CBS’ got over 10,000.
NBA’s got 1,224.
We’ve got 1,999.
What am I talking about? I am referring to the number of clips we have on our YouTube channel.
Some time today or tomorrow we’ll up posting our 2,000th clip. It’s like child’s play, we have over 4,000 on our property at WatchMojo.com…
I wonder how many new media, made for web video producers have that many clips? If anyone has any comparables, please let me know.
Digg this Blog
Share on Facebook
WatchMojo on Twitter
WatchMojo on YouTube
Add to Favorites
WatchMojo NewsletterYou knew this was coming…
When Mahalo launched, the naysayers came out in droves: we penned a post called Mahalo: English for 1996.
Then as the company morphed from one project to another, the cynicism grew. Last month founder Jason Calacanis penned a post calling for 80% of Web 2.0 to shutter. Knowing that Jason is a master of PR, you knew he was laying the foundation for Mahalo’s own cuts and potential shutdown. Right now, the latter is by no means a fait accompli, but for Jason to suggest that the company will be able to survive without any ad revenues until 2012 is a bit of a red herring; the real question is,will Sequoia, who itself rang alarm bells just last week on the need to get one’s house in order, sit by and watch Calacanis burn through $20M in VC?
Yeah, I don’t think so.
Mahalo, like many other startups that were funded in the past few years, were over-confident VCs flipping a coin in the air hoping it would land on jackpot. But as the economy tanks and credit becomes scarce, financiers realize this isn’t time to play Grown Up Monopoly with real money…in fact, many companies don’t pass Go and don’t collect $200.
This is why we’re seeing all of these layoffs. Make no mistake about it:
- quality companies with a glimmer of hope are being funded and reinforced as we speak,
- so-so players are being asked to reduce costs until a final judgment is rendered,
- defo losers are being shut down. Some might have to repay the money they raised.
Today’s news from Mahalo means that its backers put it in the second or third pile. Where will it end up?
Mahalo’s traffic strategy right now is simply to jump on the latest, breaking news, publish a page on it, and hope that Google’s super quick spiders index their page… It’s a gimmick, not a worthless one, but not exactly priceless either.
Mahalo’s dilemma remains the same: the more Mahalo becomes an actual content hub though, the more it strays away from its core. The more it sticks to its core, the less relevant it is over time.
From Jason Calacanis’ website:
We’ve laid off a just under 10% of our full-time staff, cut our overhead by doing smart things like renting desks (we have six offices in Santa Monica fyi), and reorganized our editorial department to focus on freelance positions over in-house editors. The net result of the effort is we are giving Mahalo another year of “dry power” (or runway) to complete our mission.
Yeah… that might not be a good idea. Who the F needs six offices?
Online music-focused social network Imeem is on the block, according to our sources, and has hired investment banker Montgomery and Co. to lead the sale. Coincidentally, we have also learned that the company is announcing some layoffs internally today—as much as 25 percent of its around 80-strong workforce.
Imeem has raised above $50 million in funding over the last two years, including a $15 million round from Warner Music Group earlier this year. Other previously disclosed investors include Sequoia Capital and Morgenthaler Ventures…we have also learned that DAG Ventures was the last one to invest in the company this summer, with the valuation north of $200 million. They would probably like more than that, but with the current market, anything in nine figures would be, well, reality-rational.
It is worth noting that DAG did the last funding at $200M. Depending on what, if any, liquidation preference they put in the deal, it is very possible that the founders, management and employees will be wiped out in any deal.
This is why I would never agree to a liquiditation preference, frankly.
Disclosure: Imeem is one of WatchMojo.com’s distribution partners. We have absolutely no insight on the company’s layoffs etc.
Regular readers have surely come across the short version of how my old company crushed old media stalwarts Maxim, GQ, Esquire, Playboy et al. and deeper-pocketed competitors such as TheMan ($17M of funding folks!) to become the #1 online magazine in the men’s lifestyle space:
It’s a three step process, are you ready?
1- We didn’t get buried by the weight of excess funding and irrational expectations;
2- We ran the company with an eye on costs and a desire to generate more and more revenues and thus be “profitable“ (pronounced “prŏf‘ĭ-tə-bəl” and is a derivative of the noun profit, profitable is an adjective that basically means “not being f*cked”);
3- Then when the [insert name of] bubble burst, we charged ahead while our peers had to scale back.
