Firms also typically aren’t viewed as late stage until they’re doing about $10 million in annual revenue and appear to be within a year of profitability.
File under “Good to know”.
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WatchMojo NewsletterWow. Via Valleywag, from Forbes:
Keith Daubenspeck and Dwight Badger set up Advanced Equities Financial in 1999, tech’s heyday. In their first deal they raised $28 million for Pixelon. The video firm went bankrupt 18 months later after chief executive Michael Fenne blew $11 million on a party featuring The Who and the Dixie Chicks.
Pretty bad, heh? But wait, it gets worst:
Fenne was actually David Stanley, a con man wanted in two states for fraud. Pixelon’s insurer paid $2.6 million to settle claims. Daubenspeck and Badger say their lawyers failed to review Stanley’s past and that they were victims of fraud.
No comment, actually, worth noting the title of the Forbes article (not Valleywag’s!) is “Garbage In…” - wow indeed.
Here’s the clincher:
AE puts investors into outfits like VisionTek. In 2002, eight months after AE put $4.5 million of client money into the video graphics firm, it went bust. The bankruptcy trustee sued Daubenspeck and Badger for helping push it into Chapter 7 by launching a rival with three former VisionTek managers. AE, the managers and a supplier paid $3 million to settle the suit.
And now, the gold medal goes to:
AE’s ability to raise money for shaky firms like Agami put it on the VC map. “Up rounds” of financing that increase the paper value of startups enable earlier-stage VCs to present happier reports to limited partners–and to prospective investors–about their unrealized gains.
“This place is a stereotypical bucket shop,” claims a current AE broker who says he’s sticking around only because he hasn’t been paid in full. “The deal flow is a joke. The only reason we get these deals is because we massively overpay.”
Hmm… maybe I should give them a call… not!
Read and weep.
Who cares if paid search pulls in 40% of the online ad pie?
Who cares if the bozos as eMarketer suddenly scaled back online video ad spending for this year by 65%.
All I know is that each month in the US, there are about 10B video streams, yet there are only 8B search queries. Search has been around for 10+ years.
Videos have only been worthy of talk since 2005 or so, so about 3 years.
That means… something.
Via TSB, From Fred Wilson:
“But as a company grows, the CEO’s job is managing people and teams, processes and priorities.”
Indeed, CEO might as well spell Chief Ego Officer, but I’m not talking about the CEO’s ego, I’m talking about the egos of those around him.
Mojo Supreme is the first company I start, and since doing so, WatchMojo.com is where I chose to focus. But before that, I worked with two successful CEOs. Both were in their 20s when they launched. Both were abrasive as hell, too.
I loved them both, but man, I’m surprised I never killed them either (I mean that figuratively, of course). At the first company, I served in a support capacity: I could have not been at the company and nothing would have been different. The second one, I helped built the joint. For better or worse, had I not been there, trust me, everything would be different (better, worst - but different, that’s for sure).
Here are some things I’ve learned about CEOs - good, bad and ugly - over those three experiences.
1- We all have egos, some just manage it better than others and see the forest through the trees.
2- Founder CEOs just want the company to succeed, so between power, fame, money and respect, they choose respect, power, money and fame, probably in that order… and understand that they need to make room for people who want those same things but in a very order than yours.
3- Founder CEOs are good when they genuinely don’t make decisions based on “money” but rather “if I had all the money in the world, what would I do and what would the best decision be?”
4 - Founder CEOs are good when they realize their limitations. At WatchMojo.com, I have helped built what I consider to become the most valuable online video content business there is, yet I’ve never shot or edited a single frame of video. Indeed, I had an idea of what online video should look like, then hired some really driven, talented and smart people to make it happen. Oh, I largely got out of their way… all the while moving the needle further out to force us to grow, expand and improve.
5- Founder CEOs are bad when they think they know it all and understand all functions. No one does, no one can.
6- Founder CEOs are ugly when they bring people in to run units and functions but don’t want to give up operational control or cede any territory to the people they bring in… then make life unbearable for all.
