Revolution Health finally found someone to merge with – Waterfront Media – in a transaction that values the combined companies in the $300 million range.
Our sources say that Revolution Health was valued at around $100 million in the transaction. That comes after burning over $200 million in capital supplied by founder Steve Case as well as celebrity investors like Jim Barksdale (former CEO Netscape), Carly Fiorina (former CEO HP) and Colin Powell (former Secretary of State and Chairman of the Joint Chiefs of Staff).
Everyday Media, which is the primary site under the Waterfront Media brand, is a general health and wellness site with a particular emphasis on popular diets.
Revolution Health has had trouble keeping costs down with around 200 employees and has failed to become profitable despite a rumored $20-$30 million in annual revenue. The company hired Morgan Stanley to shop it around to GE, AOL and WebMD, among others. At one point they tried to merge with Glam Media in a transaction that valued the companies at well over $1 billion.
Revolution Health’s last valuation was rumored to be over a a half billion dollars.
Incredibly fortunate to get valued anywhere near that amount!
Well, they say that is the value, however is not even half that much.
The $200 mill in capital you say they burned… doesn’t Revolution LLC run several different properties?
I know they were giving away a bunch of money for referrals to Revolution Money Exchange awhile back.
What’s their business model anyway? 4M uniques a month… ok… strictly ads???
Ads plus a few other deals that tanked.
Case put up close to $400M of his own cash to start this dud. He believed that he was going to repeat the success of very early AOL –of years ago, but could not understand that times change. This attitude was also partially responsible for his failure and eventual ouster from Time-Warner.
Mike is partially correct with the names mentioned, however, they were mainly members of the board, not investors. The Carlyle Group [and others] invested a lot of money also.
This is a lousy deal for Waterfront Media: what are they buying? a brand from a failed company? Ad deals? Certainly not the content, licensed from sources like the Cleveland and Mayo Clinics, etc.
Unfortunately, it was bound to happen, with Fiorina around…
ok, InsideView, you must be a mental patient, 400m of his own money int what? You guys tend to forget something that when a company raises money, the 100% of that money is not spent the first day.
This company burned at most 70-100m at most. Unless you have seen the financial reports, its almost impossible to say how much they went through, pure speculation.
To gary sinclear — Case did not really ‘raised’ money, he just wrote checks, opened his wallet, whatever you want to call it.
I absolutely agree that ‘money is not spent the first day’ but remember, this company was started by someone with a unique, uber-sized ego, who went after Time-Warner. Just think about the name he chose for the company: “Revolution.”
This is someone that actually believed that he was going to turn the largest, most advanced and complex health information and health care system in the world on its head –just because he wanted to. [Hey, this reminds me of Hillary. Wait! She failed too!]
I am familiar with the financial details; For Steve, money is NOT a problem. I know that he is working on a few projects at this time…
InsideView… You have no idea what in the hell you’re talking about.
PS –There are several other companies in this space that are failing or going to fail in the next few months. Their founders and investors believed [wrongly] that because there are billions to be made in the health and medical field, they would be ’smart’ enough to take a good bite… just by throwing technological ’solutions’ in: EMR [Electronic Medical Records], ‘paperless’ and ‘wireless’ medical practices, clinics and hospitals, etc.
There are few that actually pretend to be the equivalent of the phone books, online, offering only doctor’s appointments scheduling, ad supported, etc.
Another dud is ‘MedPedia’, [still in beta] which will likely crash, because the project is absurdly ambitious: global health and medical information for everyone. Biz model? who knows; could be annoying ads, eventually.
Google and Microsoft have already spent millions on their online personal medical records repository –nothing to show, so far. They will eventually wither or be transformed into something useful.
Marc Benioff and Jeff Bezos just wasted $3M on Zocdos, which will try to facilitate doctor’s appointments in the NYC area –According to a TC comment, the telephone still works for this type of activity…
Why would this site, or any site for that matter, even need close to $100m to get off the ground, running, and profitable.
It’s not easy to fathom how large a sum $100,000,000 really is. With the cost of tools and production practically nothing, the only real expense should be tech infrastructure (and hosting), good talent, and possibly buying your way into some distribution/advertising deals.
How did they burn through all that money?…what a waste…imagine how many fledgling startups could have used an inkling of that to get their ideas off the ground and probably beat them at their own game.
