1. 15x revenue valuation – cmon seriously? that would put google value at over $400b (ie 15x revenues of approx $25b for 2009 calendar year) and it could easily be argued that the things that give HuffPo a 15x multiple on revenue are much stronger with Google. Personally I can’t see a huge revenue upside on the HuffPo model – it faces the same limitations in a revenue and commercial scope sense as any ‘heritage’ media brand.

    TC valued at $100m … I’m sure that is what Arrington want but I don’t think with revenues around $5m (at most) that would ever come off. DIdn’t AOL only offer $20-$30m and that was pre GFC. Seems a bit more realistic that $100m in terms of financial diligence.

    Laurel – question. How come you don’t mention or discuss any similar Australian businesses using the same model as TC and HuffPo to illustrate the point (both of which seem only blog like in their CMS and employ ‘journalists’). Seems odd.

    1. I haven’t seen the numbers for Aussie big blogs – neither Inspiration Room or Inquisitr have released anything. No one else is really in the same ballpark. You got any?

      1. my question is whats the difference between a techcrunch and a cnet? or a techcrunch and a gizmodo?

        huffpo feels like all the other ‘news’ sites. what makes it a blog or social media? they have comments and erm social media traffic tools and what else?

        there’s loads of businesses in AU doing what i think are similar to those 2 and i struggle to understand why you wouldn’t speak of them

        allure media – defamer, gizmodo,, babble, kotaku
        sound alliance – inthemix, faster louder, same same, mess& noise
        private media – crikey, business spectator, smart company

        the fact you can only quote inquisitr and inspiration room is odd. the above 3 businesses are doing anywhere between $2-15m of AU revenue

        still, what makes any of these brands ‘social media’. what makes them blogs?

        besides – these ‘valuations’ you refer to are not exactly real world. If we want to talk about ‘where the money is’ talk about profit margins not exit based valuations.

        1. Can I have links to their valuations and declaration of revenue – not just your word for it? I also need to confirm that they were started by non-media people (Ariana H was an author of biographies and wrote a few scripts, Michael A was a lawyer) for the storyline to remain consistent.

          1. hrm – the valuations you quote for huffpo and TC are both guesses at best. but you want links to actual financial reports for AU examples.

            also … what does someone’s previous job have to do with anything? non-media people? whaaaat?

            i am sure an expert such as yourself knows how to get in contact with each of those 3 reasonably large organisations. However, by your logic Private Media can’t be considered as Eric Beecher and Alan Kohler are ex newspaper editors … Allure MD is Chris Janz who was an editor at news.com.au so not sure where that stands in terms of your rules of social media … Sound Alliance would qualify as neither Neil, Libby nor Andre were old media journalists. Whether they want to give you revenue figures is another matter but I am still surprised you are not familiar with the scope and size of their businesses given your industry position. Especially given you sometimes criticise ‘old media’ for not being up to speed on this whole social media/blog thing.

            I may be reading this wrong but nowhere in the article do you talk about either of these ‘soclal media’ outlets not being started by ‘media people’. How has that become a pre-requisite for consistency now?

    2. Absolutely. If anyone can show me a credible way to get the value of The Huffington Post much above $10–15 million, I’m open to listening to it. The criterion of “credible” means that the valuation has to tie either to (truly comparable) deals that have been (actually) done (recently) in the market or to some valuation methodology that can be defended to someone who understands Finance.

      My marker is the PE marker of 4–6X EBITDA as an outside; maybe (maybe) up to 1.5X Revenue, but one has to make the case. I’m just not buying bloggers who “want” these things to be worth a lot more and so they concoct valuation models that are reminiscent of the good old Dot Com days or the wishful thinking of market players in 2007/08. The only way the Oak investment makes sense to me is if there is/was a Merger or Acquisition play in the works where the investors have/had proprietary knowledge of potential synergies.

  2. Yep I know those sites – InTheMix does a miniscule amount of traffic compared to Inquisitr. Why not bring up Redbubble.com that does heaps more traffic than even the ripoff of American ones?
    When did I say “rules”? I thought it was interesting that non-media people would build blog sites of that SIZE – you getting your knickers in a twist because I didn’t mention InTheMix in the same breath as TechCrunch or Huff, well that’s just plain nonsensical.
    Your perpetual aggression always reflects poorly on the sites you try to promote.

    1. what traffic does the inquisitr do? my point was more around maybe showcasing legitimately successful/profitable Australian businesses playing in that broad area.

      anyway – weren’t we talking about revenue? i’m not being aggressive i just don’t think this article makes any sense. You talk about ‘social media monetisation’ but can’t back it up with any revenue figures. All you can claim are multipliers (from SAI heh) that are removed from the real world.

      Love how for you ‘aggressive’ is anyone who doesn’t agree with you.

      Also – why do you count Twitter messages/RT’s as comments. They’re not. Are you trying to game something?

  3. Laurel,

    I’m aware your blog gets a lot of attention so I thought it was important to challenge the claims relating to our site inthemix.