7- Outside CEOs are bad when they think they are the show. Because the Board brings them in and showers them with affection, these tend to go out of their way to prove/justify their value… generally at the expense of founders and the executive team.
8- Outside CEO are great when they understand the limitations of their previous successes and adapt broad lessons to their current challenges but have the common sense not to extrapolate every single thing that happened at their old gig to their new gig… avoiding making life unbearable for all.
9- CEOs - be it founders or outsiders - understand that people probably just view the job as that, a job. What motivates the troops to kick butt is wildly different than what motivates them… and they make adjustments to get the company to where it needs to go. But sort of like Bill Clinton used to be able to do: they also understand how to make each person’s life and personal goals as important as theirs.
10- Founding CEOs understand that the way the world works: if they want to remain CEO after funding, chances are they won’t… and if they want to get away and do something else, the Board won’t let / encourage them.
From Wall Street Journal:
Amid a sharp downturn in automotive advertising on television, General Motors Corp. has pulled out of its longtime sponsorship of the Academy Awards, one of the biggest annual events on broadcast television.
The move will leave Walt Disney Co.’s ABC without one of its biggest advertisers for Oscar night in February. The auto maker has long been one of the biggest spenders on the star-studded program. It shelled out $13.5 million for ad time on the broadcast this past February, according to TNS Media Intelligence. Over the past 11 years, GM has spent more than $110 million for ad time on Oscar night, according to TNS.
(…)
ABC brings in about $80 million in ad dollars annually from the Oscar broadcast, according to Nielsen Monitor-Plus. Other past advertisers on the show have included J.C. Penney Co., American Express Co., Coca-Cola Co. and McDonald’s Corp.
In 2000-03, when the ad market tanked, no one was really advertising online. The good news about 2007-0?’s ad meltdown is that many major marketers are advertising online, realize it’s more effective… so when they scale back, they usually scale back on TV… and when they reallocate ad dollars, it’s TO the Web, and not away from it…
All in all, GM’s decision not to advertise on TV’s Oscar show is pretty much a sign of the times, but it’s still shocking… as boring as it might be, it’s still the Oscar’s!
From Paid Content: a lot of activity in acquisitions and investments in new media, judge for yourself:
VC Investments:
– Total number of investments:160
– Total number of disclosed investments: 137 valued at $1,925,830,000
– Average investment size: $14,057,153
– Best estimated value of overall investment in the space (disclosed and undisclosed): $2,126,620,000
Acquisitions:
– Total number of acquisitions: 100
– Total number of disclosed acquisitions: 46 valued at $17,535,320,000
– Average acquisition size: $327,313,415
– Best estimated value of overall transaction in the space (disclosed and undisclosed): $20,594,510,000
I could not help but notice that 10 x 2.1B = $21B… pretty much the trailing twelve month figure for acquisitions. Yes, this does not account for time value of money etc., but it’s awfully close to what the target payout should have been, adjusted for timelines. Enjoy the graphs:
It definitely was the year of ad networks… which explains why me-too-dia companies are now diving into launching ad networks (re: News Corp., Viacom, Forbes, etc.).
From StarTribune.com, via SAI, from YouTube co-founder Jawed Karim:
Silicon Valley has a lot of noise, a lot of hype. People are very excited about all of the Facebook stuff, Facebook applications. It’s just been a huge hype over the last year when actually … there isn’t really that much value. It’s just a bubble. It’s almost a distraction.
Couldn’t be truer… Facebook’s grown quite a bit in the last year, but I’d argue it’s done that despite the Apps, not because of them. Anyway, Karim is looking for startups both in the Valley and his high school stomping grounds, the Twin Cities in Minnesota. It’s a good thing he didn’t limit himself to his college alma mater, Stanford, lord knows they get enough financier interest. Karim left YouTube early on to return to Stanford. I’m sure he sleeps well at night: he was also a member of Paypal, which sold for $1.65B (where he met other YouTube founders Steven Chen and Chad Hurley).
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