For starters, Revolution has large, very well equipped offices in Georgetown, the most expensive [trendy, fashionable] area of Washington DC. They also wasted unbelievable amounts of money as salaries for the most inept ‘experts’, who, ultimately, were responsible for this awesome business concept: ads would greatly ‘monetize’ the effort [as Steve Case said on the Today Show] plus, lets’ borrow content from the Cleveland and Mayo Clinics, etc. Then, Voila! we will certainly have a super-winner.[NOT].
InsideView, looks like you are not really from the inside. Even outsiders knows Revolution’s office nor Revolution Health’s office is in Georgetown. They are both in Dupont Circle.
i concur
It’s easy to burn through the money, when almost all of their traffic is paid for. They made no progress in getting organic traffic, almost all of these numbers are bought from buying ads on the search engines each month.
Wrong. While it is true that about a year ago a lot of their traffic was SEM, most of it recently was SEO — i.e. cheap — traffic. They actually have better uniques and page views than the acquiring company. The real problem was the lack of a subscriber income base.
Folks, I see a lot of people opining without an ounce of accuracy here. Don’t play the expert if you don’t know the facts.
Theres no need to compare numbers vs numbers, (especially since Alexa is usually always wayyy off), but revolutionhealth.com and techcrunch.com have almost identical Alexa ratings…just going by that, can the TC staff extract their traffic levels?
“revolutionhealth.com and techcrunch.com have almost identical Alexa ratings” –Just remember that TC was ‘valued’ at $89M just a few weeks ago!!! Lol, lol, lol,lol !!!!!!
Seems to me that a pig wearing lipstick is out there ‘valuating’ Internet properties out there… lol, lol, lol
who still uses alexa… this isn’t 1995:
http://www.quan...lth.com/traffic
http://siteanal....com/?metric=uv
or find some comscore data
This is the first sign that Web 2.0 Bubble is cracking. A round-down full ratchet dilution. There will be more coming ………..
agreed that this is a bad deal for waterfront. i think it’s safe to say that the main value that revolutionhealth offers is in the companies its bought itself. carepages for one, is a really cool company that already has a large install base in hospitals and could smartly be leveraged as a trojan horse so to speak, to turn it into a lightweight PHR.
really, though, i think this is more validation for waterfront media. they’re doing a great job.
I don’t use any of their sites. enough said.
Hey InsideView thanks for all the details/analysis.
Do you have color on whether they were getting good CPMs and whether they were paying alot/too much for their content/experts?
So what does this say about Steve Case as an entrepreneur? Are we all still going to assume success with everything we backs after this huge failure?
Can you spell “dot com bubble”! These guys still know one thing extremely well, how to burn through insane amounts of money and try to sell to a bigger fool when the time comes to bail….incredible.
To Reggie –Back in the days, when AOL was hyperactive buying small companies and signing deals with hundreds of advertisers, its approach was always aimed at squeezing hard, trying to get the last penny out of them [a close business associate defined it as getting the deal plus 'a pound of flesh'] –Steve case has carried forward with him a similar ’spirit’ meaning that he has obtained the best money-making deals possible from Revolution advertisers and associates, keeping in mind that his name alone would virtually guarantee a great success for his company; you know, his friends are powerful people with almost unlimited means plus well-known celebrities and public figures such Colin Powell and many others.
Unfortunately, he has not kept pace with significant changes on the Internet, new trends, social networks, and much, much more. Bet he does not know what Techcrunch is… and probably has some vague concept as to what ‘Google’ means, other than the ubiquitous search engine.
In other words, although he has a lot of millions, he has missed the train.
As to the contents, the deals are/were similar in the sense that the sources considered Revolution as another way to get more traffic to their own sites, bringing, in turn, more patients to their hospitals, more income and profit, etc.
To Martin Ringlein — Although kind of out of touch, Steve still is a powerful player. He has diversified his investments and could have [really] retired, in the traditional sense, long time ago. He will try again, but this time, hope that he steps back and, really, try to learn from the always shifting landscape. He would be wise to get closer to the valley and, perhaps start a VC fund or associate with younger minds to start new companies: there are hundreds of new, brilliant ideas out there in need of seed money.
The reason Revolution Health burns through so much money is because of their insane and unresonable adwords campaign. They even advertise on obsecure search terms. What’s the point when you need quality content to keep visitors coming back.
Yes, content is king. It is amazing that so many [apparently] smart entrepreneurs do not get this obvious fact.