Well… the same thing is happening now with my new company WatchMojo.com. From NewTeeVee:
ManiaTV Lays Off 20, to Reduce Amount of Original Content
Layoffs are a common theme these days, mostly due to the current economic downturn. We’ve recently covered layoffs at Veoh, PermissionTV, Playboy, Heavy, Seesmic, and BitTorrent. Crackle, another site focused on original content, also lost most of its staff amid a move from Northern California to its Sony mothership in Culver City, Calif.
I am not sure I would put Heavy and Mania TV as our direct competitors… but seeing how we all produce original content, then I guess, to some extent, yes, we compete. The point is, both companies made cardinal mistake #1: believe your own PR, raise too much money, get cornered by VCs to cut just as the online video market takes off.
It is a shame, because in all fairness, back in 2004 when I was looking for new projects to pursue, it was the sight of Mania that led me into thinking that producing video content for the Web could work. I am actually rooting for them and hope that this bit of cost cutting will help them indeed reach profitability.
Considering this:
Funding for online video sites has been on the rise. It nearly doubled between 2006 and 2007, from $266.9 million to $460.5 million. In just the first quarter of 2008 alone, over $217.3 million was raised.
Also rising has been the amount of ad dollars going toward online video: eMarketer reports a 55.9 percent increase this year over 2007.
In a report in March, the now-defunct Bear Stearns predicted that the sector would continue to expand.
“We believe that video will be at the very heart of the next five years of Web evolution.”
Online video might very well be recession proof, but it is not stupid proof. So sure, some companies and management teams will survive and dare I say: thrive. But a lot of them will also fail because there’s been a high dose of st00p1d in the market, as well.
See our 20 Dumb Things About Web 2.0 here.
Joe the Plumber, meet “Roger the Angel”.
Roger Ehrenberg has some insights into the shifting landscape of VCs and angels. Some good tidbits. As the financing landscape changes and becomes more difficult to raise money, I see a lot of young companies being flipped early on.
How does one value such deals? Read on.
Seeing embryonic - let alone pre-revenue - companies get acquired was all the rage during the go-go Web 2.0 days. Those days are indeed over. But quality companies are continuing to be eyed by major media firms. Traditional media firms have cash on their balance sheets, they don’t like to give up stock (so the fact that their shares are in the toilet is moot) so because expectations have come back down to earth, I think you will see acquisitions, especially with less investments.
With companies where much of the value is in the “forecasts”, it’s not uncommon to look at a deal that calls for an earn-out, according to an M&A executive who has signed many checks in the past decade. Such earn-out deals provide a semblance of logic to the buyer and can get an entrepreneur the price they want, only that it is paid out later, when some targets and milestones are reached.
These milestones range from very attainable to nearly impossible, and can be measured simply by revenue, traffic, or simply time.
Personally, as an advisor, I tell other entrepreneurs that earn-outs are a necessary evil if you want to sell and lack leverage. But I also tell them matter-of-factly that once you commit to an earn-out, treat it as bonus, otherwise it’s a recipe for disappointment and becoming disillusioned.
As an entrepreneur myself, I am adverse to them naturally. But not for the reasons you might think.
The tricky thing with earn-outs is that acquirers have no clue what to do with companies they buy. As a result, the first year is a wash and the sellers are screwed. Worst case was dMarc, where a billion dollar deal turned out to be a $102M deal. That is not bad at all, but everything is relative: if you’re expecting a billion dollar payoff and walk away with a $100M, you are pissed off. Just ask Bear Stearns shareholders.
I have gone through one M&A where I was a shareholder: when IGN bought AskMen, for example, IGN forgot about us because it was looking to file for an IPO, but then it got bought out by News Corp., and we became the forgotten long lost cousin in some far-off land.
Had that deal been an earnout, the sellers would have been screwed, period, because there was some inaction initially.
There is also the matter of the currency of choice. Back in April 2006, one company made an overture to acquire my new company WatchMojo.com. They wanted to offer stock. Problem? Their stock is now 90% off what it was then, and although I did not anticipate the severity of the fall, I surely knew that the stock was going to fall. In cash deals, it is less variable to some extent, but again it all depends on the details.
Personally I am not against earn-outs, provided:
- there is a minimum guarantee that would ensures that the seller won’t hate the buyer,
- the downside variance is offset by enough upside that it’s worth it for the seller to agree to and stick to,
- the buyer commits to X resources, be it time, people, money etc. OR alternatively, autonomy to run the shop as you see fit.
Ultimately, it boils down to leverage. Once you start asking for this, and getting it, then it means you can avoid the earn-out talk altogether and adopt a time-tested method of negotiating:
PLAY
