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Famous tech acquisitions’ cost per user
- msoad 13y agoWe can add Viber for compression too: $3 per user
- selectout 13y agoDidn't realize Aardvark only had 90,000 users. Huge win for the Aardvark team with that sale.
- ghayes 13y agoUh, is it just me or is this chart having a hard time with comma versus period for "thousands separator"? Broadcast.com is listed as having $10,961 cost per user, but comes up as $10.961 on the chart. [Sale price of 5.7B for 520K active users]
- SnowProblem 13y agoIt's not just you. I was about to post this. On a related note, 11K per user is insane. What did Yahoo see in Broadcast.com?
- icpmacdo 13y agoI would guess for technology they developed not their user base.
- genofon 13y agoMark Cuban
- AznHisoka 13y agoMore accurately, they had a vision of Mark Cuban getting rich, buying the Dallas Mavericks, and hanging out with beautiful women ^_^
- greendestiny 13y agoWhat they saw was youtube.
- deleted 13y ago[deleted]
- blawson 13y agoThat's correct notation for a significant part of the world: http://en.wikipedia.org/wiki/Decimal_mark#Examples_of_use http://en.wikipedia.org/wiki/Decimal_mark#Examples_of_use
- thrush 13y agoAnother interesting metric would be cost per user minute (would probably need to be normalized over a time period like day, week, month, or year, or quarter).
- _sentient 13y agoInteresting analysis, but that flickering tooltip issue is beyond annoying. A quick UI fix would be a big improvement.
- abbott 13y agoPayPal was a steal.
- LandoCalrissian 13y agoSo was Youtube, pretty interesting to put it in perspective.
- oskarth 13y agoWow. This graph is certainly illuminating: https://public.brightside.io/v1/chart/321ef2c603e8d67080afcd92f48e1d69 https://public.brightside.io/v1/chart/321ef2c603e8d67080afcd... 450000000 is a lot of users. Metcalfe's law says that the value of a communication network is proportional to the square of the connected users. Then add to this the amazing growth they are seeing. I don't think people quite realize what this means. EDIT: In general, it baffles me how many armchair opinionators there are. Isn't it more interesting to try to understand why FB paid $16B, rather than saying why they shouldn't have?
- TTPrograms 13y agoThis was exactly the chart I wanted to see after I saw the first one. ...but did they really put a LLS line through that dataset?
- rkuykendall-com 13y agoIt's an API that puts an LLS line through everything. If it isn't meaningful, ignore it.
- Retric 13y agoMetcalfe's law is clearly wrong after a network get's overly large. I could in theory call a random person in China but if I have no way of communicating with them it's practically worthless to do so.
- nl 13y agoCat gifs are pretty universal. But seriously: I've had people on conference calls when they couldn't understand the language, but someone wanted them to see slides. The fact they could join the call (in that case on Skype) definitely made the network more valuable. You might argue that the fact you can't speak to some of them drops the value per user, and that is true to some extent. But the fact they are on there and attract other people (some of whom you can speak to) adds value for you, too.
- chaz 13y agoInteresting dataset, though I do have some quibbles. For example, registered users aren't the same as monthly unique visitors, which is how CNET is best measured. And ecommerce like Zappos have completely different metrics. One thing I would like to see is the user numbers normalized against web users at the time, which helps put late 90s acquisitions in better perspective.
- pedalpete 13y agoWould be interesting to see this go one step further to list annual revenue per user at the time of acquisition.
- FigBug 13y agoMost of those were a complete waste of money. Seems like the majority of the big money acquisitions did not live up to the hype.
- arasmussen 13y agoThere's this thing called sorting which makes stuff a lot easier to read and more informative.....
- bungabunga 13y agoI am surprised Google's acquisition of the thermostat company is not included. $30,000 per user.
- gregcrv 13y agoI think you missed a zero... 3,200,000,000 / 1,100,000 = 2,909 dollars / user
- dman 13y agoI think the more fascinating metric here is cost per employee which gives us an idea of economic value created per employee. Whatsapp destroys the other acquisitions on this metric.
- rtpg 13y agoit's odd that we focus so much on just user numbers yet talk so much about aqui-hiring. In most cases it's not just the users they're trying to get, but also the talent (with the idea that most of them aren't one hit wonders). Acting like startup acquisition is a single-metric game seems like a gross oversimplification. This chart only proves it by showing there is little correlation between user count and buy price.
- mmanfrin 13y agoBroadcast.com's bar is incorrectly scaled down 1000x -- overlay shows cost per user is over $10k, but it lists at $10.
- rkuykendall-com 13y agoI think it's the comma. The visualization code must just grab the first set of numbers.
- gcb0 13y agoindeed. it was the first thing i looked for... and when i saw $10 i was shocked that broadcast.com had any use let alone billions...
