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Summary:

Update: The Meebo funding and the likely exit strategy has sparked off a great debate. Dare Obasanjo has penned, Flipping Your Start-Up 101. “If you are building a Web startup with the intention of flipping it to one of the majors, only three things matter; technology/IP, […]

Update: The Meebo funding and the likely exit strategy has sparked off a great debate. Dare Obasanjo has penned, Flipping Your Start-Up 101. “If you are building a Web startup with the intention of flipping it to one of the majors, only three things matter; technology/IP, users and
the quality of your technical team,” he writes. Don Dodge extends the argument. “If the company has market leadership in a new product space or market segment than the valuation goes up significantly,” he writes. Will Hsu takes a different take and says I lack imagination, and writes, “Meebo has essentially created a persistent connection/relationship with their users.” Greg Yardley, another one of new favs says, “why go with a zero-revenue model that’s going to be sold for $50 million tops when you could pick a business model with the potential to generate some really, really serious cash?” Example, Price Grabber. Paul Kedrosky splashes ice-cold water on the whole conversation and adds, “If you are building a startup solely with the intent of flipping it to one of the majors then you are playing Russian roulette using a gun with five full cylinders, and one cylinder containing a bullet that flits in and out with 50% probability.”

(The original Meebo report in the extended entry!)

For a while, the word on the street has been that Meebo, barely 13 weeks old has been out raising some cash. But did they? Apparently yes! The amount of money they have raised is $3.5 million, at about $9 million pre-money valuation from Sequoia Capital, and Roelof Botha has joined the company’s board. The company has been growing pretty rapidly, about 250,000 logins and 7 million messages as of yesterday, and the Meebo Musketeers have built a good platform.

Now for the tough part…There are a lot of questions about the business model here, and well, it remains to be seen how it pans out. Paul Kedrosky, who is a little cranky today because of a cold does post a good question:

You’re not going to charge, so it has to be ads, does it not? Among other issues, how is running ads alongside someone else’s IM service any more acceptable that Google running ads alongside someone else’s news content? Or is Sequoia just funding them — assuming they’re funding Meebo at all, which I still find doubtful — as a pure flip to acquisition exit?

Here is the rub: Since the company basically aggregates all four major IM networks in a browser, all the four major IM owners – AMYG are out of the acquisition game. One of them buys the company, the others shut down access to their respective networks. The very quality that makes Meebo attractive to end-users will make it difficult for them to be acquired. But there is one option: eBay. When all fails, you know who to call. Skype did. Interactive Corp is another long shot, but they are bargain hunters not premium payers.

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  1. Just playing here… What about CNET?

  2. Meebo is more than “barely 13 weeks old”. They launched their product 13 weeks ago, but worked on it for many months before that and on a previous version of it as far back as 2 years I believe. They’ve earned their current success, and I think that they’ll build an interesting business.

  3. Maybe someone can help me because I just don’t see what is so great about Meebo. Sure they are the first web IM to offer all major services. Is that a big deal? What else is there? AIM and ICQ both have much much better web clients. Check out AIM Express. I’d bet Yahoo and MS do as well.

  4. Sounds like they got alot of cash raised quickly should be interesting to see what they put it to.

  5. Jake,
    Its different from AIM express or others. For one everything is served over single browser window and its works like a desktop IM would. It has some rough edges but the idea is very good.
    Rgds,
    Venkatesh

  6. Cortland Coleman Friday, December 16, 2005

    I read an article (over 4-5 months ago) that stated many of the soldiers overseas use meebo on their GI computers. Extraneous software downloads (IM clients) are not allowed on their machines, so a service like meebo allows the troops to stay in touch with friends and family back home.

  7. For those who question the business model, if they have users, and can serve ads, they can find a payment for AOL, Yahoo, and MSN that will work for everyone. Furthermore, by capturing that audience, they will be able to develop other add-ons, products, and services that would allow them to serve lots of ads, not even on the meebo page but on ancilliary apps and pages.

  8. There is one reason why meebo is working well right now, and that is because all of the people in schools, offices who are behind a blocking proxy cant get their IM fix without meebo because it has all been blocked (inluding the web editions of MSN and AIM (yes they exist, thus they don’t need meebo).

    This will all fall apart when the proxy server catchup and start blocking meebo the same way they block the other online IM providers and meebo will lose the 50%+ of people who use it because they have no other method of access.

  9. “Its different from AIM express or others. For one everything is served over single browser window and its works like a desktop IM would. It has some rough edges but the idea is very good.”

    Venkatesh – are you saying AIM Express and others should open a big wide browser window so the IMs forms can fit? That is certainly not the IM experience I want.

  10. We did a podcast with Meebo’s founders 2 months ago. You can check it out here: http://www.minorityrapport.com/2005/10/im_today_webdes.html

    Thanks,
    Doug Sherrets

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