Queen of Green: 5/8/11

Wednesday, May 11, 2011

Press Release::Facebook Will Be A $1 Trillion Company

Kevin Ryan

NEW YORK -- Facebook is going to be a $1 trillion company, as measured by valuation, once it really starts monetizing its platform, says Kevin Ryan, CEO of Gilt Groupe.

Ryan is also the cofounder and chairman of Business Insider, so standard disclaimers about conflict of interest apply to this post.

We pulled Ryan aside at the SAI Startup 2011 event to get his thoughts on the tech industry, and the competition for Gilt that's coming from Amazon.

He admits that Amazon is an intimidating competitor, but he says Gilt's advantage is that it is focused singularly on the flash-sales business, while it's a side project for Amazon.

Ryan's company just raised $138 million at a $1 billion valuation, so he's got money in the bank to fight off Amazon.

Since he just pulled in a big valuation for his company we got his thoughts of the current market for startups. He says there is, zero chance we're in a bubble.

We also tackled Google and Microsoft's future. You can hear our full interview in the clip below which we recorded in the lobby of Startup 2011.

Kevin Ryan is CEO & Founder of Gilt Groupe. He is a technology innovator and entrepreneur. Prior to Gilt Groupe, he was CEO of DoubleClick and helped build the interactive ad giant into a multi-billion dollar global industry leader, which was ultimately acquired by Google in March, 2008 for $3.1 billion. Kevin is also chairman of Business Insider.

Queen of Green is a global green cooperative brand,a network of green stakeholders from 29 diverse sectors who share a common goal of transforming their world. We unite 29 stakeholder groups to cooperate and collaborate to implement 14 Socialdevelopment Programs that will improve the quality of life for 200 million of the world's poor. Ambassador Hope developed the new Foreign Empowerment Policy for President Obama, Organizing for America and the G20 leaders. Ambassador Hope has developed a Social Investment Portfolio of 14 programs to empower the poor in 70+ countries. She passionately believes in empowering the talent and skills of the poorest of the poor to become green and sustainable. By integrating the development process to ensure energy, food, and health security is combined with education and micro-enterprises for economic security it is possible to mobilize millions of citizens to be the change they want to see in the world.

Press Release::Groupon Wants To Go Public NOW

Groupon was about to file to go public this week, sources tell AllThingsD's Kara Swisher, but their bankers held them back because they were going to do it without all of the necessary paperwork, financial modeling, etc.

So, if Swisher's sources are right, Groupon wants to go public as soon as possible, sooner than previously anticipated. Most people were expecting a Groupon IPO in the fall.

An IPO is a complicated process. There's a fair bit of bureaucracy involved, and that's only the beginning -- after that you have to go with your banker to meet a bunch of institutional investors who have to agree to buy your stock so the IPO doesn't flop. But a filing could happen at any time.

That being said, Groupon is almost sure to be one of the hottest IPOs. It could go public at a $25 billion valuation, which would make it a bigger IPO than Google.

Press Release::14 And 116: These Two Numbers Explain Why Microsoft Dropped $8.5 Billion On Skype *

The big news yesterday was Microsoft's acquisition of Skype for a striking sticker price of $8.5 billion.

Most people stopped at the price, expressing surprise that Microsoft could spend so much money for a company that had recently been spun out at a $2.5 billion valuation.

But here are two numbers that explain the logic behind the deal: $14.7 and 50.

What do they mean?

$14.70 is what Microsoft paid per user for Skype, according to Atomic Inc. When eBay bought Skype back in 2005, they paid $45.60 per user. So Skype's price went up, but its price per user went down. Another way to look at it is that when Microsoft invested in Facebook at a $15 billion valuation, a move then viewed as an act of desperation and now recognized as a masterstroke, the social network had less than 100 million users, which works out to more than $150 per user. Comparatively, Skype is a bargain.

116 is the number of days until Microsoft makes the money back in operating cash flow. Microsoft had $26 billion in operating cash flow last year. So $8.5 billion works out to around 116 days of cash flow for Microsoft. That money would have been rotting on the balance sheet anyway. Given the possible synergies between so many of Microsoft's products--Windows Phone 7, Kinect, Lync, etc.--that's cheap. Of course, it's all up to good execution whether those synergies can be accomplished, but even the option on them is worth that kind of money.

Press Release::Ballmer Would Not Let Skype Shop Around For A Better Deal

Steve Ballmer oversaw Microsoft's $8.5 billion Skype bid himself, and insisted that Skype sign a "no-shop" clause to keep it from soliciting other bids, according to Bloomberg.

Microsoft was already negotiating a partnership with Skype when Ballmer talked to Windows and Office execs and heard enough to convince him to launch a takeover. In March, he sent CFO Peter Klein to make an unsolicited buyout bid from majority Skype owner Silver Lake Partners.

Skype's starting price was $7 billion -- that's how much the company expected to get from its IPO.

Throughout the talks, Microsoft's negotiators insisted that Skype was not allowed to shop the company around to other bidders.

So Facebook and Google never had a chance.

The companies agreed on the $8.5 billion price in April but didn't sign the deal until yesterday.

Press Release::LinkedIn Sets Its IPO Valuation Above $3 Billion

LinkedIn CEO Jeff Weiner

LinkedIn has set its price for its IPO, MarketWatch reports.

The company will be raising $271 million at a $3-3.3 billion valuation. It is pricing at $32-35 per share with 94.5 million shares outstanding.

LinkedIn reported revenues of $161 million in the 9 months to September 2010 and expects to be unprofitable in the next few years, according to its IPO filing.

Press Release::Microsoft Has Bought Skype For $8.5 Billion

Microsoft has bought Skype for $8.5 billion in cash, Anupreeta Das and Nick Wingfield of the WSJ report.

The deal was concluded late Monday evening.

It is the biggest acquisition Microsoft has ever made.

The price tag is silly on a stand-alone basis, but the deal could make strategic sense for Microsoft: With the rise of Facebook and Gmail and Apple, the company has lost its dominance of online communications. Although Skype's functionality is now a commodity (Microsoft has services that offer the same functionality), Skype's user-base and "social network" are not. If Microsoft can successfully integrate Skype with Exchange and Microsoft's other communications tools (including Windows Phone 7), it would give users more incentive to stick with its products.

And $8.5 billion is chump change for Microsoft.

The deal is a nice flip for Silver Lake, Andreessen Horowitz and other firms that bought 65% of Skype from eBay at a valuation of $2.75 billion two years ago. It also puts $1.9 billion in the pockets of Skype's founders. And eBay shareholders, who still owned 35% of the company, didn't do badly, either. (eBay ended up making nice money on Skype.)

Om Malik has a good analysis of why Microsoft is buying Skype and what it means for the rest of the industry, including Facebook.