GeoSign Raises $160 Million For Content Acquisitions

i guess this is good news for all these no-name startups emerging - lol

Is it just me or do the websites in their portfolio look less impressive than something you would expect from a company that just raised $160 million? They’re not the horrific domain parking pages that are everywhere but the sites look like they use off-the-shelf design templates and the content is less than compelling. I don’t know how Restaurantica really even qualifies for the “basic social network” label as there seems to be very little in terms of substantive social features.

yeah, i checked one of their sites and it is full of spam ads. It tried to install something on my PC and it was hard to close it…. like the old days of popup spam.

drama 2.0 , i am with you. geez, who would fund this?????

Drama 2.0 - I just looked at Restaurantica and thought exactly the same thing.

Maybe the lesson here is, enough talking, time to build a website before the money runs out.

My guess is this is just a tax write off for someone.

less impressive! c’mon guys its rubbish. I just can’t believe it how someone gave them $160 million…

maybe they need one more 101 site: FoolingVCs101.com

Ahh, maybe as crappy as those sites are, they actually make money. That tends to be what motivates most investors.

A case of quantity, not quality.

There’s a great interview with Tim Nye here: http://frankschilling.typepad......qa_wi.html

Tim’s a smart guy and he knows how to make money online… I believe he is intent on adding value to the internet, and that the sites they currently operate are just a precursor of what’s to come…

They have already hired 100+ content creators and editors and have several interesting projects underway…

With the traffic they pull, and the IP they own, $160 million is not outrageous… The domain industry is reaching critical mass, and the value of targeted online advertising is increasing steadily… I think AC will look back on their investment in Geosign as a very wise move…

$160 million is a stunning amount of money to be used towards only 3 to 5 acquisitions, especially given the quality and depth of their existing properties. Even if you *can* build super-niche sites for low cost that provide a return, it’s hard to justify raising so much money to purchase them. What’s stopping others from building similar sites?

I’m also not sure how Restaurantica can be called a “social networking” restaurant site, but maybe that’s just bias from running a similar site myself. =)

The money that’s tossed around is nothing. These people don’t cry when they lose money because it’s either not their’s or they have so much they don’t care.

VC money and web investment is about ‘throw and stick’ the more they throw at it, the more will stick somewhere.

Throw $500M, $300M sticks write off $200M and the $300M that sticks may make $3B. It’s gambling plain and simple.

The numbers are just bigger.

Baz

@John

I think the 3 to 5 number is incorrect, actually… According to the interview I linked to, they have 50 - 60 targets…

With Geosign’s recent purchase of Hockey.com and the announcement that they hired a domain acquisition strategist, I would say it’s safe to bet that they will be picking up some premium domains that convert well, are readily monetizable and generate substantial type-in traffic… Their GolfCourses.com domain comes to mind…

It will take substantial capital to pry names like these from the hands of their current owners, but the strategy will pay off in the long-term (if not the short term as well)…

Why is everyone hating?

Won’t they be acting basically like a VC company with the only difference being they will actually use all their portfolio companies to hep each other out? Whether that be with technology or traffic or people?

Like if you had 10 REALLY great sites but all they need was eyeballs to see it and you had one portfolio site already with millions of visitors…use that one site to promote the 10 new ones and hopefully you eventually have 11 sites with millions of eyeballs.

They should go after Odeo!

The “direct navigation” market in my opinion is a very risky one and I’ve seen a considerable number of highly-generic domains that don’t generate nearly as much type-in traffic as you might expect. Try this: when you’re with a friend and you’re by a computer, ask him to find golf course listings online. See how many of your friends go directly to golfcourses.com and how many go to Google and search for “golf courses” (of course, golfcourses.com is on the first page of results, but is competing with other sites, including those paying for AdWords).

Direct navigation companies are betting big that new, less-than-savvy Internet users will find out about the “Internets” and go to something.com faster than existing Internet users will learn what a search engine is and go to Google to find information about “something.”

Unfortunately, most of the sites being developed by these firms have such weak content and such a generic feel that actually getting users to stick around or come back multiple times is a real challenge. Despite the 100+ content creators and editors a previous poster claims GeoSign has already hired, the content on the sites in their portfolio just looks too generic and plain. More savvy users (like us geeks on TechCrunch) will quickly recognize it for what it is: filler content designed for SEO and that directs you to ads.

