Rumor: Confabb To Be Acquired By End Of Month

Nice moves. What’s also nice is seeing relatively useful tools being acquired, and in general at least a tip of the hat towards having an actual business and not so much of the late nineties ‘the business model is dead’ kind of thinking.

Not that it doesn’t happen still, but at least I believe this company could be worth something.

Any word on potential buyers here?

Michael,

my sources are telling me that this is untrue.

$5M in payout seems like a lot of money for a 3 month startup.. what is backing that up? What traffic is confabb doing? What is their revenue model? It would be nice to know wouldn’t it..

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My gut tells me this is untrue also. Anyone take a gander at the traffic stats for this? Im seeing an Alexa ranking of 112k…not exactly a powerhouse.

Maybe the buyer is purchasing it earlier for a lower price instead of waiting for when it could “possibly” worth more?

Mike–you certainly don’t miss a beat. Thanks for the write up but rumors of our acquisition are premature. While there is interest in us from a couple of entities, any talk of an acquisition is putting the cart before the horse. We are very happy to say that Confabb has gone over extremely well in the community and our business model is bearing fruit. And, we are in fact talking with some interesting companies about opportunities for joint marketing partnerships which will be a tremendous benefit for both our shareholders and our users.

a social network around conferences??

alexa shows zero traffic as it’s no longer in the top 100k sites. although you can’t take it as gospel, that’s not a very good sign.

Comparing confabb to mybloglog in terms of value as a function of how long they have been up and running…well I know which one I’d put my money in:

http://www.alexa.com/data/deta.....=8apps.com

why is mike writing about rumors anyways?

don’t spread rumors/gossip, as they say - lol

just stick to the stories that to the best of your knowledge, are facts

damn I need to go back to the drawing board and come up with a web app!

Now their site is worth another million or two because of the TechCrunch bump.

Google bought Adscape Media (in game advertising firm) for 23 million.

source: http://lists.fiercemarkets.com.....,6ha9,fjp3

I always worry that premature leaking of something like this could cause any aquisition to derail. Lets hope that is not case here.

Forget Alexa, which is inaccurate. Take a look at their community for CES, which is obviously one of the powerhouse conferences:

http://www.confabb.com/conferences/ces2007/details

14 users watched
14 users attended
6 ratings
4 discussions

If this is the type of activity level seen for a conference like CES, then it’s a sign at the very least that they haven’t developed the community itself to the point where an acquisition would make a lot of sense. Right now they look more like a conference directory that a social network, as it doesn’t seem as if there’s a whole lot of social interaction going on. If this is an acquisition for technology then one needs to ask if something like this couldn’t be duplicated for less than $5 million. If they built it on $75,000, you’d think it could.

Ok,

Lets really look at this. I call BS. I think that some one in the confabb camp is trying to stir some interest in a not too interesting site. I think that there is some tomfoolery going on here.

1 put the rumor out there that there is a takeover happening.
2 deny
3 say it is premature but we are talking
4 sit back and wait for a company dumb enough to buy
5 pray for traffic

this site is vaporwear ……the most popular conference has nothing in it ….
how bout they get over 100 visitors a day then we can start talking bout takeover.

milas

Michael,
you are soooo wrong about MyBlogLog. The site has been around from the beginning of 2005 and NOT since october. Where do you get your facts?

Someone with so much experience as you should know it better!

Accuracy of the rumors aside, everyone who’s scratching their heads over Confabb’s “light” traffic is making the mistake of considering all traffic as equal. Just a guess, but maybe Confabb’s audience is more valuable because its based around $3,000 conferences where people on corporate tabs are going to be dropping another $2K on hotels, transportation, booz, etc. Look at the offline publishing world. The most profitable mags and papers aren’t always the highest circ. ones.

to you guys who question the viability of a conference based app. i can easily see how this kind of app can gro, if the site can generate enough traction around people who’ve been to a conference/event , and who want to talk to each other.

unfortunately a lot of you guys are way too young to recall, but i remember trying to get membership lists of conference attendees as these guys were potentially our targeted customers/competitors… at the time 80s/90s.. it could get to be pretty damn pricey to get this kind of information…

so i can easily envision different tracks that this could incorporate…

peace

-bruce

We may sell mediarati too, if we get better price.

Re#20. What price are you getting now? $5?

Greg Cannon: the value per user could be higher for conference goers, but until you have a sizable base of active users, you can’t value a single user significantly. You might be able to sell a niche service with 1 million users for $75 million ($75/user) but try selling a niche service with 500 users for $37,500 ($75/user). The economics just don’t work. Based on the activity levels visible on Confabb (including the stats I posted for the CES community), there’s very little value to extract from the audience they currently have. Could it grow? Sure. But that takes investment of time and money. If somebody wants to buy this for $5 million, they’d be paying for an application that apparently cost less than $75,000 to build. The audience is so negligible right now as to be a non-factor in the valuation of the business.

