Wednesday, September 29, 2010

Why TechCrunch Was Acquired by AOL...

Yesterday it was announced that the popular technology blog, TechCrunch, was being acquired by AOL for a reported $25 million.

A few observations...

First of all, if TechCrunch, which receives about 3.8 million hits per month, and turns a profit of $3.5 million annually, can be valued at $25 million, then that's a pretty good barometer to use for valuing websites in general, and blogs more specifically. After some detailed calculations, I have determined that The Nerfherder is not quite there yet :-)

Second, it's almost surprising to hear that AOL is still alive. What have you heard about them in the past five years, really? Their latest plan to stay in business is through acquiring media companies, like TechCrunch and Engadget, hoping to turn a profit through advertising. Even if you're not skeptical about their chances for success in that enterprise, you have to admit that they joined the ranks of the irrelevant quite a while ago.

Third, Michael Arrington, TechCrunch's founder, illicits a mixed emotional response here. On the one hand, you've got to give the guy credit for starting up a website from scratch and cashing it in for $25 million within only a few short years. He's living the dream. On the other hand, his public statement about how he sold TechCrunch simply because AOL has top engineering talent and that he wanted to be focused on writing, and not be distracted by the engineering challenges of maintaining a website, is so phoney-baloney that you have to roll your eyes a bit. Is anyone in their right mind really expected to believe that nonsense?

I have a sneaking suspicion the $25 million played a bigger role in his decision-making process than his statement leads us to believe, and that he didn't sell TechCrunch to AOL simply for engineering help, or for The Greater Cause.

But good for him, nonetheless.


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