Rumors seem like more than just rumors when they’re printed by the New York Times, don’t they? Well here’s one that you can judge for yourself: Plaxo is for sale. The news comes from people who were “briefed on the [upcoming] auction.”
The company has yet to turn a profit, but seems to think it’s worth $100 million. With 15 million registered users, the company may be being a bit modest with its valuation. Facebook, after all, thinks it’s worth $10B (and that’s on the low side). With just under four times the registered members, a price tag of $2.5B would at least not be the most outlandish thing we’ve ever heard.
Or, to use another measure, two years ago when Rupert Murdoch acquired MySpace, they paid $580 for about 30 sites, including MySpace (allegedly $327M of which was directly for MySpace, which had 22 million members at the time). So on the conservative side, they could be asking about $220M.
But they’re not. And why not? Two reasons: they’re not growing like either of those companies (and may not ever). They’ve been around since 2001 and have yet to see the hypergrowth period—and headlines—that larger social networking sites. This is probably due, at least in part, to the fact that they’ve never aspired (until recently) to be anything more than an online Rolodex.
The second reason: they’ve never turned a profit. Facebook, even before Project Beacon, stood to bring in some $150 million last year. Plaxo, not so much.
So what would you pay for a potential, up-and-coming social network—and what would you do to make it profitable?