- gcb0 13y ago* user, not use. but that works too... and does it include the youtube legal deals and fines? probably not
- DivByZero 13y agoYep, that was the first thing I checked as well, actually broadcast.com is by far the most expensive acquisition. There's probably a bug in the visualization library getting the thousands coma as a decimal separator, too bad :)
- nl 13y agoSome of these acquisitions weren't done for the users. Aardvark, Jaika, Dodgeball, Picasa, Broadcast.com, FriendFeed (missing), maybe Flickr as well as more recent acquisitions like DeepMind ($900M to Google, zero users) were bought for some combination of the team and the technology.
- chavesn 13y agoAll this shows to me is how useless it is to compare by "cost per user". The note at the bottom says "Facebook acquired WhatsApp for 16 billion dollars, the largest startup acquisition to date. Cost per user was comparable to Google's YouTube acquisition.". It's sort of close, but we're still talking about a swing of >30% there -- $5 billion dollars in WhatsApp's case. There are many things missing from "cost per user" but I think the first thing to ask is "user doing what"?
- davidiach 13y agoI think you are right. I have accounts on many websites, but I am not worth the same amount as a user on each and every one of them.
- chucknelson 13y agoAgreed - how do we know the value difference for a "user" of Zappos and a user of whatsapp (among other dimensions)? This graph is not very insightful, it's just visualizing the easy way to look at and quantify the purchase.
- alexeisadeski3 13y agoOh my god... I'd forgotten completely about YouTube. At under $2B, that must have been one of the best acquisitions of the whole bunch. YouTube for 1/10 the cost of WhatsApp.
- aragot 13y agoHow many were they at YouTube when they got bought? I tend to think more about acquisitions as capital per employee, as in, that's how efficient they are at creating value. It's more interesting that comparing users because of the "users doing what" question. I'm disappointed i can't find graphs about those. Last companies I checked (but I can't remember which ones), the capital was around $1m per employee. Except for WhatsApp.
- deleted 13y ago
- bicknergseng 13y agoI think the cost per employee is even more interesting. $320 mil for every WhatsApp employee, compared with ~$76 mil for everyone at Instagram. Now is a good time to be in the yacht business.
- rayiner 13y agoKind of dumb to compare U.S./Western Europe users to primarily non-U.S. users as is the case for Whatsapp. I'd bet a 19 year old in India is an order of magnitude less valuable from an advertising standpoint than a 19 year old in America. Not only because people have less disposable income in those countries, but because kids have less control over their parents' disposable income.
- rubyn00bie 13y agoUhhh... neat, but can we see profit/revenue per user in that list? I think this is pretty much useless without that context.
- TorKlingberg 13y agoFor many of these each active user drives many passive visitors. Examples: Geocities, Flickr, YouTube.
- jiggy2011 13y agoHow are we defining a user here? For example in the case of youtube, do we count people who watch videos? People who sign up and comment? People who upload videos?
- dustcoin 13y agoRelevant to yesterday's news: Acquiring MtGox for "free" would cost ~$336 per user if the leaked crisis document is accurate.
- talon88 13y agoNo Tumblr on this chart?
- allochthon 13y agoOne remarkable thing about this list -- with the benefit of hindsight, I only like five or six of the acquisitions all that much.
- simonsarris 13y agoI do not like charts like this because their existence implies that cost per user somehow matters, or is a deciding factor even, in the price of an acquisition. Even if that was the major metric in determining a price, there's often a very large difference between the number of users currently and the expected number 1 year or 5 years out. You don't buy a company because of the number of users it has right now. You buy it because you think you can do something better with it, or to be defensive in a field, or to expand your own customer lists. What's more, not all users are created equal! When Flickr for instance was aquired, what percentage of users were paying users? I think its hard to make any real generalizations here, but better than a chart of cost per user, I think this is probably closer to a chart of how badly Company X feels it needs some audience. It's some formulation of growth, panic, defensiveness, etc.
- chucknelson 13y agoOverall I think there are a lot of factors, many that we the public are not privy to, that form the basis of these deals. All of this analysis and speculation is a form of entertainment. And that's fine I guess...
- dublinben 13y ago>When Flickr for instance was aquired, what percentage of users were paying users? Probably a lot more than there are now. As a former paying user of Flickr, Yahoo really stopped all development for about five years. Now, I have no reason to upgrade to a pro account.
- craigyk 13y agoAlso, the metric amuses me since it implies most of the value of a tech acquisition is in the users, not the actual tech or talent being acquired. Or the timing and context of the acquisition. Is this trying to say Whatsapp was a good deal? lol.
