Plaxo for Sale

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Plaxo For Sale?

By: Jordan McCollum
2008-01-04

Rumors seem like more than just rumors when theyre printed by the New York Times, dont they? Well heres one that you can judge for yourself...

...Plaxo is for sale. The news comes from people who were briefed on the [upcoming] auction.

The company has yet to turn a profit, but seems to think its worth $100 million. With 15 million registered users, the company may be being a bit modest with its valuation. Facebook, after all, thinks its worth $10B (and thats on the low side). With just under four times the registered members, a price tag of $2.5B would at least not be the most outlandish thing weve ever heard.

Or, to use another measure, two years ago when Rupert Murdoch acquired MySpace, they paid $580 for about 30 sites, including MySpace (allegedly $327M of which was directly for MySpace, which had 22 million members at the time). So on the conservative side, they could be asking about $220M.

But theyre not. And why not? Two reasons: theyre not growing like either of those companies (and may not ever). Theyve been around since 2001 and have yet to see the hypergrowth period"and headlines"that larger social networking sites. This is probably due, at least in part, to the fact that theyve never aspired (until recently) to be anything more than an online Rolodex.

The second reason: theyve never turned a profit. Facebook, even before Project Beacon, stood to bring in some $150 million last year. Plaxo, not so much.

So what would you pay for a potential, up-and-coming social network"and what would you do to make it profitable?

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About the Author:
Jordan McCollum is a staff writer for the popular marketing blog Marketing Pilgrim. She has worked in search engine optimization with clients including 3M, Little Giant Ladders and ADP. After graduating from Brigham Young University, Jordan joined the SEO copywriting team at the Internet marketing firm 10x Marketing. After 10x closed its doors in December 2006, Jordan became a freelance writer and Internet marketing consultant specializing in SEO. She also has extensive experience with web analytics, conversion rate enhancement and e-mail marketing.


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