4 ms·

Isn't something really weird going on in the world when you can sell a company with almost no revenue (let alone profit) and no obvious business model in the ho

Isn't something really weird going on in the world when you can sell a company with almost no revenue (let alone profit) and no obvious business model in the horizon for $ 1.1B, or is it just me?

jessedhillon 13y ago
If acquiring millions of users is so worthless, why don't we all have 100k+ monthly page views and fantastic engagement numbers? Or, put another way: put a dollar value on a speculative Yahoo effort to attract a user base the size and demographic composition of tumblr's. Don't forget to price in the risk of failure.
- hcarvalhoalves 13y ago
  The point is, since when eyeballs started being worth so much? Isn't it proven already that users are like butterflies in the hand (you can't squeeze them, but let loose they fly away)? Myspace is there to prove that being king today doesn't say s* about your position in ten years. This year Facebook lost 1.4 million users, first deficit since launch.
  - onedev 13y ago
    How much of that 1.4 million is due to people dying? Global churn affects your userbase when you have a userbase as insanely massive as Facebook's.
    - deleted 13y ago
      [deleted]
    - drgath 13y ago
      54 million people die each year (150k / day) http://en.wikipedia.org/wiki/Mortality_rate http://en.wikipedia.org/wiki/Mortality_rate
      - onedev 13y ago
        So the fact that 1.4 million people "left" doesn't really mean anything then. Also, according to all statistics, Facebook has actually been GROWING. They have 1.11 billion users now compared to less than 1 billion last year. Something like a 26% growth if I recall. Come on people, there are only a finite number of internet connected human beings on this planet. Growth HAS to slow down at some point. They're not gonna double their userbase YoY if they already have over 1bn people on their service....that'd literally be impossible.
  - Steko 13y ago
    "This year Facebook lost 1.4 million users" http://techcrunch.com/2013/05/01/facebook-earnings-graphs/ http://techcrunch.com/2013/05/01/facebook-earnings-graphs/ Just to add some context, overall up 20%+ first quarter over prior year Q1. Granted flat in the first world and I could believe a small net loss but I don't see it in these numbers.
    - hcarvalhoalves 13y ago
      http://www.marketwatch.com/story/facebook-loses-14-million-active-users-in-us-2013-01-15 http://www.marketwatch.com/story/facebook-loses-14-million-a...
      - Steko 13y ago
        http://thenextweb.com/insider/2013/04/29/socialbakers-denies-report-that-millions-of-users-have-left-facebook-claims-there-is-no-story/ http://thenextweb.com/insider/2013/04/29/socialbakers-denies... I'm sure FB does their best to lean on their metrics and spin the best story but at the end of the day they are publicly traded and those charts are not too ambiguous. But sure, some of those accounts are fake every year. So a nearly flat gain in the US/Canada could well be a loss in actual humans using the service like they are meant to. I don't have a FB account myself because reasons and so I'm sympathetic to the idea that they may have peaked. Just wanted to give some balance.
- coldtea 13y ago
  >If acquiring millions of users is so worthless, why don't we all have 100k+ monthly page views and fantastic engagement numbers? What kind of bizarro logic is this? For one, something being worthless doesn't mean it is also common. There are rare and difficult to attain things that are also worthless. Second, we're discussing monetary worth here. That is, if you get something back for your 1.1 billion dollars. A service giving you free money would also have 100k+ monthly page views and fantastic engagement numbers. But it would be worse than worthless.
  - jessedhillon 13y ago
    Oh, I see you only read half my comment before responding. Try the other half now.
markdown 13y ago
You are buying the potential for profit. Not exactly the same thing, but in a way it's similar to buying a broadcast license. Companies pay millions/billions for the right to project some media onto eyeballs.
- adventured 13y ago
  Except a broadcast license is protected and inherently limited by the govt. Tumblr's position in the world is neither (ask all the tumblrs that have come before). It's really nothing like buying a broadcast license.
  - markdown 13y ago
    Please read my comment again. I never said it was the same thing. > It's really nothing like buying a broadcast license. Both provide access to eyeballs, and both are bought with the intention of monetizing that somehow... usually with advertising. That's a similarity in my book.
- hcarvalhoalves 13y ago
  I believe the better analogy would be buying a broadcaster, not a license. A license is just the government milking the private sector over a historical real world limitation (broadcasting frequencies).
- coldtea 13y ago
  >You are buying the potential for profit. So, let me rephrase the question: Isn't something really weird going on in the world when you can sell a company with almost no revenue (let alone profit) and no obvious business model in the horizon for $ 1.1B, AND no bloody potential for that kind of profit either, similar to endless other deals that got nowhere for the buyer, or is it just me?
Cryode 13y ago
I'm with you - the perceived values of websites/businesses like this are astounding. Somehow founders and VCs walk away with a bunch of money after acquisitions, but what's Yahoo going to do? Seems like a large sum for an acqui-hire. Then again I'm a giant noob when it comes to startups, funding and acquisitions. Regardless, the numbers are out of this world.
- ghshephard 13y ago
  Absolutely NOT an acqui-hire. $13mm in 2012 revenue, more than doubling in 2013... "In November it shouldered its way into the top ten online destinations, edging out Microsoft’s Bing and drawing nearly 170 million visitors to its galaxy of user-created pages, according to the measurement firm Quantcast. Tumblr’s tens of millions of registered users create 120,000 new blogs every day, for a total of 86 million and counting, which drive some 18 billion page views per month." http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-david-karps-800-million-art-project/ http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-...
ghshephard 13y ago
The Forbes Article has them hockey sticking their revenue. http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-david-karps-800-million-art-project/ http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-... "The company finished 2012 with $13 million in revenue; the hope in this “leap” year is that it’ll get to $100 million."
- nerdnorth 13y ago
  That article is full of gold: 2012 - Operating Expenses: $25 million, Revenue $14 million (that's an $11 million loss on paper) For 2013, they're saying they'll need to hit 4x revenue growth in order to hit profitability? Does that mean 4x the ads for their (fickle) userbase?
  - standby 13y ago
    The $14 million revenue of 2012 was not using the same business model of 2013. Ads is a new thing.
morpheusart 13y ago
The $1B value seems very large, however, there's no question you can add advertising to it and make significant amounts of money. They know the demographics, they know the traffic volume, so they can estimate how much they can make.
majani 13y ago
There is value in buying into a network of users, but it is in no way worth 100X multiples of sales. Since such deals usually happen within the Silicon Valley ecosystem, I strongly suspect that cronyism is involved. VCs in Yahoo decide to do the VCs in Tumblr a solid, and the favour probably returned in the future. This is what investors really mean when they tell companies that they have 'connections.' The VC business is tough, with average returns dwindling each year since the bubble, so there is motivation for this sort of thing to happen.