- GBKS 13y agoThe Critical Path discusses really well in the latest episode. http://5by5.tv/criticalpath/112 http://5by5.tv/criticalpath/112
- rm999 13y agoIt would be interesting to compare this to the equivalent metric for companies that went public: the market cap per user at IPO (or maybe X days after the IPO if there's a lot of volatility?). I'm curious how the valuations differ between IPOs and acquisitions. On one hand IPOs are determined by the open market instead of opaque decisions by a small handful of people. On the other hand, private acquisitions are probably less regulated and allow for more insider information in the pricing (?). Some other dimensions I'd be interested in are the number of employees, year, current number of users, and (for public companies) current market cap. For acquisitions I'd be curious if there are any decent objective metrics of the "success" of the acquisition.
- kamilszybalski 13y agoYou forgot about how much Microsoft paid for Hotmail.. i think it was $40/user.. $400 million for 10 million users
- michaelochurch 13y agoThe cost per employee numbers are what have me raging. Given how much value engineers produce (even mediocre ones, much less us closer to the 10x persuasion) how the fuck did we end up being so lowly valued? I think the answer is that we suck at fighting for our own interests. A traditional union might not be the answer, but something like the SAG might be the way to go. It's absolutely inexcusable that computer programmers don't, for example, have the right to have a representative when negotiating with management or HR.
- joshconstine 13y agoWho made this? I want to cite it properly on TechCrunch?
- Grue3 13y agoPlease don't, Techcrunch quality is already low enough even without charts based on bad statistics.
- bedhead 13y agoCost per user makes EV/Sales look like an ultra-precise and dependable measure of value.
- brianbreslin 13y agoCan someone remind me what aardvark did?
- abvdasker 13y agoMy thoughts exactly. Apparently it was a Q&A site that asked questions to friends and friends-of-friends. This chart is the sweetest of schadenfreude — so many terrible acquisitions for huge sums of money.
- watermarkcamera 13y agoNo wechat or weixin on this chart ?
- malcolmmcc 13y agoIronically, I only make Google money through YouTube when I'm not a registered user, because when I am I have AdBlock on and it's only when I'm in an incognito mode or different browser/profile that the ads get shown. So yeah, users not necessarily the most relevant metric there. Which, upon reflection, makes YouTube even more of a steal than it looks in the chart.
- carlosrt 13y agoRevenue Multiple would make a more useful chart to me. Broadcast.com had $60M in revenue when they sold. Knowing they sold at ~98x revenue seems more useful to me when pricing a stock.
- vishrad 13y agoI really want to see Txn Size / Employee. Equity never gets meted out equally across employees. However as a worker bee I am the 'dog that eat the scraps from the table'. When the $/employee is high, even non-founder, non-dev#1 employees make out well. IMHO, the last such exit was YouTube, before WhatsApp ofcourse.
- sek 13y agoA FeedBurner "User" is not equal, this was a publisher service. The real target were the feed subscribers, or maybe they are where can I check the data? The same goes for Youtube, how many visitors did they have? They bring in the ad revenue. Compared to Facebook/Whatsapp where you can usually only participate by being a user.
- joelthelion 13y agoI think a more useful coloring would be by period: "first internet bubble", etc.
- ig1 13y agoSo this story has 210 points, 80 comments and has been up for 13 hours and yet no-one has mentioned that the data is completely wrong. There's no accounting for inflation. Comparing a nominal 1999 dollar amount with a nominal 2014 dollar amount is like comparing a euro amount with a dollar amount without doing an conversion (which would actually still be more accurate).
- Grue3 13y agoAbsolutely useless metric, both mathematically and economically. When a service has a lot of users, it has no room for growth and cost per user will be small. When a service has a few users, but has potential to grow exponentially, it will have high cost per user. Economically there's a large difference between services with respect to their monetization. A service where each user pays $1000 will have higher cost per user than a free service.
- hankScorpi0 13y agoCost per user is moot when compared against companies which inherently have different users, across different types of devices. Take our latest spot of head-scratchery ala WhatsApp, it's easy to do math and say: "oh right they paid about 40$ a user." Did they really? WhatsApp has a huge set of "new" users on new and old devices. So, how again is a WhatsApp user on some random (non-smart) phone in India, as "valuable" to Facebook as one sitting in the Valley with their iWhatever.
- drakaal 13y agoSeveral sources estimated that 1/3 of whatsapp users were spam accounts. So the numbers are a bit off. I would also like to see this adjusted for "Today Money" which would put things like Geocities WAY up there. I quoted a source at $80 per actual users base on the Monthly Uniques. http://www.forbes.com/sites/shelisrael/2014/02/25/2329/ http://www.forbes.com/sites/shelisrael/2014/02/25/2329/
- MaysonL 13y agoAnd how much is Time Warner Cable going for? Somewhere around $2K/subscriber? WhatsApp, with 30X the userbase, costs ~1/2 as much.