July 2nd, 2007 by Markus
If you are a founder that takes a lot of Cash and your company isn’t growing in leaps and bounds like facebook chances are you aren’t going to be holding more than 5% of your company if a payday comes along according to the clickz’s article (Union Square Ventures has a presentation saying less than 10%) .
http://www.clickz.com/showPage.html?page=3626306
The author says that if you build quickly and sell quickly you’ll make more money. I agree with that, but if you are a programmer you really don’t need any VC money and can build a decent product in your spare time. Taking your hobby company to $100,000/year in profit is the same thing as holding 5% of a company that makes $2 million a year in profit. Not only will you own 100% if your company but chances are that you are far more likely to be successful AND have a buyer AND its far easier to grow to 200k in profits than it is to get to 4 million in profits.
You’ve probably heard 90% of business’s fail in the first year. Its probably the biggest urban legend in the business world that won’t die. The US government says that 65% of new business’s are still operating after 4 years. There is a report that says more then 66% of companies founded in 98 -2002 are still operating today.
Anyone know what the average VC success rate is? I bet its no where near 50% or even 30%. Would be interesting to see how much money founders walked away from in smaller VC deals. Even for something as huge as myspace the “founders” only walked away with $5 million or 1% of the sale price. What would you rather own, 100% of something or 5% of a dream?
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June 28th, 2007 by Markus
James posts about transforming hotornot here.
From what I’ve heard of pay sites that try advertising they generate about 10% of their revenues from advertising at a small scale. My traffic exceeds that of match.com and I can tell you I’m not even close to making $30 million a year which is 10% of Match.com’s revenue.
As for growing pageviews via facebook I think that is a mistake for a dating site, even when they allow advertising you’d make cents on the dollar compared to what you’d make having the visitor on your site. I couldn’t even create a dating site in facebook that would run with a profit on facebook. Most of facebooks pageviews aren’t even in the US and you are looking at splitting 5 cent CPM’s with facebook.
I think James will face an uphill battle getting a lot of money via advertising, assuming his pay section was well optimized he’d have to grow pageviews 10 fold t0 make the same amount of money. But he still has virtual gifts so maybe its only 5 fold growth needed. Hotornot has expanded to 14 employees and given away a lot of equity. That means that he has to grow revenue far beyond the 5 million he had before to own the same dollar amount of the company. Ie owning 50% of a company that nets 3 million a year is the same as owning 10% of a company that makes 15 million a year net.
There is also the problem of market size, if a site like hotornot wants to make far more as a free site than a pay site it may not even be possible. Assuming a free model makes 1/10th to 1/20th the revenue per user is the market even big enough to support a company with 20 million in revenue?
If I wanted to generate $100 million in revenues per year it would be pretty easy, all I need to do is convert to a paid site. To generate 100 million a year as a free site is virtually impossible as the market isn’t big enough. I’m already the largest player in the UK, Canada, and US. Growing the company another 10 to 20 fold just isn’t realistic.
At the end of the day I don’t know if hotornot made the right choice. The answer to that question really depends on how huge the site can get.
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June 26th, 2007 by Markus
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June 19th, 2007 by Markus
http://video.msn.com/v/us/msnbc.htm?g=49ee9d34-d815-44d9-a1e7-ee36ed196403&f=05&fg=rss
In the last few months Plentyoffish has become the worlds largest dating site. I’ve now got number 1 rankings in the UK and Canada and in the US moved from 5th to 3rd place in the last few months and just a few percentage points away from taking second place.
Compared to match.com Plentyoffish has until now been living in obscurity when it comes to media exposure. I hope that I get more coverage for plentyoffish now that its in the top 3 in the US.
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June 16th, 2007 by Markus
The new Facebook Application platform seems to be the first stage in Facebooks assult on Google. Search can really be split into 2 groups, users searching for information that isn’t social and users searching for information that is social in nature. The top searches on google tend to be social networking, maps/directions, music, games, traveling, dating etc etc etc.
The biggest problem with Google is that Google doesn’t know how good or bad the destination site is. With facebook its directory lists social applications by the number of users they have, how popular they are etc. In effect Facebook is in the process of transforming into a portal/search engine.
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June 15th, 2007 by Markus
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June 14th, 2007 by Markus
http://www.earthtimes.org/articles/show/news_press_release,121814.shtml
A lawsuit has been filed against TrueBeginnings, LLC, the owner and operator of the True.com online dating website. The lawsuit seeks certification of a class action on behalf of True.com customers who were charged service fees by True.com after cancelling their subscriptions.TrueBeginnings, LLC is a Texas-based company, that claims to have millions of subscribers to its online dating website, True.com.
The complaint alleges that True.com charges its customers monthly service fees in excess of $50 per month, and that True.com charges its customers’ credit card or bank accounts for these fees. True.com advertises on its website that memberships can be cancelled at any time. However, the complaint alleges that True.com does not accept cancellations in writing or on its website. Instead, True.com will only accept cancellation requests made over the phone. The complaint alleges that True.com bills its former subscribers service fees, even after those subscribers have attempted to cancel their subscriptions over the phone, and that this is done without the knowledge or authorization of the former subscribers.
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June 13th, 2007 by Markus
I just checked into the merriot hotel in Santa Clara which happens to be across from Yahoo. I don’t have my address book with me but are there any people from yahoo personals that want to meet up?
I am here doing a speaking gig tomorrow with james from hotornot and others. I figure i’ll spend today checking out some of the wineries around here.
http://www.churchillclub.org/eventDetail.jsp?EVT_ID=739
My email is in the about me section.
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June 13th, 2007 by Markus
Seems that facebook is getting nothing but glowing reviews.
http://blog.pmarca.com/2007/06/analyzing_the_f.html
Ilike is the most successful application on facebook with millions of users signing up. But take a look at their alexa chart and you will see they lost 70% of the traffic to their website since launching on facebook.
http://www.alexa.com/data/details/traffic_details?q=ilike.com&url=ilike.com
I think at the end of the day facebook will reduce independent websites like Ilike, lastfm etc to just another feature that won’t exist outside of a social network. Just like every other business who have a legal obligation to make money, Facebook will have no choice but to clone the most successful applications and build them directly into their platform.
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June 12th, 2007 by Markus
Zencon has been bought by American Capital no details are given. Zencon has been for sale for well over a year and they run sites like blackpeoplemeet.com.
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