The Good NET Guide

Posts Tagged ‘million-monthly’

Wikia, a for-profit group of user generated wiki sites that was founded by Wikipedia’s Jimmy Wales in 2004, is now a profitable company. CEO Gil Penchina says the company’s revenues grew 4x in 2009 while they kept costs in check. Late last year the company reported strong financial results, but hadn’t yet reached true profitability.

He won’t disclose what revenues are, but the company currently has 40 employees and has open spots for a dozen more, he says (although I only count eight positions on their jobs page).

Wikia sites attracted about 21 million unique worldwide visitors in December (Comscore), and those visitors racked up over 2.7 billion page views. The company attracts around 8 million U.S. visitors monthly, they say.

The site makes money on ads surrounding content. They have a direct sales team and also pull ads from networks and Google.

Their largest site is lyrics.wikia.com, with over a million lyrics pages. answers.wikia.com, which launched a year ago, has 600,000 user generated questions and a million monthly visitors. A couple of months later the company ended its attempt to build a search engine that could challenge Google.

The company has raised $14 million over two venture rounds.

News Corp is unloading more of its digital assets. This time it’s the movie review site Rotten Tomatoes, which is being acquired by startup Flixster, which has the most popular movie app for the iPhone and other mobile devices. The purchase price was not disclosed, but it was at least in part a stock transaction. News Corp now owns a minority stake in Flixster, which has only raised a total of $7 million in venture capital.

Flixster already shows Rotten Tomato reviews and ratings within its iPhone app (you can contrast the critics’ reviews from Rotten tomatoes with Flixter user reviews). Putting the two companies together certainly strengthens Flixter. The combined reach of both is 30 million unique visitors a month across all different platforms, according to the companies. Just looking at their websites, Flixster has 10 million monthly global unique visitors versus 7.5 million for Rotten Tomatoes (see chart below).

In October, News Corp sold off Photobucket to Ontela for $60 million. Expect it to divest more of its digital businesses this year.

Photo credit: Flickr/[177].

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Software giant EMC starting the New Year with another acquisition. EMC is acquiring Archer Technologies, a company that develops governance, risk and compliance software. The terms of the deal were not disclosed. The acquisition is expected to close in the first quarter of 2010.

Archer Techonologies’ software will be folded into EMC’s Security Division. The company has six million licensed users of its software and boats and impressive client list that includes 25 of the Fortune 100. The software tracks the lifecycle of corporate policies and objectives, analyzes and manages business risks, and compliance. EMC says that Archer’s technology will help its customers manage risk in their IT infrastructure.

EMC has made quite a few acquisitions in 2009; buying SourceLabs, FastScale Technology, Data Domain, Configuresoft and Varonis Systems. It looks like the purse strings are opening up again this year.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Google and Yelp are in advanced acquisition negotiations, we’ve confirmed from multiple sources. And while the deal isn’t done, we’ve heard that it’s very likely to close. The price is supposedly at least $500 million.

Yelp was founded in 2004 as a way to let users leave reviews on local businesses. Comscore puts worldwide traffic at nearly 9 million monthly unique visitors, and it has been growing fast – the company says it’s real numbers are more like 25 million monthly uniques.

Yelp has whispered that 2009 revenues will be around $30 million and are expecting $50 million or so in 2010.

Yelp last raised venture capital in early 2008 from DAG at a $200 million pre-money valuation, we’ve heard. They’ve raised a total of $31 million over four venture rounds.

On the odds of the deal happening – one source says its 80% likely. Not signed, sealed and delivered, but past the term sheet stage.

Google is building out their own directory of local businesses with its Place Pages, which can be accessed via Google Maps and local search. They are encouraging local businesses to put Google-branded stickers in store windows and recently added their own ratings summaries to business profiles. Yelp, of course, already has all of this data, along with a growing and active audience of consumers who are used to finding (and rating) businesses on Yelp.

