Selling Out

Originally published on Signal vs. Noise on January 21st, 2006

Jason’s earlier post on “Building to Flip…” got me thinking about some of the emails and calls I get on a regular basis from people ready to flip their flop. These offers seem to be eerily familiar lately, with something like: “Since launching our site x-months ago, we have been featured on a number of blogs and we are: a. almost as big as (according to Alexa); or b. growing faster than Flickr did during its first 6-months. We thought your company might be interested, as we have already fielded offers in the single-digit millions from other large companies. We would be interested in speaking with you, but need to speak this week as things are moving quickly on our end.”

I swear that I have searched to see if there is some blog or “how-to” site somewhere where they find this repulsive language for their pitch because it is so familiar. So here’s the deal, I bet I’m a lot like other corporate development folks in the industry. We love getting contacted by entrepreneurs who are interested in combining with our company because they like what we do, and they see selling to us as the best way to grow their business and keep their users happy. They contact us because they see that the combination will enable them to have more resources and help overall, therefore the combination enables us to build something great together. But launching into a “hot pick-up line” basically kills the conversation before it starts. Seems obvious, but I guess not so much when you’re blinded by the $$. To be clear, I don’t think starting a business to increase your personal wealth is a bad thing. Whether staying independent or selling out, your going to have to make money somehow- so it had better be a motivating factor. It’s just that having a real passion for your product and users is far more attractive to a potential buyer.

In my experience, these are the things that motivate me to take interest in young or “pre-profitable” companies:

  • Small, talented teams where each member can do “a little of everything”. Essentially entrepreneurs where the team are more “doers” than “managers”.
  • Talented engineers that are great product people. These people blow me away.
  • A feature (which is often the whole product of the company), that combined with one of our products, can immediately increase usage and revenue for both entities.
  • A product with tremendous growth potential in need of resources and a business team to increase revenue.
  • Users: You need them, and they need to LOVE your product.
  • A team who sees combining with our company as the best path to achieving their bigger company, personal or product goals.

Trust me, it is hard to fake these traits. Eventually your flip strategy will be seen through, and it will either blow up the deal or significantly decrease the value of your company in the eyes of the acquirer.


Originally published on Signal vs. Noise on Deecember, 7 2005

As promised, many of the posts I’ll do this month will discuss my experience with the M&A process, specifically at CNET. I’ll start with a real world example by announcing CNET Networks’ acquisition of dating site today.

Over 6-months ago I called Ben Brown of to see what was happening with the site, and understand why he felt the world needed a site for “hot nerdy girls and indie rock boys with glasses”, and if the site was successfully delivering on its promise of helping people “meet interesting people”. I will tell you, I was a little nervous about the call, because looking at Ben’s Consumating profile, he describes himself as an “Internet Rockstar” and there’s a picture of him licking Malcolm Gladwell. These are usually the tell-tale signs that the entrepreneur is a complete ego-maniac or a bit crazy. Anyway, within minutes of talking to Ben, I realized that he has a great combination of confidence, experience and a fantastic sense of humor that immediately makes you like him. The rest of the team felt the same way after meeting him. We knew he would be a great fit for the organization. More importantly, he truly cares about the Consumating cause, and making sure the people who sign up for the site find a cool place to hang out and actually meet people. Consumating is about something, and something he cares about a lot – helping people meet people where they can make a meaningful relationship around the things they like, not just the statistical matching of their profile.

So why did we buy Talent, brand, content and community. We truly believe that Consumating has the ability to be a fantastic brand for our 18-30 year old audience, and both our users and marketer customers will receive great value from the community experience. CNET cares very much about these traits, and we always try to find the right combination of talent, brand, content and community in each of our businesses- whether built or bought. Over the last few years, you may have noticed that our brands have really embraced their audience and increased the level of community offerings in their sites (See:, Gamespot,,,, Webshots,, for examples).

So this is a little insight into why we have bought a small, innovative company in the dating and people connecting space. You will notice that there was no mention of tagging, Web 2.0 or other hype, er, feature-based items that drove this purchase. has these things, and uses them very effectively to create a unique (but easy) way to find new people. How many other sites can help you find girls into comic books, PHP and Wilco in the Chicagoland area this easily? The point is that Ben created something of value for his users, and we valued that. I believe Ben would tell you that he chose CNET as a home for Consumating because we can help him scale, give him more resouces and help him nuture and grow the brand and the community. Short version: our visions lined up, and we believe Ben and team are the right people to help us deliver on it.

Please check our Ben’s message about the acquisition to his users here. Look forward to your comments.