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No Bubble 2.0 yet

The recent acqui­si­tion of YouTube by Google for a stun­ning $1.65 bil­lion made me won­der whether we were see­ing a rise in the price. While the New York Times sees a return to the crazy val­u­a­tions of the 90s, a look at the acqui­si­tion land­scape does not seem to sup­port their con­clu­sions. Let’s take a quick look at the most noticed acqui­si­tions (and if I missed some, please drop a note in the com­ments and I’ll add it):

Feb-03 Blog­ger Google $20 mil­lion (rumored)
Jul-04 Picasa Google Under $5 mil­lion (rumored)
Jul-04 Odd­post Yahoo $20 mil­lion (rumored)
Jul-04 Web­shots Cnet Net­works $71 mil­lion
Jan-05 Live­Jour­nal SixA­part $20 mil­lion (rumored)
Feb-05 Blog­lines IAC (AskJeeves) $25 mil­lion (rumored)
Mar-05 Flickr Yahoo $30–35 mil­lion (rumored)
May-05 Dodge­ball Google Around $10 mil­lion (rumored)
Jul-05 MySpace News Corp $580 mil­lion
Sep-05 Skype Ebay $2.6 bil­lion
Oct-05 Weblogs Inc. AOL $25 mil­lion (rumored)
Oct-05 weblogs.com Verisign $2.3 mil­lion
Oct-05 Upcoming.org Yahoo Around $1 mil­lion (rumored)
Dec-05 del.icio.us Yahoo $30–35 mil­lion (rumored)
Jan-06 Web­Jay Yahoo Around $1 mil­lion (rumored)
Feb-06 Mea­sureMap Google Less than $5 mil­lion (rumored)
Mar-06 Writely Google Around $10 mil­lion (rumored)
Aug-06 Grouper Sony $65 mil­lion
Sep-06 Rojo SixA­part $10 mil­lion (rumored)
Sep-06 Jump­cut Yahoo $15 mil­lion (rumored)
Oct-06 YouTube Google $1.65 bil­lion

So yes, Google is pay­ing $1.65 bil­lion for youtube, Ebay spent $2.6 bil­lion on Skype (mak­ing the Google/YouTube deal look like a cheap deal), and News Corp. paid $580 mil­lion for MySpace (mak­ing them look fru­gal com­pared to the other two big deals) but the truth is that, across 20 major deals, those 3 stand out as the excep­tion and not the rule. It appears that, on aver­age, deals are gen­er­ally below $50 mil­lion and, in most cases, lower than $10 million.

Bub­ble 2.0?

I’m sure peo­ple are going to call me out on this because I’ve pre­vi­ously warned about the pos­si­bil­ity of a new bub­ble being cre­ated. How­ever, at the cur­rent time, it seems the data does not sup­port that con­clu­sion yet.

What it appears to sup­port, how­ever, is an inter­est­ing cal­en­dar anom­aly: it appears that major deals gen­er­ally hap­pen in the 4th quar­ter of the years (either that, or I got my data set wrong)

Another inter­est­ing point is that I haven’t found any other chart of that type around the net. So I fig­ured this page can be a start­ing point. Hope­fully, faith­ful read­ers will help me fill this chart with more data points so we can do more gran­u­lar analysis

Originally published on October 9, 2006 in Business . You may find related thoughts pieces under the following terms: , , , , , , ,

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  • http://glinden.blogspot.com Greg Lin­den

    There is a much longer and more detailed list of Google’s acqui­si­tions in Wikipedia:

    http://en.wikipedia.org/wiki/List_of_acquisitions_by_Google

    Most of them are very small.

  • http://www.briansolis.com Brian solis

    Inter­est­ing piece. I def­i­nitely con­cur. While Web 2.0 is draw­ing alot of atten­tion, I think the only sim­il­iar­ity between the “bub­bles” is the hype. The num­bers elud­ing to bub­ble 2.0 just aren’t there right now.

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  • http://blog.sharmavishal.com/ Vishal

    This is a good list, how about crate alist of dot­com (web 1.0) top buy outs and com­pare with web 2.0. It will put things in perp­sc­tive for peo­ple who don’t know about dot­com bub­ble much.

