Reddit Case Study: How personality impacts product success
written by Nisan Gabbay, posted on April 29th, 2007
Why profiled on Startup Review
Reddit is a social news site that was launched in June 2005. As of April 2007, Reddit is generating ~170,000 unique visitors and 1.9M page views per day. The company was acquired by Conde Nast Publications in October 2006 for an undisclosed sum. Reddit is thus far the most successful graduate of Paul Graham’s Y Combinator program, reaching a successful exit with just four employees and $100,000 in total angel funding.
Interviews conducted: Steve Huffman, Reddit co-founder. Aaron Swartz, early employee/co-founder via merger with infogami.com.
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eCrush Case Study: Why timing the M&A market is tricky
written by Nisan Gabbay, posted on April 15th, 2007
Why profiled on Startup Review
The eCrush network is comprised of several major sites (ecrush.com, espinthebottle.com, and highschoolstyleboard.com) that offer flirting, matchmaking, quizzes, romantic content and social networking type features to teenagers (age 13-19). The sites receive over 1 million unique visitors per month, and rank as the 10th largest dating site in the US according to NetRatings. The company has been profitable since 2002, and generated $1.4M in profit in 2006. The eCrush network was acquired by Hearst Media in December 2006 for an undisclosed sum, rumored to be in the $8-12M range based on my sources.
Interviews conducted: Clark Benson, co-founder and seed investor of eCrush
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YouTube Case Study: Widget marketing comes of age
written by Deepak Thomas and Vineet Buch, posted on March 18th, 2007
This week’s case study was co-authored by guest writers Deepak Thomas and Vineet Buch.
Deepak is an MBA student at the University of Chicago. He previously worked at Oracle for 10 years in engineering and product management roles. He is currently looking for summer internship opportunities at early-stage Venture Capital firms. He may be reached at deepakthomas (at) gmail.com.
Vineet Buch is a Principal at BlueRun Ventures, where he focuses on consumer Internet, mobile services, and enterprise software, and on BlueRun Ventures’ investments in India. Immediately before joining BlueRun in 2005, Vineet co-founded Riya. Vineet authors his own blog, Venture Explorer.
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MyBlogLog Case Study: Product progression and the widget
written by Nisan Gabbay, posted on February 26th, 2007
Why profiled on Startup Review
MyBlogLog was launched as a blog analytics service in March 2005, but became popular by creating online communities around specific blogs. MyBlogLog enables bloggers to connect with their readers on a more personal level by building profiles of readers and connecting them via social networking features. As of February 16, 2007, MyBlogLog had 70,000 registered blogs, approximately 14,000 of which are using its popular “Reader Roll” widget. The company was acquired by Yahoo in January 2007 for a rumored price of $10-$12M. The company was bootstrapped with no outside investors, resulting in a nice payday for its three founders.
Interviews conducted: Scott Rafer, CEO of MyBlogLog
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Betfair Case Study: Target a niche and expand
written by Nisan Gabbay, posted on January 21st, 2007
Why profiled on Startup Review
Betfair is one of the largest Internet success stories that few of us in the US know much about. This is because Betfair is a UK-based company that operates the world’s largest online betting exchange and does not accept bets from US consumers. Betfair completed a financing in April 2006 that set the company’s valuation at slightly over $3B! The financing should be considered a partial buyout, as Softbank bought a 23% interest in the company for ~$600M. That money was used to provide partial liquidity for the company’s early investors, founders, and employees. That lofty valuation is grounded in spectacular financial performance over the last 4 years, as the company grew from ~$10M in revenue in fiscal 2002 to ~$280M in fiscal 2006. Betfair generated ~$70M in operating profit in fiscal 2006, for a healthy 24% operating margin.
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eHarmony Case Study: Offline advertising the key to scale
written by Nisan Gabbay, posted on December 10th, 2006
Why profiled on Startup Review
eHarmony established a new category within an online market that many considered to be dominated by two well-established Internet brands in Match.com and Yahoo. eHarmony was launched in August 2000 with $3M in funding and grew into a rumored $100M+ revenue, highly profitable company in less than 5 years (note: revenue currently estimated at $165M per year). By the time Sequoia Capital and TCV invested $110M into the company in November 2004, it was rumored that almost $80M of the round was used to buy out founders shares. Not bad results for a company in a market that not many VCs would have invested in during 2000/2001.
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iStockphoto Case Study: How to evolve from a free community site to successful business
written by Kempton Lam and Nisan Gabbay, posted on November 26th, 2006
Note from Nisan Gabbay: I am pleased to announce that this week’s case study is the first to be authored by a Startup Review reader, Kempton Lam. Kempton is a management consultant who specializes in assisting start-ups. Please see Kempton’s background and blog for more information. Kempton followed the same process that I take in creating these case studies, and I served as editor to ensure that the format is consistent with the Startup Review format. If you’d like to become a guest author for Startup Review, please contact me.
Why profiled on Startup Review
iStockphoto is both an online community for photographers and a source of high quality, low-cost stock photos. As of October 2006, iStockphoto’s stock photo library contained ~1.1 million images contributed by 23,000+ photographers. In 2006, iStockphoto expects to sell 10 to 12 million photo licenses from this library, at prices ranging from $1 up to $40 per image. iStockphoto’s success opened up a new market segment for stock photography, catering to customers who could not afford traditional, high cost stock photos from the likes of Getty Images and Corbis. This success caught the eye of Getty Images, who acquired iStockphoto for $50 million in cash in February 2006.
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Xfire Case Study: Successfully changing product direction
written by Nisan Gabbay, posted on November 19th, 2006
Why profiled on Startup Review
Xfire provides a free instant messaging service designed for online gamers. Xfire enables gamers to detect what games their friends are currently playing and allows unobtrusive IM communication from inside the game. In May, 2006, Xfire was acquired by Viacom’s MTV Networks for $102M in cash. Launched in January 2004, Xfire now has 5.6 million registered users, with ~300,000+ joining each month.
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HOTorNOT.com Case Study: Mixing free and premium services
written by Nisan Gabbay and Rob Finn, posted on November 12th, 2006
Why profiled on Startup Review
When HOTorNOT first swept onto the scene a few years ago, not many people thought it would amount to anything more than a short-term fad. Even today, not many people recognize that HOTorNOT has a very profitable casual dating service consisting of 500,000 – 600,000 active users. HOTorNOT is making somewhere between $5M - $10M per year in revenue with very little cost since they don’t spend any money on marketing.
I felt HOTorNOT would make for an interesting case study because of how they blend a free, viral service with a premium pay service. This is typically a difficult transition to pull off and HOTorNOT offers some great lessons learned.
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Facebook Case Study: Offline behavior drives online usage
written by Nisan Gabbay, posted on November 5th, 2006
Why profiled on Startup Review
Facebook was launched in February 2004 by Harvard undergrad students as an alternative to the traditional student directory. Its popularity quickly spread to other colleges in the US by word of mouth, and the site now registers close to 15M monthly UVs and over 6B page views per month. Facebook has completed two rounds of venture financing at very high valuations, the first at a valuation of ~$100M and the second at ~$550M (valuations are unconfirmed). These valuations were driven by the multiple acquisition offers that Facebook has reportedly turned down (the latest was a rumored $750M offer). Facebook is already generating significant revenue, so despite all the valuation and web traffic metric hype, it has also established a very real business.
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