Blog Post Pays $61M to Get into Social Networking

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 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.

14 Responses to “ Pays $61M to Get into Social Networking”

  1. The site for those who love the Italy that you won’t experience on the tour-bus itinerary.

    A social network dedicated to those who appreciate Italy the regional, the seasonal; hidden nooks, funky festivals, the restaurant where the owner is your host, chef and sommelier; the Barista who…..

    Well, you get our idea.

    What’s yours?


  2. “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.

  3. 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?

  4. Michael Camilleri

    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.