Let’s play the Plaxo valuation game.

plaxoYesterday Plaxo put itself on the block for sale. They have hired investment boutique Revolution Partners to assist in the sale.

They have had two notable successes; the first one was that have been able to overcome the (well deserved) bad reputation of being "spammy" and the second one is that the tool called Plaxo Pulse is a great hit.

Plaxo Pulse enables sharing of content from multiple different sources across the social web, including blogs, photos, social networking services, rating services, and others. It is based on Google’s open social container.

The down side is that they still do not have a good revenue model. The revenue numbers for Plaxo are hard to come by and that probably means that they are really anemic.

They currently have about 15M users (20M if you look at the forward trend and not the trailing trend).

The company has so far raised $28 Million in four rounds, from Sequoia & Ram Shriram (Series A; 2002 $3.8M @ $7.5M post), Globespan Capital (Series B; 2003; $8.5M @ $33.5M post), Cisco (Series C; 2004; $7M @ $64M post), and ; 2006; $9M @ $122M).

So, let’s talk about the valuation and how much would Plaxo sell for. I know, these could be, and in this case they probably are, different numbers, so let’s play the game as to how much do you think Plaxo is worth and how much would it sell for.

As a data point, remember that in 2006, DAG already valued them at $122M.

My take: at $5/non-paying user, it is worth about $75M max, and it will sell for about $225M. The $225M purchase price will be justified by saying that one should look at the forward extrapolated user base, and the expected improvement in the revenue, to come up with the current purchase price (!). Assume 25-30M users next year, that gives about $150M as the allocation for the user base and rest as multiplier for the potential revenue improvement. There is some double counting here, but what is a few tens of millions between friends?

Leave a comment if you have a different method of valuation or have a more creative way to justifying $200M+ purchase price.

V-Enable’s mobile voice enabled search - people are talking

imageV-enable is a voice based search that users can access via their mobile phones, and receive the search results via SMS. Contrary to searches conducted on desktop or laptop computer, searches for information via browsers on mobile phones has always been slow, and adoption has lagged behind that on the other platforms.

V-enable’s patented voice based search is faster, and much easier to use on mobile phones. It is supposed to be about 90% accurate and takes about 1-2 seconds. With all the interest in using cell phones for finding information and content, should see this segment of the search market growing quite a bit in the near future.

 imageAnd of course any technology that promotes cell phone usage is music to the ears of carriers - particularly 411 services for which companies charge $1 to $2 per search. In August of 2007, V-enable signed a deal with MetroPCS to provide its mobile 411 service.

The field of voice automation is seeing a lot of excitement, recently.

Nuance, a company that we have profiled before, is a provider of speech recognition software. In August of 2007, Nuance joined Jingle which operates the Free411 service. Jingle has an ad supported revenue model. To use Jingle, you call 1-800-FREE411 and ask for your listing (but not before you listen to an ad regarding Botox plus the offer to connect to the advertiser right away!).

In March of 2007, Microsoft bought Mountain view based Tellme, another provider of speech recognition software in a deal rumored to be worth about $800 million. One hopes this ushers in an era of voice based commands for PCs and all other devices such as PDAs and televisions, an area that has been teetering at the brink of usefulness for a while now.

San Diego based V-enable raised $6 million in Series C funding from Palisades Ventures and Softbank Capital. Earlier investors include Siemens Mobile Acceleration, Sorrento Ventures and the Tech Coast Angels.


Technorati Tags: voice search, v-enable, nuance, jingle, tellme, microsoft, palisades Ventures, tech coast angels, softbank, sorrento ventures

The power of an ad copy - Attention, Desire and Action

peterman_catalogSome of you might remember the Peterman Catalog (either from the Seinfeld show, or from getting the actual catalog, or from the book ). John Peterman built a mail order apparel business on an archaically styled catalog that featured drawings, accompanied by long, poetic descriptions, that marketed mood more than specifics. What it showed was the power of an “Ad Copy”; the motivation that goes behind the sale of a product.

In the last few months, I encountered a couple of amusing examples of superb ad copies on Ebay - yes, they might have been serendipitous, unintentional ad copies but they still illustrate the basic point that the ad copies can make or break a sale - very often it is not the “product” it is the “ad copy” that motivates the buyer.

Dawn, a mother of 6 kids, recently put a baseball up for an auction and the listing started as:

I’m selling the baseball that started my wonderful first day of spring break. Do you want to know why I’m selling the baseball that started off my wonderful first day of spring break? Only because Ebay won’t let me sell my kids who were playing with the baseball that started my wonderful day. Is spring break over yet?! Here’s the whole story…

You can read the full story here. The auction attracted 220,000 views and the ordinary baseball sold for $1125!

Just last week, a father bought the holy grail of the 2007 Christmas gift, “Guitar Hero III”, for his 15 year old son. But when he caught his son smoking pot, the father decided to put the gift on Ebay. The story was heart warming and it wasn’t long before the bidding for the game, which typically sells for $125, had reached $9000+.

ImageWhen the advertising legend, David Ogilvy, was told that copy should be short and terse, because nobody reads more than a few words of an ad, he wrote the classic, “At 60 miles and hour the only sound you hear is the clock.” It was a full page of text, describing the features of the Rolls Royce. It sold a lot of cars.

A few of the critical items an ad copy needs are attention, desire and action, rest is fungible. A promise of benefit; credibility, persuasiveness, and other things are needed to create desire or induce an action.

A good ad copy is not just for selling an item from a catalog, or a baseball or a Guitar Hero video game. It is equally important for a startup to develop their ad copy for the investors and customers. An elevator speech, a fast pitch, a power point presentation, a business plan, are all ad copies for different clientele - attention, desire and action is all you need.

Young Social Entrepreneurs - STARTUP and change the world

youth_social_enterpriseA social entrepreneur is someone who recognizes a social problem and uses entrepreneurial principles to organize, create, and manage a venture that creates social change.

Young Social Entrepreneur Forum is an innovative idea for engaging the youth in social entrepreneurship.

I really like the tag line - “STARTUP and change the world” - so true!

startup and change the world

The forum aims to invest in young visionaries who have big ideas and who need crucial startup support to turn their ideas into action. The start-up support includes:

• Startup financing up to USD15,000

• Essential development knowledge & tools on social entrepreneurship

• Technical consulting through mentorship

• Access to diverse networks

Their social network of youth entrepreneurs at Futureshiftters has 200+ members.

We wish them well and fully support the endeavor.

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