Where is Your Money Now?

Posted on January 17, 2008
Filed Under Bubble Watch |

Time Warner shareholders might be asking themselves that question if the rumors around AOL’s possible $200 million acquisition of Where Are You Now? (WAYN), a UK-based social network for travelers, are valid. With $4.5 million in annual revenues and 3.6 million unique visitors in November according to comScore, a nine-figure acquisition of WAYN would seem to provide a disappointing answer: the shitter.

AOL is not the only major Internet company apparently considering spending big money on the acquisition of a niche social network: TechCrunch has reported that IAC is “very close” to acquiring movie-focused social networking startup Flixter for more than $150 million. The price here looks unjustifiably rich as well: although Flixter had 12 million unique visitors and 358 million pageviews in May 2007, this had declined to 8.2 million visitors and 139 million pageviews by November.

While I’m generally a fan of niche plays, I’m never a fan of bubbles and if either of these rumored acquisitions is being negotiated seriously with a nine-figure price tag, it’s yet another sign of a bubble growing incredibly large. If AOL and IAC feel compelled to spend nine-figure amounts on properties with what I would consider moderate traffic and that, most importantly, appear to offer little hope of making a real contribution to revenue growth, one must question just how promising the future looks for these companies. Given the near-certainty of a recession and the impact that this is going to have on advertising-dependent businesses, I think smart players will conserve their capital and look to make any acquisition moves once these vulnerable startups start feeling the pain. After all, the wise say, “Buy when there’s blood in the streets.” With idiotic nine-figure acquisitions of second-tier social networks, AOL and IAC would essentially be saying “Let’s buy before the first drop hits the pavement!”

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Comments

2 Responses to “Where is Your Money Now?”

  1. Annika Erskine - WAYN.com on January 17th, 2008 5:08 am

    Further to the comments referred to in TechCrunch on Jan 16th we would like to confirm that WAYN has at no point had discussions with AOL and are not currently looking for a strategic sale.

    WAYN is unique in that it is focused on the travel vertical which represents by far the largest online sector and we are excited about the new products we are introducing to our members and the prospect of developing into the mobile space with location based data and services being one of our core strengths. We benefit from a broad demographic with over 50% of our UK users over the age of 35. We are also one of the only social networks which is 18+ to improve the safety for our users.

    Privacy and account interaction options are extremely comprehensive allowing users full control over mail, updates and contact from other members. Since the site opened up to all members as a free service with unlimited storage and no restrictions on contact we have enjoyed huge growth to more than 10m members worldwide and have invested heavily in launching new travel and lifestyle related services for them.

    Our present focus is to create long term value and build a truly successful business. The WAYN vision is to become the world’s largest and most successful travel and lifestyle community portal and our management team is solely focused on achieving that goal.

    If there are any questions regarding the WAYN travel/lifestyle services or to receive information about future announcements from WAYN please contact +44 (0) 20 7336 8088 or .

  2. Drama 2.0 on January 20th, 2008 2:30 am

    Translation: we want somebody to buy us.

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