Isn't something really weird going on in the world when you can sell a company with almost no revenue (let alone profit) and no obvious business model in the horizon for $ 1.1B, or is it just me?

jessedhillon 13y ago

If acquiring millions of users is so worthless, why don't we all have 100k+ monthly page views and fantastic engagement numbers? Or, put another way: put a dollar value on a speculative Yahoo effort to attract a user base the size and demographic composition of tumblr's. Don't forget to price in the risk of failure.

hcarvalhoalves 13y ago
The point is, since when eyeballs started being worth so much? Isn't it proven already that users are like butterflies in the hand (you can't squeeze them, but let loose they fly away)? Myspace is there to prove that being king today doesn't say s* about your position in ten years. This year Facebook lost 1.4 million users, first deficit since launch.
- onedev 13y ago
  How much of that 1.4 million is due to people dying? Global churn affects your userbase when you have a userbase as insanely massive as Facebook's.
  - deleted 13y ago
    [deleted]
  - drgath 13y ago
    54 million people die each year (150k / day) http://en.wikipedia.org/wiki/Mortality_rate http://en.wikipedia.org/wiki/Mortality_rate
    - onedev 13y ago
      So the fact that 1.4 million people "left" doesn't really mean anything then. Also, according to all statistics, Facebook has actually been GROWING. They have 1.11 billion users now compared to less than 1 billion last year. Something like a 26% growth if I recall. Come on people, there are only a finite number of internet connected human beings on this planet. Growth HAS to slow down at some point. They're not gonna double their userbase YoY if they already have over 1bn people on their service....that'd literally be impossible.
- Steko 13y ago
  "This year Facebook lost 1.4 million users" http://techcrunch.com/2013/05/01/facebook-earnings-graphs/ http://techcrunch.com/2013/05/01/facebook-earnings-graphs/ Just to add some context, overall up 20%+ first quarter over prior year Q1. Granted flat in the first world and I could believe a small net loss but I don't see it in these numbers.
  - hcarvalhoalves 13y ago
    http://www.marketwatch.com/story/facebook-loses-14-million-active-users-in-us-2013-01-15 http://www.marketwatch.com/story/facebook-loses-14-million-a...
    - Steko 13y ago
      http://thenextweb.com/insider/2013/04/29/socialbakers-denies-report-that-millions-of-users-have-left-facebook-claims-there-is-no-story/ http://thenextweb.com/insider/2013/04/29/socialbakers-denies... I'm sure FB does their best to lean on their metrics and spin the best story but at the end of the day they are publicly traded and those charts are not too ambiguous. But sure, some of those accounts are fake every year. So a nearly flat gain in the US/Canada could well be a loss in actual humans using the service like they are meant to. I don't have a FB account myself because reasons and so I'm sympathetic to the idea that they may have peaked. Just wanted to give some balance.
coldtea 13y ago
>If acquiring millions of users is so worthless, why don't we all have 100k+ monthly page views and fantastic engagement numbers? What kind of bizarro logic is this? For one, something being worthless doesn't mean it is also common. There are rare and difficult to attain things that are also worthless. Second, we're discussing monetary worth here. That is, if you get something back for your 1.1 billion dollars. A service giving you free money would also have 100k+ monthly page views and fantastic engagement numbers. But it would be worse than worthless.
- jessedhillon 13y ago
  Oh, I see you only read half my comment before responding. Try the other half now.