If we’re back in a market where M&A can be driven primarily by the potential of concepts alone then we’re in trouble. In a sane market, it doesn’t make sense to acquire something that has yet to prove it can attract a large audience and that has no defensible technology or market position (i.e. key partners, relationships, executives with unbeatable domain expertise, etc.). There’s no doubt that many major companies are facilitating this startup flipping because they’re scared that if they don’t acquire early, they’ll be forced to look at 9 and 10 figure acquisitions later, but if I’m a Yahoo shareholder, for instance, and I see them acquire MyBlogLog (which has limited mainstream traction) so soon after launch, I have to wonder if Yahoo has the ability to compete in the market. If the startup you’re looking at acquiring has a limited lead on you and no major traction, you have some real problems as a company. If you feel you can’t compete and need to perpetually acquire to stay in the market, you are in trouble. Somebody else just launched a service similar to MyBlogLog. Will it succeed? Who knows. But it highlights the fact that somebody else was undeterred that MyBlogLog had a head start. It also demonstrates that Yahoo purchased something with no real defensible position in the marketplace. An acquisition of Confabb, in my opinion, is the same type of acquisition.

Sam: I think the idea is interesting, but if it’s easy for us to see how this could grow, the question is why it hasn’t. I believe there’s something of value to the concept, but I wouldn’t pay $5 million for an interesting concept and nice looking service with no real traction. A few devil’s advocate points:

- Unless Confabb has near 100% penetration for each conference, conference, the service has little use as an attendee list.
- Conferences are social networking events. Do you absolutely need an online social network built around them? Usually you go to conferences knowing (in general) who will be attending and making it a point to network with the key people and/or companies you’d like to meet. You exchange contact information, etc. and remain in touch with the parties of interest after the business is over.
- If you do believe that an online social networking component provides enough value to attendees of conferences, wouldn’t the operator of a conference be best equipped to set up such a social networking component for its conference? They have direct access to the attendees to market it and if they wanted could automatically set up an attendee list that lists 100% of the attendees if desired. I’m sure CES, for example, could get more than 14 “members” for an official online network they operated. If any major conferences do this, Confabb’s market becomes fragmented very quickly and it gets marginalized. Of course, there’s no reason this has to occur and this disadvantage could be eliminated with the right business strategy, but I’m not on the Confabb payroll so I’ll let them figure out the obvious.

Drama 2.0 - you seriously need to start a blog. With analysis like that, I’d definitely read it.

drama….

your questions regarding confabb are valid, and we’d both agree that whatever happens with confabb it’s up to the principles to implement, and to continue to innovate.

however, one of your statements, was in questioning why confabb hasn’t grown more. i would reply by stating that it has, and in fact is apparently growing. these guys are growing a business, and just like planting a tree, it takes time/effort.

to your point regarding that major conferences could in fact have their own social networking, this is also valid. however, i would state that if every (major) conferences had their own social network, then the value to the end user is limited.. when i went to conferences, there were plenty of people that i was pretty sure i never met, but who never the less were important. a social network for the conferences where the users could interact with each other, as well as with others from other like minded conferences would be quite useful, and potentially very powerful.

in fact, the more i think, mull this over, this begins to look like one of those times were you start to say, there might be a good buziness model here!!

i once came out of my apt, years ago, and looked on the ground and saw what i thought was a $1 dollar bill.. who cares right? i picked it up, and saw that it was in fact a $100 bill. however, no one drops/loses a $100 bill… so i took it to a bank. yeah, someone had dropped a $100 bill!! bought a few text books that day!

my point is that sometimes you need to take a harder/closer look, and you might find something valuable.

peace…

-bruce

“If somebody wants to buy this for $5 million, they’d be paying for an application that apparently cost less than $75,000 to build.”

If you watch Scoble’s show where Salim announced the startup you will learn that the company was built using equity labor. Everyone involved contributed their time and skills in exchange for stock. The small amounts of monetary investment apparently came about right before the launch.

i agree with drama. this is sort of going against a mindset. people who attend conferences expect the socialising at the conference itself. maybe this site will work as an after the fact but i doubt it. the mentality with conference goers is attend, network then split. the hookups afterwards are deals which isnt really done online for the world to see. for example if i went to a java conference and met some coders, i doubt we’d roundezvous back at the conference website. what would happen is we would im, phone, email, meet at starbucks and so on.

not saying this idea is doomed. if it works as a comprehensive directory then its already there for the most part. the social stuff is just gravy. id like to see things like calendar integration, email me certain kinds of conferences etc.

i definitely want to see which conferences are offering free lunches, free dinners, xbox raffles, book giveaways and so on.

