A post by Wired.com, pretty much blasts Demand Media over their S-1 they filed to go public, and previous statements made by co-founder Richard Rosenblatt regarding the profitability of the company:
“”Several commentators noted the absence of profits, (in the S-1) which sat oddly with co-founder Richard Rosenblatt’s public pronouncements over the years”
“Rosenblatt has been describing Demand Media as profitable for a long time. The earliest reference I’ve come across dates back to March 2007, when he told one interviewer: “We’re very profitable, and we could go public now if we wanted to.” The following year, Rosenblatt described Demand as “highly profitable.” In late 2009, Wired was induced to describe Demand Media as “profitable as hell”.
“This simply wasn’t true, at least not under GAAP, the collection of accounting rules that the Securities & Exchange Commission forces publicly-traded companies to use. In fact, Demand’s IPO prospectus reveals that the company has delivered losses every year since its launch in 2006, running up an accumulated deficit of $52 million.”
The Wired.com piece also questions the valuation of the company:
“”Venture capitalists have invested nigh-on $350 million in the company, and voices close to Demand Media are suggesting valuations of between $1 billion and $1.5 billion. The former would make Demand Media the first $1 billion+ IPO since 2004, when Google reached a valuation of $27 billion on its first day of trading. The latter would make Demand Media more valuable than The New York Times Co., which has a market cap these days of about $1.2 billion.”
Partially unrelated but maybe an indicator that my nose is on to something. I have been thinking for the last few days about Internet weakness. Not in established companies but with pure Internet based ones.
I think we may be on the verge of another Internet collapse. It won’t look like the first dotcom bubble and will be much smaller. But I do believe we are about to see an avalanche of failed Internet companies that are running out of money and steam at the same time. Failed business plans that can no longer afford their own weight. Most very employee heavy and not enough profits to keep paying them. JMO
Timber!!
Look for NameJet.com price increases 2x … anyday now, it’s coming !! 😉
This Rosenblatt guy appears to be a master in scamming others into buying his failed companies. Where are his previous masterpieces now? Zaktly.
Now they have a spam site that is tailored to Google. That’s fine for a mom-and-pop but for a publicly traded one at a billion+ no less ? Imagine a Google hiccup and here goes their company. Once again those that bought Rosenblatt’s creations will be screwed.
Since when has common sense prevailed, this industry is full of hopeful individuals and plenty of men ready to help them dream…for a price that is. The last one’s who should speak out against DM seem to be the FIRST.
Rick makes an interesting point and some of the figures in the domain registrations may back it up. The monthly new registrations for .com are now back around the 2005 level without the noise of domain tasting to buoy up the figures. The value of some of the tasted and held domains would probably decay over the period of a few years and as linkrot sets in, some of these deleted and reregistered domains would lose their PPC value as people and search engines forget about them. And as the domain registration cycle move on a yearly basis, there’s a lot of 2007/2008 domains that may yet be dropped. The effects on the PPC companies might be the early warning signs. Hidden in some of the newer TLDs of the last few years is the domain industry’s own Sub-Prime crisis. The whole Social Media thing is another area that should see some problems in the immediate future. There’s a lot of talk about it by the same type of people who were waffling about a “battle for eyeballs” back in the dotBomb era. They were clueless then and they are clueless now. The main objective of business is profit.
Of course to use another real estate analogy, some of the domain industry has been like realtors selling to other realtors.
“But I do believe we are about to see an avalanche of failed Internet companies that are running out of money and steam at the same time. Failed business plans that can no longer afford their own weight. Most very employee heavy and not enough profits to keep paying them.”
Me too, take away their cash flow (borrowing) for a short period of time and they will crumble like a deck of cards. much the same as what our governments are now facing.
No wonder GoDaddy is up for sale.
Stop the BSing and show me the NUMBERS!!!
So… Demand loses millions a year, but has a $1B valuation??
What am I missing??
