tnl.net

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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