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I'm not a money guy. I know very little about valuations and stocks and well, pretty much anything that has to do with valuing a company monetarily. Fortunately for me, when I rolled off that ironing board at 6 months old (true story) and landed on my head on the cold linoleum floor in the basement, two things happened....

  1. My father (who was watching me at the moment, and I say watching loosely) has never heard the end of it from my mother, 34 1/2 years later.
  2. All the right-side brain stuff, like math and engineering and handy work... well, that all got knocked out and made more room for the marketing stuff.

At least that's my story anyway. But back to the point.
Today a company called MyBlogLog was acquired by Yahoo! for 10 million smackers. If you haven't used MyBlogLog before, it's a really great tool that combines social networking with other fun stuff like stats for your blog, etc... It's fun, smart and just generally useful.
Of course, the conversations ensued, and thanks to the power of Techmeme I was able to follow them closely. One in particular stood out to me, and that was from a gentleman named Don Dodge, who wrote 'Yahoo acquires MyBlogLog for $10M - Has anyone done the math?'.
Yahoo has acquired MyBlogLog reportedly for $10 million. Does anyone stop to do the math on these things? MyBlogLog started business in July...just 6 months ago, and they have 5 employees. They reportedly serve 45,000 blogs, have 33,000 registered users, and zero revenue.
Valuing startups is an inexact science for sure, but there are some guidelines. Here are a few "back of the napkin" approaches without the benefit of any due diligence or facts.

Don certainly seems right. His argument makes a lot of sense from a financial standpoint (I guess), however, what Don is missing is one key factor that "numbers guys" can't seem to buy into, and that is...
You can't just be cool, you either are, or you aren't.
MyBlogLog didn't get acquired because of the money, it got acquired because Yahoo! knows cool when it sees it, and realized that no matter how much less $$$ they could spend on developing something similar, it would be extremely hard to reinvent cool. The challenge for Yahoo! now is to keep the cool bottled up and fresh.
Don't get me wrong, you numbers guys are smart guys, but every once in a while, walk over to the marketing or branding or web guy/gal in your office/building/neighborhood and ask their opinion first. It's not always about the numbers.

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