First, you have to identify a need [market] –for a service, solution or product, then build your company to satisfy it.
As a crude example, and I am sorry to bring this up, “The Drudge Report” illustrates this crucial point: the site seems designed by a chimp, however, it has been successful for a long time because it addresses the “need” for political gossip.
When “Revolution” was started, the push was to design the ‘best possible’ GUI with a lot of ads –not quality content, mind you. As I quoted before on TC, I was present at one of their early meetings, asking repeatedly to the ‘Chief of Content’ about content quality written by qualified, experienced physicians: one of my points was that if the site/company was started to offer the ‘best’ health and medical information available, wouldn’t it make sense to hire the best medical professionals? [duh!!!!!] –Well, basically I was told to shut up, because the ‘content’ was to be prepared by in-house ‘health’ writers [with NO medical training at all.]
At that point, I realized that this company would be permanently visiting the deadpool. It lasted this long only because of Steve Case’s deep pockets…
Any word on partner Revolution Money Exchange?
This property has not performed as it was expected; it is reliable to a point because it operates under the supervision of the FDIC. There have been several other companies started in the past few years on the online payment space with mostly poor performance –and failure.
PayPal dominates and will do so in the foreseeable future. Again, Case, with a grandiose [largely misplaced] purpose, wanted to dominate the online payment landscape… ["Revolutionaze" --change everything, I know better and I can do better]
Now that the “Revolution” brand has lost some of its luster, its negative effect will be felt by several other properties… At the same time, as I commented before, Case will try again; however, it is reasonable to assume that some of his calls would not be returned this time. AOL is part of history, we would be better off leaving it where it is…
PS: not a surprise, but resumes have been flying out of “Revolution” at an amazing pace…
InsideView
you really dont know what you are talking about. Case was the FIRST ONE to realize the value of GOOGLE. therefore he very early replaced their search engine with the google search engin. not only that , in return he got 3% of google. Not bad. your very long statements plus statement that you bet he doesnt know what is Google, reveal that you are full of hatred and have an agenda. tell us why you are so frustrated ?
I won’t blame Steve for everything. Sure, he wanted to do something grand but its not a bad thing. The speed at which money was burnt was probably the single most important reason for RH’s failure. Much focus was on trying to create value using technology instead of providing useful and in-depth content for which most people visit such sites.
Inept middle and senior management is equally responsible for the failure. Bad sexy ideas were promoted over better common sense (not so sexy) ones and there was no concern over the cost of development or consideration for value added to the company/site. That said, most people who worked there are somewhat responsible for the failure.
Except you, of course. Right?
You’ve got it all figured out, which is why you’re off making billions instead of trolling biz-gossip sites.
“That said, most people who worked there are somewhat responsible for the failure.”
Except you, of course. Right?
You’ve got it all figured out, which is why you’re trying to build industry-changing companies, instead of trolling biz-gossip sites.
Oh, wait …
I am also responsible. And Sorry if I hurt your feelings.I am just giving my opinion like everyone else and can be wrong. But it’s my opinion.
I find it interesting that Glam walked away from this deal and Everyday Health — which is much smaller and relatively unknown jumped at it. In the weeks following the deal, this seems like a good decision on Glam and a poor one for EH.
Why? Both RH & EH drive traffic by spending large amounts of money on keywords- Glam does not spend any. Any of us could show 10M visitors if we spent the money — given neither are profitable, hey are running a dangerous arbitrage business. Last downturn, all these companies went belly up, as there were just not enough ads to support buying low and selling high. Health agencies and brand managers are not stupid to spend money like this.
Glam preserving its cash, and being tighter sounded odd couple of week ago — now sounds wise given the world economy. RH would have been the only part of their business where they would have had to spend money for content and traffic. In their current model, they have stopped minimums and house ads since April — Michael wrote about it. May be they were being careful way back then. Not as good short term for publishers was what it sounded like — now looks like they were acting responsibly, and their publishers may survive. While RH, Federated, Adify, and small network publishers like Travel Ads will have a hard time — or shut down.
How much success can you acheive when you have a big loswer like Don hacket as you starting CEO? He ran Dr. Koop into the land of failure. Plus when you have other senior people who do not know how to peel a banana, what can you expect?
How much success can you achieve when you have a big loser like Don Hacket as you starting CEO? He ran Dr. Koop into the land of failure. Plus when you have other senior people who do not know how to peel a banana, what can you expect?