For their part, Google is clearly on a shopping spree. They recently acquired AdMob for $750 million, and were in the running on the LaLa acquisition. Expect lots of deals to be announced by them over the next three months.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

MySpace Music has completed its acquisition of most of the assets of music service iMeem.

We first broke the news that MySpace was close to acquiring iMeem last month. Two days later, we reported that an agreement was signed to purchase the assets of the company for $1 million in cash.

The deal didn’t close, however, because some of the assets MySpace Music was going to buy (namely, servers) were actually being leased. So that had to be worked out. And the final price ended up being less than $1 million, meaning MySpace Music is getting the iMeem brand and users for next to nothing. An additional earnout is also part of the deal, but it’s not much.

Unlike the iLike acquisition, iMeem is being acquired by MySpace Music, not MySpace. MySpace Music is a joint venture between MySpace and the music labels.

But now it is official. MySpace Music will be acquiring some of iMeem’s remaining assets and transition its 16 million monthly users over to MySpace Music. All of their playslist swill be migrated over, for instance. Founder Dalton Caldwell, CTO Brian Berg, COO Ali Aydar, and VP of Sales David Wade will oversee the transition on a consulting basis. It is not clear what will happen to IMeem’s other employees. Imeem now redirects to this landing page.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Video game online network Machinima.com has raised $1.7 million in funding from previous backer MK Capital . According to reports , this is being considered an add-on to Machinima’s previous round in November, with the possibility of upping the amount to $2.5 million if needed. Machinima.com has become quite the growing viral attraction in the last year.

Read the rest here: 
Video Game Network Machinima.com Gets $1.7 Million In Funding

Zynga is planning to bring FarmVille, the mega-hit Facebook game that currently has over 65 million monthly active users, to its own web portal at Farmville.com, according to sources familiar with the launch. The new site will use Facebook Connect integration to bring the popular game to standalone portal. This will presumably allow Zynga to offer a more engaging experience because it will be able to take over the whole page, without the normal Facebook interface running around the borders, and it also gives them more flexibility with their design. Look for the new site to launch as early as today.

Assuming the new site does well, we can likely expect Zynga to port its other games to their own standalone portals down the line.

Zynga has recently been in the headlines lately over our reporting on its use of scammy offers to help monetize its games (other social gaming companies are guilty of the same practice). Zynga removed those scams promptly, but then they reappeared. Finally Zynga announced they were gone for good, but that isn’t the end of the story: now there’s a class action lawsuit against Zynga and many other companies who allegedly engaged in these scams.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Editor’s note: Guest writer Glenn Kelman is the CEO of Redfin, an online real estate broker that seeks to give consumers the information and tools once limited to real estate agents. Previously, he was a co-founder of Plumtree Software, which had a public offering in 2002 but is now part of Oracle.  Below he shares the best questions from investors during a recent fund raising.

For startups, Christmas comes in November. Partners come back from vacation in September and deals start closing a few months later; since the credit crisis deferred fund-raising for most of the past year, November 2009 will probably end up being especially busy.

Redfin is one of the companies that just closed a round. Already the process has resulted in a huge shift in our mindset: from just surviving to building a juggernaut. That shift is one every startup can try on for size, whether it needs capital or not, by asking itself the same basic questions that VCs asked us.

VCs are good at asking questions. They are unimplicated in your dumb decisions, unmoved by your original sense of mission and far less concerned than you that a blunder could bankrupt you. They re-imagine your business in terms of all the other businesses they’ve seen, pulling the arms off one doll and the head off another to create a perfect money-making Frankenstein. And since the stakes are high, the whole philosophical exercise tends to result in action.

Here are the questions VCs asked Redfin that changed how we think about our business.

1. What’s your deadly sin?
Sequoia’s Roelof Botha said he only invests in companies that let consumers indulge in one of the seven deadly sins. He rattled them off with alarming familiarity. “You don’t want to be the site that people should use,” Roelof said. “You want to be the site they can’t stop using.”