markdown 13y ago

You are buying the potential for profit. Not exactly the same thing, but in a way it's similar to buying a broadcast license. Companies pay millions/billions for the right to project some media onto eyeballs.

adventured 13y ago
Except a broadcast license is protected and inherently limited by the govt. Tumblr's position in the world is neither (ask all the tumblrs that have come before). It's really nothing like buying a broadcast license.
- markdown 13y ago
  Please read my comment again. I never said it was the same thing. > It's really nothing like buying a broadcast license. Both provide access to eyeballs, and both are bought with the intention of monetizing that somehow... usually with advertising. That's a similarity in my book.
hcarvalhoalves 13y ago
I believe the better analogy would be buying a broadcaster, not a license. A license is just the government milking the private sector over a historical real world limitation (broadcasting frequencies).
coldtea 13y ago
>You are buying the potential for profit. So, let me rephrase the question: Isn't something really weird going on in the world when you can sell a company with almost no revenue (let alone profit) and no obvious business model in the horizon for $ 1.1B, AND no bloody potential for that kind of profit either, similar to endless other deals that got nowhere for the buyer, or is it just me?

Cryode 13y ago

I'm with you - the perceived values of websites/businesses like this are astounding. Somehow founders and VCs walk away with a bunch of money after acquisitions, but what's Yahoo going to do? Seems like a large sum for an acqui-hire. Then again I'm a giant noob when it comes to startups, funding and acquisitions. Regardless, the numbers are out of this world.

ghshephard 13y ago
Absolutely NOT an acqui-hire. $13mm in 2012 revenue, more than doubling in 2013... "In November it shouldered its way into the top ten online destinations, edging out Microsoft’s Bing and drawing nearly 170 million visitors to its galaxy of user-created pages, according to the measurement firm Quantcast. Tumblr’s tens of millions of registered users create 120,000 new blogs every day, for a total of 86 million and counting, which drive some 18 billion page views per month." http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-david-karps-800-million-art-project/ http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-...

ghshephard 13y ago

The Forbes Article has them hockey sticking their revenue. http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-david-karps-800-million-art-project/ http://www.forbes.com/sites/jeffbercovici/2013/01/02/tumblr-... "The company finished 2012 with $13 million in revenue; the hope in this “leap” year is that it’ll get to $100 million."

nerdnorth 13y ago
That article is full of gold: 2012 - Operating Expenses: $25 million, Revenue $14 million (that's an $11 million loss on paper) For 2013, they're saying they'll need to hit 4x revenue growth in order to hit profitability? Does that mean 4x the ads for their (fickle) userbase?
- standby 13y ago
  The $14 million revenue of 2012 was not using the same business model of 2013. Ads is a new thing.

morpheusart 13y ago

The $1B value seems very large, however, there's no question you can add advertising to it and make significant amounts of money. They know the demographics, they know the traffic volume, so they can estimate how much they can make.

majani 13y ago

There is value in buying into a network of users, but it is in no way worth 100X multiples of sales. Since such deals usually happen within the Silicon Valley ecosystem, I strongly suspect that cronyism is involved. VCs in Yahoo decide to do the VCs in Tumblr a solid, and the favour probably returned in the future. This is what investors really mean when they tell companies that they have 'connections.' The VC business is tough, with average returns dwindling each year since the bubble, so there is motivation for this sort of thing to happen.