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  • http://blog.sharmavishal.com/ JK87

    Over­pay­ing for a web site is over­pay­ing. It doesn’t mat­ter if you pay­ing $40 mil­lion for a web­site, or $400 mil­lion . If the site doesn’t make money, and really stands lit­tle chance to, it is over­pay­ing, and a bub­ble is born.

    The irony is the only pur­chases on that list that really have any HOPE of pay­ing back their new own­ers ARE the huge ones.

  • Devitry

    here is another old list of google buys.
    http://www.seobythesea.com/?p=64

    You should put this in a graph that shows total spend­ing per month or quarter.

  • Jason Beck

    Given that Google makes it’s money on adver­tis­ing, I’d like to see a “Daily Traf­fic” col­l­umn added to the table above. It is likely that the 3 stand­outs in acqui­sion price are also the stand­outs in traf­fic generated…if acqui­sion price and traf­fic scale appro­pri­ately, then that would tend to deflate the bub­ble theory.

  • dan

    How can there be a bub­ble? SOX has elim­i­nated the IPO/Bubble com­po­nent. These are all cash/equity M&A deals, the aver­age pun­ters who rode high and then crashed in 2000 aren’t at the table.….yet.

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  • http://blog.sharmavishal.com/ Maharaja

    Fair­fax took out Trade Me for $460 mil­lion in March.

  • Stephen

    What about all of Oracle’s acquistions?

  • corn­ho­lio

    what about $600mln eBay-shopping.com deal?

  • http://jawadonweb.com Jawad Shuaib

    Fear not, there is not going to be a Bub­ble 2.0. For such a thing to hap­pen, these mega cor­po­ra­tions would have to col­lapse from over spend­ing on buy­ing star­tups. That is not gonna hap­pen, ever.

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  • http://keith.hostmatrix.org/cgi-sys/suspendedpage.cgi Keith

    So far, the two bil­lion dol­lars takeover are Skype and YouTube. One can imag­ine how much Google is earn­ing from peo­ple around the world to have that much money to pay these com­pa­nies! Wish my site is worth as much as a mil­lion too.

  • http://www.tnl.net/blog/ Tris­tan Louis

    Actu­ally, most of the other deals listed (like Visio, shopping.com, or even the deals that Ora­cle has made in the last few years) would not count as Web 2.0 deals as they were tra­di­tion­ally estab­lished com­pa­nies. Those could show the rise of a bub­ble in tech in gen­eral but they could also be part of the stan­dard oper­at­ing approach to deals in tech in gen­eral (if I were to start track­ing deals out­side the Web 2.0 space, I'd have to also track deals across all indus­tries in order to under­stand the over­all pic­ture) For exam­ple, the takeover of ATT by SBC, using this type of mea­sure, dwarfs all the Web 2.0 deals done in the last few years (and that's just one deal, off the top of my head). So I decided to focus on acquired com­pa­nies that met the stan­dard def­i­n­i­tion of Web 2.0 when I drew up the list.

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  • http://www.tnl.net/blog/ bn

    eBay bought Rent.com for $415 mil­lion in Dec ’04

  • Avi

    I think CNet bought Consumating.com last year also.

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  • http://www.metrics2.com/ Met­rics 2.0

    No Bub­ble 2.0 yet, but the mea­sure­ments of bub­ble 2.0 is becom­ing sticky — sticky 2.0

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  • Morpheus7

    The bub­ble isn’t with exits, but with what ven­ture guys are pay­ing in pri­vate trans­ac­tions. This will be the real shake­out when many of these com­pa­nies blow up or get sold for cents on the dollar.

  • http://clevershark.com Clever­Shark

    It’s all a bit of a moot point. Google paid the $1.65 bil­lion in stock; now I read some­where that this (at the time) rep­re­sented 1.4% of their mar­ket cap, but Google shares jumped a lit­tle over 2% on the news.

    So, tech­ni­cally, the pur­chase has already more than paid for itself when one looks at it from a share­hold­ers’ point of view.

  • Henkie

    nov 2004: eBay acquires Dutch trad­ing site Marktplaats.nl for $290 million

    http://investor.ebay.com/releasedetail.cfm?ReleaseID=148001

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  • Nicole

    Really good chart. It was just what i’ve been look­ing for. And yes, i haven’t found any one like that. It will be nice, if there was another one but with acqui­si­tions that hap­pens in the first bub­ble. Thanks!

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