Word comes this morning that AOL will purchase Bebo, the social networking site, for $850 million. This works out to about $21 per user. I believe also that the founders of the site will leave, each taking with them enough money to choke a horse.
Now, Bebo is a great company and I’m sure is worth every penny that AOL is paying for it, and the strategic benefits to both are very clear. Still, it’s got to give you pause. None of these social networking sites — or YouTube, either, for that matter — is producing the kind of revenue, let alone profit, that would justify the enormous prices for which they have been selling.
This leads to one inexorable conclusion: it is possible to now sell a business for a virtually infinite multiple of cash flow.
I believe that I, Bing, represent just such a business. And smaller investors, with less capacity for debt in this challenging market, could acquire me for a much more reasonable sum.
I am right now developing a prospectus for my friends at Allen & Co. They are unaware of this as yet, but it’s coming along nicely, and if Herb would return my calls I’m sure I could get something started. We could get a fishing expedition going almost immediately after they leak news of the potential deal to a number of their close associates in the media. A whisper here, a murmur there… and Boom! We’d be off and running.
Lacking that documentation at the moment, the details of the transaction are still a bit murky, but the outlines are clear enough.
Assets of the new BingCo include the growing community surrounding my content, which is clearly monetizeable, with excellent demographics and psychographics, along with unparalleled stickiness. The business itself has very low overhead, consisting of two founders, one being Mr. Bing himself and the other being a public relations professional whose identity he prefers to remain a closely-guarded secret.
Growth potential for the distribution side of this valuable, non-fungible content is enormous, as big as the world wide web, in fact, and includes thousands of sites that will take advertising-supported content for free. Naturally, advertising growth is still a challenging issue, but that’s equally true of all sites that are selling for nine, ten or eleven figures, with most of those figures being a zero.
Liabilities are also few, and consist mostly of the founders’ inability to get anything done after about 7 PM, for a variety of reasons we need not go into here. The company, as yet, is privately held, so there will be no Board or regulatory approvals necessary.
The price of this growing, thriving enterprise has yet to be ascertained, but like all user communities it has nowhere to go but up. At this moment, there is very little revenue, even less profit. All there is is a brand and a number of people who sort of recognize it.
Let’s start the bidding at $25 million. I figure that should provide the F.U. money the principals have been seeking for many years.