2. Where’s the real money?
Venture capitalists’ focus on the size of our company’s addressable market made us realize that half of our potential revenues lay in the eight markets we’ve already opened. “What’s the rush to open Orlando,” a VC asked us, “when you still haven’t cracked 1% share here in Silicon Valley?”

Good question. A startup with 18 months of cash is like Val Kilmer in the opening stick-up scene of Heat, with only 80 seconds to get the bearer-bonds from an armored car; as a detective on the scene later marvels, “they ignored the loose cash.” That’s the way to be about your addressable market: not just greedy, but disciplined. Time is short.

3. What are your unit economics?
The financial statements we look at every month don’t tell us what a small business will look like when it grows up: sure we need to account for all sorts of fixed costs like how much we spend on engineers or maps, but what really matters is whether we make more money from a customer than it costs us to get and serve that customer. So to see if a business works on a large scale, VCs first want to understand it on the smallest scale.

For us, this meant explaining what Redfin made this summer on a single home purchase, with a per-transaction account of what we spent on marketing to get customers ($27), on local data ($153), on customer service ($2,906) and so on. We also calculated how much annual revenue we got for every monthly unique visitor.

We knew our margin before, but hadn’t broken the numbers down into their most easily handled form. This is important. Numbers are just numbers if they aren’t simple enough to act on; a linebacker with a simple playbook can react rather than think during the game. Knowing that the big number is how much we spend on our customer-service team refocused us on making sure we hired the right team and invested in its happiness.

4. What are the explanatory events?
A money-raising deck mostly consists of graphs with lines going up and to the right, scrunched two to a page to make the lines look steeper. The only reaction we expected to our version of these slides was awe. But Roelof asked us to annotate each graph with what statisticians call an explanatory event. What change in our business had caused revenues to shoot up? We claimed that publishing agent reviews had sent conversion through the roof. But when we dug into the numbers, we found the real explanatory event was a change in our service a month before – unlimited home tours. Making a simple picture of a business trend and then correlating that with a big decision helps you understand what levers really move your business. When there are no explanatory events, you’re just getting lucky.

5. Why can’t you grow faster?
The most important question venture capitalists ask is what prevents your company from growing faster. At first, I thought it was a demand disguised as a rhetorical question, asking Redfin to raise projections beyond what we could deliver. But when I got testy, Greylock’s David Sze said, “We’re not asking you to lie.” He just really wanted to know what the rate-limiting factor was.

We cycled through a few lame answers: “We prioritized margins over growth.” “We wanted to be realistic.” Then Redfin’s Sasha Aickin quietly pointed at the headcount line of our projections and said our rate-limiting factor is probably how quickly we can hire top-notch real estate agents. Everyone nodded. We got back from that meeting and began thinking about scaling agent hiring.

6. What are the accelerating effects?
It’s easy to grow 300% in your first year or two, when you’re starting with nothing, and people first hear about your service. What separates a potential colossus from other businesses is the capacity to keep growing at that rate in years four, five and beyond. When Reid Hoffman looked at Redfin, his primary question was whether there were “accelerating effects,” where growth begets more growth. For Amazon, the product reviews and personalization history it captured from its first users accelerated its second stage of growth. For Facebook and Twitter, the community itself constantly recruits new users. For companies like Zappos and hopefully Redfin, it’s word-of-mouth about our customer service. This line of thinking made Redfin focus on our most sustainable competitive advantages: not the usability of the site itself, but the data we gather from visitors to that site, and the rave reviews we get from those visitors who become clients.

7. What’s your secret sauce?
One of the godfathers of venture capital is, we were told, obsessed with secret sauce; the man apparently hasn’t put mayo on a ham sandwich in 20 years. So in preparing for a meeting with him, we tried to think of technology that only we could build. Previously I’d always thought this challenge was silly. Grinders like me believe in the lunch-meat not the sauce; we just try to focus on the right problems, and run faster than our competitors. In this view even Google, if it stopped coding for a year or two, would be caught. But while Redfin has gotten far by being relentlessly incremental—letting users filter property searches by pools or parking spaces—the pressure on us to do something proprietary helped us prioritize game-changing features that we’d put off in the past. We hope to come up with Something Big in 2010.

