We have a new podcast up on TalkCrunch - an interview with Tucows CEO Elliot Noss. Tucows just acquired one year old Ajax calendar Kiko for $250,000 on ebay. We spoke for about twenty minutes on his reasons for buying the company and what he plans on doing with it. Elliot also talks for a few minutes about the bidding drama on ebay, where the sale price increased by over $100k in the last two minutes of the auction.
I think the transaction, and others like it, might signal a trend in the new web. Is eBay the investment bank of Web 2.0? New companies are easy to start, easy to fund and (now) easy to sell for a few hundred grand on eBay…this might be the way many of these small companies eventually find liquidity.
Previous TechCrunch posts on Kiko are here.
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VentureVoice also pointed out the I-Banking 2.0 connection with a bit of a writeup here:
“Startup Sold on eBay for $258,100 (or: eBay turns iBanker)”
http://www.venturevoice.com/20.....25810.html
-david
I want this:
http://cgi.ebay.fr/ws/eBayISAP.....0026408824
If you can get liquidity this way or similar, and this is not a one off, then that is a very disruptive change for the traditional players.
Ebay or not, I can never stop thinking when I see posts like this one that:
1) Focussing on grabbing eyeballs and figuring a business model later was lame in ‘99 and is still lame today – if you behave like pets.com don’t be surprised when you end up in like them.
2) The product they had felt more like a module for some bigger app than an app in its own right – something also symptomatic of the Web 2.0 world. The blogping aggregator module of Terapad.com took me half a day to write and test, it seems awkward there are 6 or 7 companies out there basing their entire business model on something like that.
3) For 250K a lot of Kikos could be written.
But hey, it’s Elliot’s money, not mine
More on topic with the post, are we seeing the creation of a new market where anyone could quickly build a series of small webapps, post them on eBay, and profit?
The only issue being that there’s no revenue stream while you develop, but for an already established consultant or consulting firm, it could be a nice way to generate revenue and raise one’s profile.
eBay is full of crappy websites to sell. Need filters !
So if you want to hear the interview from the flip side, we spoke to one of the developers on the Web 2.0 Show recently. It is interesting to hear what they thought was their downfall.
The real value of a site comes from the userbase, not the software.
Big waste of money … a few engineers in India could have built what you needed for $25K not $250K
I’ve heard they buggered Kiko right under Paul Graham’s nose, what a steal!
A few engineers in India? Haven’t you heard? Corporations are moving the work back home. It ended up costing us a lot lot more..
They are moving it back because they want it done right and working right, rather than the garbage they create in India … sort of like Kiko I guess.
My friends in New Orleans at http://www.huckabuck.com/ have put their search interface up for sale on ebay as well - http://cgi.ebay.com/Huckabuck-.....dZViewItem
Definitely looks like an interesting trend - will be very interested to see how many of these companies that are not going to make it end up with the same fate…
250K does seem like too much for the calendar system. I figure that 3 guys working on it as a contract could get it down in 4-6 months (or less?) for a salary split three ways… and ~80K I would think is pretty good when you reduce the amount of work.
But I guess he’s paying for something that already exists, has been tested to some degree, has popularity, and has a domain? So actually, maybe it’s not such a bad deal if he can turn the investment into a winner.
Am I the only one who believes these endless iterations of online “office” applications are totally pointless? I applaud the technical aspect of the work, but honestly, does anyone actually use this stuff for daily activities, and PAYS for it?!
Is is the issue of too many people chasing the same stuff (duplicating).
Of all these types of tools the one that really impressed me was ‘Zimbra’.
I think Zimbra needs to be installed on a server though which I do not have.
Have a good day
Serge
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@ Mike
Because everything created in India is garbage and everything in the Western world is not. I love the generalizations that people make. It shows serious ignorance.
I’d probably suggest that SitePoint’s Marketplace (www.sitepoint.com/marketplace/) is a better place to sell a website than eBay. Far less low quality sites to sift through and potentially more qualified buyers. Though if you get the kind of press Kiko got, it might not matter.
(Disclaimer, I am a [volunteer] moderator at SitePoint’s forums… so I’m something of a fan)
Hey, I think I said this eBay thing about web2.0 start-ups some time ago:)
http://blog.curiousoffice.com/?p=59
Ah, does this mean I do not even have to look for VC funding for my new venture MustFeed.com?
Kiko was funded by the Y Combinator group but I doubt $6,000n of funding (where n is the number of founders) would get a start-up anywhere. More than the money, it is probably the business expertise and buzz creation abilities that start-ups are probably interested in.
@Mike, if India was creating garbage, I don’t see how the consulting firms like Infosys could grow at rates greater than 30% a year over the last five years.
@Mike .. let me guess you got fired for incompetence and someone competent from India took your place at a third the price. A little bitter are we? LOL!
@ Jimmy and Andre (and supporting what they say)
I totally agree, its the combined package which the bidders wanted - the code, tested product, userbase, popularity (which is only increasing owing to all this coverage its getting). And the last two take much more time and resources than people might think, and its still not assured after all that.
Considering that similar web too.0(sic) apps crop up faster than anyone can say ‘hey, i thought of that first!’, all the (un)/popularity does not go waste.
Raphael mentioned that there are a lot of crappy websites on sale at eBay, but this one is the one being talked about at the moment and that gives it just the coverage it needs, especially now.
Oh, and since everyone’s badgering Mike, i’ll just say that dude, words strung together do make sentences, but ever heard of the concept of not talking when you dont know about something. Even if Indians are creating garbage (not that i’m endorsing that), and even if you think that they charge less than you would, what is your problem there? Apparently, you’ve never heard of the concept of ‘com.pe.tition’. lol.
While I am quite surprised that kiko pulled of 250k, i would disagree with many people that the better way would be to hire freelancers from india/china/vietnam etc and do it for less then 1000. Mainly because kiko was not selling only software but at the same time users(40.000 u.v./month), which are coming to kiko not through search engine but through direct request which makes quite a difference. So the question here how much would you pay for 40.000 visitors/month that will keep coming back.
Aibek (#23), I disagree,
First, I’ve read that on startups.gigaom.com that Kiko’s angel round was $50,000 in convertible debt, which is more realistic figure of its development cost, and might explain the initial ebay 50k bid.
Second, (and I quote an onstartup post, refering to kiko’s # of users and page views) - “… nowhere in the eBay listing do I see a value associated to those assets (what they are valuing primarily is the domain name and the source code). I find that somewhat telling….”
Finally, and I’m not sure if someone has mentionned that yet, but those servers must cost quite a bit to maintain, so basically when you buy Kiko you buy a lot of maintenance cost as well.
I think whoever made that comment earlier is right, Elliot Noss might have done it because 1) it’s really good PR (the sale generated quite a buzz, give Tucows that ‘edgy’ feel they had lost, for example) and 2) it won’t dent Tucows’s budget in any way whatsoever.