Is money being made by these types of companies? Absolutely. How much and for how long? Who knows. I do think it’s worth noting that (at least to my knowledge), none of types of firms has ever produced a massive “hit” Internet service. The owner of videos.com didn’t create YouTube. Why not? The owner of photos.com didn’t create Flickr. Why not? Firms like DemandMedia in particular are hoping that they can create a large network of social media sites (”millions of MySpaces”) simply by plugging a generic social platform into a generic domain name but what they’re lacking is probably the most crucial aspect of success: passion. Nearly all of the people who have started the startups that have captured our attention in recent times were passionate about the product they were building, built it to meet a need they had (or to serve a group they were a part of) and have created a brand around their active participation in the business. From Kevin Rose to Mark Zuckerberg to Tom (even though he was more of a marketing front), you have people who, at the very least, appear passionate about what they’ve built and who are really involved with their communities. On the other side, you have companies like GeoSign and DemandMedia that think that with enough money and “professionals” they can create a social media Death Star that will take over the world. I, for one, won’t be holding my breath.

Question: do anyone of you think these sites generate more profit than if the investors took their 160 million and invest it in a money market account that returns 5%? Etrade has such an account.

Let’s calculate: 5% annual return on 160 million = 8 million a year. Do you think after deduction all costs, that these stupid sites generate 6 million in profit per year, total? I doubt it.

The above said ‘building social networks around sites’ with the keyword there being building. I do not think any of them would call the restaurant example a social networking site yet but I am sure they are building on it. It actually has a fair deal of review content already for such a simple setup.

The gizmocafe.com video content is also very funny stuff.

The acqusiation of sites like mediarati.com, veetube.com and bazah.com will should be considered as this site’s show hugh potential building them up as social media.

If you read the article its obvious this guy’s business plan is one-dimensional. The language he uses is pure generic domain hosting. He doesn’t talk at all about stickiness or user experience, and the only tech he hypes has to do with auto generating content on pages. The only value he sees is in the inherent value of the domain name itself. I’m not even sure this deserves to be on TC. Having said that, how profitable are these generic/typo domain landing pages anyways? Anyone know?

I’d love for google to come out with a link voting feature just so people could ‘digg’ down these landing pages.

I have a client who owns a very competitive keyword domain (i.e. keyword.com). His type-ins alone net him almost a million a year. There is a huge market for type in traffic.

Geosign makes much more money then any of you dare to imagine. Do some digging and you’ll see what I mean.

The fact that they don’t know the difference between social networking and user generated review content would scare the hell out of me if I were their investors.

I’m sure geosign is making more than some small countries but it doesn’t mean it is 1. sustainable or 2. that they don’t have the talent or the drive to take it any further than those 2003 websites (mostly) in their portfolio or 3. sustainable or 4. sustainable.

What happens to these direct navigation, generic keyword, parked domain sites when PPC advertisers put enough pressure on Google and Yahoo! to stop syndicating ads to these non-search sites? Believe me, PPC advertisers are starting to notice where their ad spend is going. This distribution fraud (syndicating search ads to non-search sites such as parked domains) is actually a bigger problem for PPC advertisers than click fraud.

I think that eventually either the PPC option will disappear for parked domains or Google and Yahoo! (or somebody else) will build a separate advertising network for parked domains. Either way, this will result in either zero revenue or less revenue for these kinds of sites.

As long as the traffic is targeted and converting, PPC advertisers will be perfectly fine. Advertisers don’t care if a user spends 2 hours on a site like techcrunch or 2 seconds on a lander page.

Even if there was a decrease value to the advertiser, this would be already built into the cost…the beauty of the auction system.

Calling Restaurantica a “social” site is quite a stretch, but I am impressed by it. Restaurantica started in Ontario, and it’s hands down the best way to find a good place to eat around here. I go there first whenever I want to eat somewhere new, and I always see that number of reviews growing. 30,000 reviews? I remember when it was 1,500 and that wasn’t very long ago. They really have something special - now if they add some more sophisticated Facebook-like features, it will be even better.

Are they cash flow positive?

This company, via it’s arbitrage component, has generated as high as $5M/month in EBITDA. Equivalent of $60M US / year… Try generating that with your 5% interest you bonehead.
The only way you get $160M to invest in any company is by being a little smarter than the average schmo with money in the bank.
Doesn’t mean it is risk free, but pretty impressive little model regardless. And they have only a minority investment at $160M… wish I had come up with this model…