If Paid Content is worth $30M, is Silicon Alley Investor worth $5M pre-money (or $6M post-money)? Sure, why not. That’s how the M&A and financing businesses operate:
1- one part about demand and supply for a business,
2- one part about comparables,
3- one part about fundamentals,
4 - one part about leverage, which is a combination of the three points above. Why it’s a point in itself is because some people might have 1, 2, and 3 but cannot exert that leverage or are poor negotiators (or as they say in Latin, smallus ballus)
However, I wonder… since financing deals take some time - even for money men like Kevin Ryan - do you think the PC deal made them regret the financing value or rush them to close the deal?
I don’t know. In February, we penned Elite Eight Tech Blogs.
I never included valuations, because, well, I wrote that on a Friday evening from 10pm to midnight and I was burnt by the end, not being able to recognize letters, let alone compute valuations… but recent comparables help us start to add price points. Paid Content comes in at $30M, and SAI at $5M.
While I am sure that Rafat Ali took the Guardian’s kids as collateral to ensure editorial autonomy, as a corporate-owned blog, I will remove PC off the list. I had included SAI in the initial list, and this move frankly shoots them up. Nothing spells validation and credibility like an official, institutional round of money. I would know, because we’ve never raised a real round (I’ve funded this bad boy myself), but the drawback is that oftentimes people think I’m crazy when they ask who our VC is and I give them a blank stare.
Anyway, I will be updating that list soon, some things to expect:
- I think GigaOm moves up the list a bit, its recent Business Week partnership being solid validation.
- Tech Crunch remains a powerhouse, but with the whole Web 2.0 being more of a joke now than a fad, I wonder about its resiliency. Also, I really like Erick Schonfeld, but I wonder, what is TC’s value without Arrington? I think Heather Harde has added a je ne sais quoi to the firm… but the fact remains, as the Duncan Riley experience shows, you can’t pluck a blogger and parachute him onto a new blog and create a business.
- As much as I admire what each of the entrepreneurs behind VentureBeat, RWW and Mashable have done, all three need to do some soul searching. RWW is more of an IT source, Mashable is a mash of many things, and VB is more on financing and deals anyway… but the climate for all three is hazy, and cluttered.
One of my favorite VC bloggers (along with Paul Kedrosky) Fred Wilson says that someone told him he could sell AVC for $5-10M. Wilson says “he’s not sure about that” and he is right… because a good VC would tell you that AVC is 100% Fred and without him that site would be worth $0… the discount then would be considerable.
On SAI, the resurgent renaissance man Henry Blodget was smart to immediately surround himself with a handful of young, successful and talented writers: Peter Kafka, Micheal Learmonth, Dan Frommer; I’d never read Vasanth Sridharan before doing so on SAI, but he fills out the cast pretty well.
That is one difference between SAI and its peers. From Day 1, it was not about Blodget, though his presence - and yes, baggage - overshadowed his team.
Honestly, as much as I respect Staci Kramer on Paid Content, for example, I know when Ali was not behind the mike. Same thing applies to Arrington; love him or hate him, you have to admire and respect some of his bombastic posts… anyone else on that blog is fine on another blog… but on TC, I want Arrington in full effect.
Valleywag, on the other hand, is closer to a publication than a blog because it was never about any one blogger (not even Nick Douglas, who was the initial, sole writer). Owen Thomas has been amazing, and his cast of characters complete the masthead admirably.
GigaOm was a special case: no one could fill Om’s shoes… but his stable of writers are all actually unique and make you almost not miss Om. As a writer and journalist, Om hates hearing that; but as an entrepreneur, he probably loves me saying that.
Moving from a blog to a business is not obvious. One day I might hire 1 to 5 writers for HipMojo.com, but I might as well launch ThisIsANewSite.com… cause that’s reality. That site could be far better than HipMojo.com, but HipMojo.com it shant be.
Anyway… nice to see the evolution happen before our eyes.
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July 17th, 2008 at 10:42 am
Nice post Ashkan. You forgot Furrier.org and HipMojo in your analysis
The value on the blogs are all people based unless you go for the aggregation play or full on ezine.
On the blog front the voice around a personality is key and that is TechCrunch’s success. However Mike has done a good job in building value around getting traffic and sequencing to a ezine. I think that he will have value to a buyer even if he bails same with Gigaom.
Venturebeat is good with Eric Eldon there and the writers that they are bringing on. Your seeing professional reporting verses editorial personality. I think that the users want the editorial personality plus reporting. Example TC and AllThingsD are great examples of both. If a blog is to monotone it doesn’t connect. imho
July 17th, 2008 at 12:50 pm
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July 17th, 2008 at 12:50 pm
Ashkan - you are crazy if you think that SAI could survive without Henry. I like Peter and Dan and the team but it’s the same ship as TechCrunch is. When you go to events here that Henry is involved in, it’s clear to see that the site got initial traction and distribution deals because of him. Period.
July 17th, 2008 at 12:57 pm
Allen, I NEVER said SAI would be the same without Henry, I just said UNLIKE some of the other blogs, Henry launched the site with other writers… so it’s not alien when you see Dan, Michael, or for that matter, Allen, writing there…
Whereas with Rafat, Michael etc., it does feel odd when someone else grabs the command, no?
It’s the same with CN. I read your site for Allen’s take on things… but someone else’s. If you have other writers, it’s fine… but is it still CN?
That’s the toughest part to scaling a blog into a media company… IMHO.
July 17th, 2008 at 1:13 pm
aah - thanks for the clarification! But I guess at the end of the day, sai/tc are still run by one “personality” and several other very talented writers.
July 18th, 2008 at 5:27 pm
[…] Karbasfrooshan (who blogs at Hipmojo and has his own video-focused online media business), did. He estimates that SAI had a post-money valuation of $6 million, even though SAI’s chairman, Kevin Ryan, […]