    You commented above ‘InTheMix does a miniscule amount of traffic compared to Inquisitr’. Can you justify that claim and back it up with figures? inthemix has passed the ABA audit and is listed in Netratings Market Intelligence. For the month of December it logged 469,000 unique browsers and 4.8M page impressions. I searched in Netratings for Inquisir but it’s not listed? On their website they don’t have any traffic info, they quote “The site continues to grow, delivering between 2.5-3 million page views from May 2009”. They don’t qualify if that is audited data or not?

    It looks like a good site from what I can see and I’m sure the persons behind the site would prefer to be talked about accurately? It may well be doing more traffic than inthemix? But to claim inthemix is miniscule by comparison is just flatly incorrect.

    As a self-labelled industry expert, it would pay to research claims you make about another publisher. Wild claims can be damaging when thrown around by someone in your position.

    Look forward to your response backed up with figures to substantiate your claims.

    Neil Ackland
    Sound Alliance (owner of inthemix)

    1. Actually I did a quick check on Google Trends before saying it – you and Ben make a great pair! 😛
      *shrugs* I’m sure you will say Google Trends is bad news, but I really don’t care – Inquisitr takes most of their traffic from the US which inthemix clearly doesn’t. Ben’s continual assertion I should compare apples with oranges was always going to end in tears.

      FYI the rest of you – I’m blogging/bookmarking revenue figures as I find them. End of story.

  4. 15X Revenues? I haven’t seen a valuation like that since the dotcom days. Makes me all misty eyed and nostalgic.

    How can you say that something like this is worth any more than 1.0–1.5X revenue or maybe 4X–6X EBITDA? Who are these “clickers,” who are valued so highly? From a cursory read of their posts they are for the most part far left wingers who might fall into an attractive age demo but whose level of sophistication suggests low income and low income potential.

    Oak is a smart bunch of guys, but I think they bought a lot of hot air here, unless the strategy was to use the $25 million to buy a related company and somehow build some synergies. Otherwise, I have a hard time valuing this thing even at the $15 million that $10 million of revenue would imply at 1.5X revenue. If HuffPo really does “appropriate” most of its content and pay 50 staffers at a relatively low level, then the 50 staffers at $75,000 total cost (Salary and benefits) need around $3,750,000. Office space in Manhattan large enough for many of them (assuming a lot of them work from home) has to be around $100,000 a month, for another $1,200,000. Throw in a paycheck for Ms. H and a couple of other grown-up salaries for another $1,500,000. Throw in a modest $500,000 for Administrative, Legal, Marketing and Accounting Expenses and assume that you need $100,000 to keep the webpage up and running every month, that gives costs of $8,150,000 before covering the costs of the fabulous Ms. H. Let’s allot a modest $75,000 a month for her travel and lifestyle expenses or $900,000 per year. That gives total expenses of around $9,000,000 for EBITDA of around $1,000,000. 6X EBITDA would be $6,000,000. Sign me up for a valuation somewhere between $6,000,000 and $10,000,000 and call me when there’s an IPO.

    1. Is it something to do with the growth? I remember seeing TechCrunch was bringing in 2 million a year, then 5, now… ? How far out to valuers extrapolate growth then slap a price sticker on that baby?

      1. Finance 101.

        There are many ways of valuing companies, all of which take growth into account. But, they also must take the Risk associated with that growth into account; it seems to me these are very risky cashflows from a projection POV; I don’t have access to the detailed demographics that Oak and HP undoubtedly have, but I’d be surprised if they show this is a highly affluent bunch of clickers.

        Traditional discounted cash flow methods project five to seven years of cflo’s and then use one of several methodologies to assign a “Terminal Value” for a Final Year before discounting the whole thing back at some Kc. I’d be surprised if one could generate a credible projection of double digit revenue growth for these cashflows into the forseeable future. My own layman’s view is that they probably peaked from a growth perspective in 08/09 and are trying hard to grow now in the low mid single digits. So, I really don’t think this method works here without some silly discount rate.

        Comparable Value methods assume that there are entities recently traded in the market which can be used to benchmark (in this case, there are, to my knowledge, none that fit that bill).

        Revenue or EBITDA multiples assume that the multiple catches risk and growth and, since there are benchmarks in the Private Equity market, I thought it the best way to go. I’m prepared to defend 1–1.5X revenue or 4–6X EBITDA if anyone wants to debate it. Three years ago, people were using up to 10X EBITDA for exit valuations; now, I think most would be delighted to get out at 6X, so I’m being generous.

        I’m open to being shown where I’m wrong, but please with real values of real companies; unlike many here, I seem to recall the dotcom valuation wackiness. All of this changes, of course, if there’s an acquisition or merger play on the horizon that includes bringing on a dependable cashflow producing enterprise.

  5. Oh my goodness! Impressive article dude! Many thanks, However I am going through
    troubles with your RSS. I don’t understand the reason why I am unable to join it.
    Is there anybody getting identical RSS issues?
    Anyone who knows the solution can you kindly respond?

  6. wonderful submit, very informative. I’m wondering why the other specialists of this sector do not
    understand this. You must proceed your writing. I’m sure, you have a great
    readers’ base already!

Comments are closed.