Archive for the ‘acquisitions’ Category

Reddit… Set… Go!

Tuesday, October 31st, 2006

After Google announced the acquisition of JotSpot, Conde-Nast announced that it was going to acquire YCombinator funded Reddit. Though not as popular or widespreadReddit logo as Digg, this democratic news portal has garnered a significant amount of traffic and a loyal following. Add to that the fact the company only employees 4 people and you start to develop some admiration for the team and the venture.

As a side note, Conde-Nast owns several magazines and websites (including Wired). The price tag of the deal was not disclosed.

From a personal standpoint, I am not convinced there is a fit here. I am going to have to delve further into the strategic direction of the publishing company, but my gut feeling says this doesn’t make sense. TechCrunch reports that Conde-Nast will leave Reddit as a standalone site, but also integrate it into other web properties, which I don’t get. I guess we’ll have to wait and see how this pans out before we jump to any solid conclusions.

Congrats to the team at Reddit.

JotSpot Bought

Tuesday, October 31st, 2006

Try and say that 10 times fast.

Google is on a buying spree. Up until this past year, Google has been very weary when it comes to acquisitions. That all changed. With YouTube, Writely, and now JotSpot among JotSpot logomany others, Google is making a much more aggressive push in the acquisition area. However, the old dilemma still holds true - whether to build a product/service from scratch or just buy an existing company at a premium. But with cash like Google and aggressive plans, it seems that the former option is the preferred.

Today, the company bought JotSpot, a wiki service founded by Excite-founder Joe Kraus. Financial terms of the deal were not released, but I’m going to take a wild guess and say that the price tag was around $30 million - but don’t hold me to it by any means.

With this acquisition, Google continues to make an aggressive push into the social application arena. Mash this together with Writely, Google Spreadsheets, and Google Calendar, and you have a full web-based social application suite. Robust, powerful. For this very reason, I think that the acquisition is a good fit for Google (Steve Rubel agrees), assuming the price tag was reasonable.

Here is an interesting note on the deal from TechCrunch:

“Other than a wiki, most of Jotspot’s plug and play applications are things that Google already has its own versions of. The acquisition may have been largely motivated by the desire to bring on board an agile team able to quickly ramp up lightweight hosted business applications for collaboration. Google may push Jotspot primarily as a project management application, one of the most important missing pieces of the company’s office platform. In fact, far more than a wiki, I’m going to guess that when Google reopens Jotspot to new users it will be as a wiki based project management service.”

Let’s just hope that the name G-Spot doesn’t stick - no pun intended.

Can You Digg It, News Corp?

Wednesday, October 25th, 2006

The rumour mill is swirling with talk of a Digg acquisition by News Corp. Both GigaOM and TechCrunch report that the media conglomerate is offering a reported $150 million Digg logofor the ‘democratic’ news site. At this point, they are only rumours, but my guess is that talks are well on their way and an announcement may be made at any time.

Is this a good opportunity for News Corp? Meh. I’m not so convinced. Although I am a huge fan of Digg and I visit on a regular basis, I see a better fit elsewhere. In my mind, the obvious bet may be Google. I definitely see a better fit there - especially with Google’s mission of organizing the world’s information and making it universally accessible and useful. In addition, Digg’s algorithm functions in a similar way to Google’s Page Rank algorithm so there may be some advantages to that.

From my perspective, I think $150 million is a low ball offer. I remember seeing that Business 2.0 magazine with Kevin Rose on the front and they valued Digg at $200 million. At the time, it seemed like a rather ridiculous valuation, but time has passed since then and I think that number is a lot more realistic now. Digg’s traffic has risen considerably - not to mention its userbase. And because Digg benefits from the network effect, it becomes more valuable as more people sign up.

In addition, there is stunning financial proposition. Because Digg generates millions of page views with relatively low bandwidth (as opposed to YouTube or Flickr), the margin between cost and revenue is greatly increased. Digg pages consist almost entirely of text which loads quickly and costs very little to run.

My opinion is that Digg should hold off and wait for a higher bid from a company with a better fit.

M & A Trend: eBay

Monday, October 16th, 2006

With many web 2.0 start-ups lacking in the revenue department, declaring bankruptcy, or failing to prove out their business models , what do you do with your website and operations as many are still driving reasonable amounts of targeted traffic? Obviously, large financial firms are not going to represent a 2-man operation and scout out potential acquisitors. It’s just not worth their time. So what’s the best way to go about exiting? eBay apparently.

This first came to my attention just over a month ago when TechCrunch reported that Kiko was putting itself up on the auction block at eBay. At first this seemed ridiculous to me, but after the AJAX calendar Kiko logocompany received $250,000, I took a second look. A couple of interesting points to note:

  • The bidding climbed over $100,000 in the last two minutes
  • The company was eventually acquired by Tucows - the popular shareware site
  • Kiko was only one year old
  • Rumour has it, there was only one full-time employee and two part-time contractors

I guess it wasn’t such a failure after all.

Quoting TechCrunch:

“New companies are easy to start, easy to fund and (now) easy to sell for a few hundred grand on eBay…this might be the way many of these small companies eventually find liquidity.”

So why am I bringing this up a month after the sale - because another company, LiveLocker, has called it quits and listed itself on eBay. The auction is currently live and bidding will end in 10 days. Currently, the LiveLocker logominimum bid price is $5,000 but we haven’t seen a bid yet. It will be interested to watch this story unfold and see what the company sells for - if it does at all. TechCrunch has also posted a list of other companies who have listed themselves on eBay here.

In the end, all is not lost for these web 2.0 start-ups. And yet again, eBay fills an inefficiency in the market - and makes some good money doing it.

Web 2.0 Acquisitions: Who’s Next?

Friday, October 13th, 2006

Google bought YouTube. Yahoo may buy Facebook. Other web 2.0 companies such as Flickr,, Upcoming, Measure Map, and Writely have been snapped up - so who’s next? Here are a few of my top bets:

  • Digg - democratic news site
  • Technorati - blog search engine
  • Riya - facial search recognition
  • LinkedIn - business social network
  • Zoho - online office product suite
  • Opera - mobile web browser
  • StumbleUpon - web discovery tool

Obviously the Internet giants (Yahoo, Google, Microsoft, Amazon, eBay) would be the most likely potential acquisitors. But media conglomerates (FOX Interactive, Viacom, AOL-Time Warner) may also be potential acquisitors. FOX has already bought MySpace and Viacom has been on the prowl for awhile.

So which web 2.0 company/companies do you think will be acquired next? By who? Drop a comment with your thoughts.