Drama: agreed. I don’t think our positions are mutually exclusive. You’re right that there has to be a minimum audience before any site has value to someone who could afford to pony up $5 mil. But the flip side…that a site with huge numbers is automatically worth $X per user is crap and that seems to be the metric that is most abused in these flip-meat-festival days. How many services count me, you, all of us as users even though we haven’t looked at it since it was TechCrunched six months ago? And I agree with YoungFook, you need to blog.

Thanks guys. I contributed to the Dead 2.0 blog for a bit but that hasn’t been resurrected. I’ll give some thought to setting up my own blog.

Sam: I don’t think there’s no value here, but it’s hard for me to value this at $5 million in its current state. Without going into too much detail, I think Confabb’s business strategy needs to involve the conferences themselves. There are a few options here. Perhaps a major conference operator is the potential buyer. It would make sense to some extent.

Greg: agree completely that you can’t value a user at $x just based on the size of the audience. I think valuations are probably one of the biggest problems in Web 2.0. There are no standardized metrics for usage that really work well. Even pageviews can be misleading when you consider that certain sites have inflated numbers due to poor design (MySpace) and others have deflated numbers due to the use of AJAX, etc. We know that many startups promote user and usage numbers that just don’t add up. At the end of the day, any company looking at an acquisition and doing due diligence should weigh revenues heavily. A company without revenues (or very minimal revenues) creates a great risk because you can only speculate on how much each user could contribute to the bottom line. That doesn’t mean that you have to be MySpace before an acquisition makes sense, but it does seem like we’re in a market where decent services with limited traction, no real validation of a business model and no defensible technology or positioning in the marketplace can be flipped very quickly, and I don’t think that’s healthy for anybody. The acquirers are at risk of blowing money and destroying shareholder value (even though the majority of the time the amounts lost are extremely minimal compared to the cashflow/revenues/market cap of the acquirer). New startups are conditioned to believe that a quick flip is viable and that the traditional components of businesses worth acquiring (revenues, profitability, intellectual property, etc.) are less important.

One other aspect of this report that we might reasonably ask: if Confabb just launched and has little traction but has already received a buyout offer of $5 million, why are the founders saying “Let’s sell!” instead of “Wow. We just launched this and haven’t even really started making progress but somebody wants to buy us. Imagine the value of the business we could build if we continue executing on our strategy!”? I’m not naive. Sometimes you take the money and run, especially in a frothy market. It’s a very nice return. But in most cases you don’t make a massive fortune by flipping. Imagine where Sergey and Larry would be now if they had sold Google to Yahoo. A much different place. I think the old stock market adage “cut your losses short and let your gains run” has some application to startups. If a startup that promotes its great potential is willing to sell out so quickly, I think they’re really telling you that they’re not as confident about their prospects as they’ve led you to believe. And the funny thing here is I think there’s potentially a very decent business to be built with the right strategy that would get them more than $5 million.

As a long-time reader and first-time poster on TechCrunch, I’d like to make a few points about ConFabb and some Web 2.0 concepts in general. I will use a website we recently launched, PubsHub, as a counterpoint. (BTW -the similarity of our name and Mr. Ismail’s last venture is purely coincidental.)

Like ConFabb, we track conferences. However, where they are a mile wide and an inch deep, we are narrow but extremely deep. We focus specifically on peer-reviewed medical meetings around the world, and currently provide over 70 fields of very specific information on over 1,000 medical meetings around the world. In addition, we have even more details on almost 2,000 peer-reviewed medical journals. We have a sustainable busness model because we have targeted the people who absolutely need to know this information (aka “publish or perish.”) Our clients include pharmaceutical companies, small biotechs, universities, research institutions, libraries and medical writing agencies. For this, they are glad to pay $4,995 per year because it saves them huge amounts of valuable time in finding, tracking and sorting the ideal place to submit their medical research for publication or presentation.

Our subscribers want up-to-the-minute and accurate information, while the journals and meetings want to make sure that their information gets out to all the researchers out there who are writing up articles for peer-review. Everybody wins.

Yes, we have feedback loops in case users find what they think to be wrong or outdated data. (Does this qualify as “social networking?”) But the same backlash that Wikipedia is now experiencing in colleges and high schools due to “socially edited content” is the same reason that ConFabb, in it’s current form will not work. First, who has time to put this information in and secondly, can I trust it? I either want it from the source or I want it in a centralized, sortable form from someone who has a vested interest in making sure the information is correct and up-to-date. That where we come in.

Call me old-fashioned, but sustainable business models are about finding an audience with a real need, delivering value and making money in return. Hmmm, but then again, maybe I should start a rumor that WE are in play…..

I don’t see it. But, we’ll see!

Here’s a tip for the folks at Confabb - talk to CMP. In ‘94 I created the first comprehensive web-based events directory which I later licensed to CMP. They branded it TechCalendar. Just went looking and http://www.techcalendar.com now 404s. Crazy. Do a deal and re-power it. Good luck…