It’s funny after writing what I did I refreshed back to the home page and saw the .co auction reports… basically proving my point. Give some one hope and they will give you their money.
Amazing that Demand may have a market cap higher than Godaddy
Josh,
it’s funny you mention that, I was thinking along similar lines. I see blogs touting the so called success of .Co, but as far as I can tell the only one’s buying that extension is Domainers.
Granted a sale is a sale is a sale, but what will happen when the circle jerk comes (pardon the pun) full circle. Will a these Domainers find an audience or an end user for their .Co’s or be left holding their c**** in their hands?
I wonder if Bob Parsons knows something we dont…
I believe this business is not about new registrations, but about renewing of registered domains. the interesting numbers are those of .tv/.info/.mobi/.me and a year from now of the .co. you can understand why the industry is coming with new tlds every year – if customers dont renew their .mobi, lets give them .me. and if they wont renew these, lets give them .co
@Yaron: Renewing .co? I am sure the .co registry will have a nice solution for this problem: Why not auction some of the top domains blocked by the registry in open auctions in July 2011, get the record prices and convince this way the owners of the .co domains to keep their domains? Maybe this will even generate some good sales in the aftermarket as follow up?
I’m with Yaron.
Also, Rick seems to be contemplating his own investments as of late in the domaining world. It seems our hard shell we thought was protecting us from the GW Bush economy collapse in 2007 is beginning to crack that shell. Hey, love the 8 years of “growth’ we had from 2001 – 2008. Luckily, money saved.
Still, domains are king.
Stephen,
now is the time to be buying stuff up if you have the liquid assets, it was during similar economic times that Schilling put together his portfolio. Now, when the market will turn around is anybody’s guess, hopefully the pendulum will swing back?
Stop all the unsupported speculation. You guys are shooting yourselves in the foot. Yes, if I were Bob Parsons I would be cashing out now too. Yaron is right, lots of 2008 registrations are going to go unrenewed. revenues and profits will fall and along with it the valuation for Godaddy.
He is smart – get out at the top. BUT – that means NOTHING for domain investors. We are holding the gold. Those names that go unrenewed are the fools gold.
The internet is not going anywhere. Just the same as in 2001 with the dotcom bubble burst, the internet carried on dancing and with it domain names.
There will always be a need and demand for an internet addressing system and short generic domain names represent the single best solution for consumers and companies alike.
I am in for the long haul and any of you who want to abandon ship on your gold mine, please feel free to contact me and send me your domains with pricing. I am buying and will continue to do so (perhaps just more selectively).
It will be interesting to see how Main Street reacts to the Demand IPO especially with so much uncertainty in the economy and all the chatter about a double-dip recession. Everyone has their own investment philosophy but I’m not sure how any broker or money manager could recommend the Demand stock to clients they want to keep… What could the pitch be really?
Venture Capital Ponzi
@ Rosener
You are buying? LMFAO
All I (and nearly everyone else I’m sure) ever gets from you is tons of spam trying to sell domains
I didn’t ask to be on your list – how’d you ever get our emails?
@ Aggro
Thanks for the feedback man – much appreciated.
We sold over $1.5 Million in domains last month, so I guess there are a few people out there who don’t think we are sending out spam.
Aside from the sales, yes, we are actively buying domains as well.
We recently acquired:
Spearfishing.com
Patio-Furniture.com
RD.de
SanFrancisco.net
& around 100 more domains in the last 2 months alone
Once again – I appreciate the feedback – but as a suggestion, if you have a problem with me or anyone else for that matter, why don’t you send an email or pick up the phone like a real man.
It’s a real show of character to make a statement like that on a public forum with a PRIVATE user name & no contact info. You’re a brave man!
“I didn’t ask to be on your list – how’d you ever get our emails?”
If you don’t want to receive his emails, unsubscribe.
Out of all the ‘domain for sale’ emails I receive, his is the
least intrusive.
And, if you don’t want to read it, hit delete.