8. How do you win?
Thinking constantly about world domination can give you a little vertigo. The way I usually get through my day is by limiting my horizon to serving the next few customers, or increasing revenues in the next few months. Which means that even though the story of how we win should be etched on the inside of my eyelids, it’s more often at the back of my mind, as a nagging doubt that I’m focused on the wrong thing.

But the essential job of a CEO is to tell that story, to everyone who will listen, making it better all the time. If you are raising venture capital, that story is by definition highly improbable, involving such an absurd overthrow of the order of things that it’s almost embarrassing to say out loud. Rehearsing the whole narrative naturally focuses you on the holes in the plot.

Just try, for example, to say with a straight face how Redfin wins: we get the best data, and build the best real estate website (maybe). We hire our own real estate agents and pay them to focus on customer satisfaction, not sales (that’s a little weird but sure, why not?). Customers appreciate the difference, and en masse fire the traditional agent who has been sending them a bottle of wine every Christmas for 10 years, giving us 20% of all high-value real estate transactions (no way!).

Way.

*~*~*~*~*~*~*~*~*

It’s hard to express just how much settling those questions has galvanized Redfin to attack the monsters under our bed. Sure, we were dimly aware of those problems before, but we existed in a state of seething, unacknowledged tentativeness. Weeks of contemplating what it will take for us to win prepared Redfin to swallow the red pill, stuff the TaunTaun, hack the Kobayashi Maru. At very few moments in a company’s history does it makes its way so deliberately. Like the recovered patient who saw while sick everything she had always meant to do, we want to make the most of our new lease on life.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Blog search engine (and more recently blog/social network advertising network) Technorati has raised a new round of financing – $2 million from existing investors, including Draper Fisher Jurvetson and Mobius Venture Capital.

This is, the company says, an extension of their Series D round from June 2008, where they raised $7.5 million at a roughly $35 million valuation. The company has raise a total of just over $32 million to date (much of that at a much higher valuation).

The company is also in the process of raising additional capital via commercial debt, we’ve heard separately but haven’t confirmed.

This funding should get the company to profitability, says CEO Richard Jalichandra. He won’t say what revenues are, except that it has more than doubled each of the last two years. He also points out that Technorati’s network, with 25 million monthly unique U.S. visitors, is now the 5th largest social media property on the Internet.

In addition to its flagship site, Technorati supplies advertising to 450 or so websites – about half blogs, half niche social networks.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.

Fwix, a startup that offers a stream of local news that’s updated in real-time, has somewhat belatedly announced a $2.75 million funding round it closed last year, led by BlueRun Ventures. CEO Darian Shirazi says since closing the round last fall, the company still has the majority of the money left. Alongside today’s funding news, the company is also launching a new ‘Wire’ API that will allow third parties to integrate the company’s stream of news updates into their sites and apps.

The basic idea behind Fwix is fairly simple: it aggregates news articles and blog posts that are relevant to a certain region (the site now features support for over 80 cities in the United States and Canada). To do this, the Fwix team selects news sources and blogs that it thinks are related to each city, and also uses automated algorithms to determine when other content might also be relevant.

Fwix has evolved considerably since its launch last August. For one, it has seen a total redesign, shrugging the Facebook-like interface it launched with in favor of something more streamlined. The site has also been making some recent strides in getting distribution — itlaunched a widget that allows bloggers to embed Fwix’s local news feeds into their sites, and the widget network is now seeing over 9 million monthly unique visitors.

Shirazi says that the new API has been in private beta on a handful of sites, including Weather Underground and RawStory. He also notes that the company’s iPhone app (which also has changed significantly since we covered it in March) was built using the API.

Crunch Network: MobileCrunch Mobile Gadgets and Applications, Delivered Daily.