I personally think that the "traditional" venture-backed (ie: having raised $10MM+) web startups are going to find acquisitions less rewarding than what they had hoped for.
By and large, there have not been a lot of successful Web2.0 startups that have gone on to acquisitions, and many of those that have didn't really end as well as people would have expected.
IMO, the current and future wave of web startups is the 3 guys in a basement building out an app and selling it for $3MM-$9MM. Maybe they took a little bit of angel money, maybe they boot-strapped it.
In order for a Web/SaaS company to gain real value, they need to be able to have a super-solid revenue model, with a very low COCA (cost of customer acquisition) and customer support/training cost, and TLV for each customer of 5x-10x+ the COCA and CS costs.
Agreed. Part of what I'm wondering is how viable the venture model is when the amount of revenue a category can generate gets quickly reduced from a free competitor that can operate at a fraction of the cost.
That's why I mentioned PlentOfFish. Probably not the best example, but if they are doing $10m as one of the leaders in the category, that doesn't spell a great future for others in the classified dating model. There are only so many of those major categories (like jobs, autos, dating) available.
The other trend is that advertising just doesn't pay the bills, even in mass amounts. I'm familiar with a handful of private companies that are doing millions of uniques per month and can't even pay a modest staff and support cost to stay afloat. The idea in the past was that with enough traffic the ad dollars would pay for free, but even that's not entirely working.
By and large, there have not been a lot of successful Web2.0 startups that have gone on to acquisitions, and many of those that have didn't really end as well as people would have expected.
IMO, the current and future wave of web startups is the 3 guys in a basement building out an app and selling it for $3MM-$9MM. Maybe they took a little bit of angel money, maybe they boot-strapped it.
In order for a Web/SaaS company to gain real value, they need to be able to have a super-solid revenue model, with a very low COCA (cost of customer acquisition) and customer support/training cost, and TLV for each customer of 5x-10x+ the COCA and CS costs.