Career site Monster Worldwide has bought social networking startup Affinity Labs for $61 million in cash, the two companies said today. A jobs site getting into business networking makes a little more sense than, for example, Cisco buying Tribe.net and Five Across, but the purchase price seems rather high. Affinity was just getting off the ground and had raised only $6 million from Mayfield Fund and Trinity Ventures.
Affinity Labs’ products consists of seven recently launched sites aimed at various professions, among them the informatively named NursingLink, PoliceLink and ArtBistro. None of them are seeing traction yet — VentureBeat reports fewer than 500,000 visitors per month in total.
Update: The company contacted us to say it has 800,000 visitors per month and about a million registered members. Affinity CEO Christopher Michel contended that the acquisition price was appropriate given Affinity was generating “not a small amount of revenue” through highly targeted advertising including email newsletters and lead-generation. He also pointed out that Goldman Sachs released an analyst note praising the acquisition. At the same time, shares of Monster hit a two-year low today due to forecasted online recruitment declines.
There is some history here — Monster was already providing advertising to Affinity and Affinity was giving Monster account holders access to its sites. Further, Affinity CEO Christopher Michel had sold Military Advantage, also a Mayfield investment, to Monster for $39.5 million in 2004 after raising $31 million in funding, so maybe the shareholders were able to defer a better return to a few years later.
At last check, shares of Monster (MNST) were down $1.14 at $27.79.
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2:10 PM PT
[...] Om has the full scoop. [...]
6:30 PM PT
[...] in 1999, sold it to Monster.com in 2004 for $40 million, then founded Affinity Labs, which he sold to Monster for even more — $61 million — earlier this month. Talk about outcomes. Congratulations, Chris! No comments Share/Send Topic: Case Study [...]
7:41 AM PT
[...] communities. Founded in 2006, the company was backed by the Mayfield Fund and Trinity Ventures and acquired by Monster Worldwide (Nasdaq:MNST) in January for $61 million in cash. Military.com, the nation’s largest military membership organization, connects its over 9 million [...]
8 comments so far
1:05 PM PT
A curious move and expensive gamble. It’ll be interesting if the offering turns out to be more like the success of LinkedIn or the circus that is Jobster.
10:22 AM PT
Joel C why do you say LinkedIn is a success? I would like to know how they are doing regarding recruiting revenue etc…
2:02 PM PT
Joel C I agree with Tom S. LinkedIn is about as far from a success as you can get. It’s a boring database where you can apparently easily have 37500 contacts in your network without even knowing most of them!
Liz, the maths are simple. You cannot say $61 million was an expensive purchase price until you know what % equity the investors got for their $6 million injection. If they got 10 - 20 %, that’s perfectly valid.
10:11 AM PT
In my opinion; this move is a bit aggressive for Monster. They already have a user base and access to a pretty large pool of jobbers and employers.
Can anybody tell me why they paid such a premium for what they could have created in a short period?
11:11 PM PT
“Can anybody tell me why they paid such a premium for what they could have created in a short period?”
Because they couldn’t have. Unless you are driven by love for the thing or a desire to be bought or ideally both, building these things takes forever, especially in larger organisations. The purchase price must be a combination of (1) buying out the staff there who are probably exceptionally talented and motivated (at least before the purchase of their startup) PLUS (2) paying for the existing user base PLUS (3) real and projected revenues.
2:25 PM PT
with the exception of the jobs.com purchase monster has a knack for ignoring fundamentals and chasing extravagant strategic goals
6:39 AM PT
here is a summary of monster.com and careerbuilder.com activities in the niche job board markets - (link)
2:50 PM PT
I am surprised no one noticed that there were rumors floating around the week after the Affinity acquisition that Murdoch might buy Monster. In which case, Monster would have been quite anxious to show that it had the social networking sector covered in an attempt to make a Murdoch acquisition more exciting.
(link)
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