The other thing Kevin mentions, along with “new features,” is infrastructure. I have no doubt that Digg pushes a lot of bandwidth, and no doubt uses a few boatloads of server space as well — but almost $30-million? Does it cost that much just to develop some analytics for partners like the New York Times? Of course, Digg also says it’s going to hire another 75 people and move into a new office, which will definitely crank up the old “burn rate” a little bit, as Valleywag notes. Om says he has it on good authority that Kevin Rose pocketed some of that money by selling some shares, and I’d agree with Om that if he did then he should be congratulated for taking the opportunity to make that old BusinessWeek cover a little more true.
To be fair, Sarah doesn’t say that it’s uninteresting; she says that it isn’t newsworthy, because it’s not surprising. And she has a point. Twitter needs to raise money because it doesn’t have a business model, and so it needs some cash to live off — and to use for upgrading its servers, etc. — until it manages to come up with one, or until it gets acquired. And it can raise that money in part because (as Sarah also notes) VCs are desperate to find the next Facebook. If that takes $10-million paid out to Ev Williams and the gang, then so be it.
The question every one wants the answer to, of course, is whether Twitter (or Slide, or Glam for that matter) are actually worth that kind of money. And the uncomfortable answer is that no one really knows — not the VCs who are providing it, not the partners who are raising it, and certainly not Ev or Biz or the people running companies like Twitter. Did Mark Zuckerberg think Facebook was worth $15-billion a year or two ago? If he did, he probably knew enough to keep it to himself, because if he had said so, he would have sounded insane.
To some, the idea that Facebook is worth $15-billion is still insane. But there’s no question that it’s worth something — and given the kind of activity and devotion it has generated, Twitter likely is as well. In the end, a VC has to make a calculated guess that it will eventually be monetizable. And all they can hope is that the times when they’re right eventually make up for the times when they’re wrong.
As Om points out, WordPress is not only a blog platform — it has become one of the default publishing platforms for all kinds of online content, including some small newspapers. As CEO Toni Schneider notes, the hosted version of WordPress at WordPress.com has more than 2 million blogs and is now the number 12 site on the Internet in terms of traffic. And yet Matt Mullenweg, who I met when he came to the very first mesh conference in 2006, is as unassuming as can be — someone who just seems fascinated by what tools like WordPress can produce.
Matt and Toni say that the funds will go to build out the company’s server network and to add new features, including (I’m assuming) the recently announced upgrade of storage space on WordPress to 3 gigabytes. It seems clear to me that WordPress is well on its way to becoming something much more than just another blogging engine. Well done, Matt. TechCrunch reported last fall that Automattic turned down a $200-million acquisition offer, and now I can see why.
It’s one of the larger — and possibly the largest — Series A financings of any citizen journalism site (OhMyNews.com of South Korea did an $11-million led by Softbank at one point, but that was a Series B financing). The round was led by Rho Ventures out of New York, along with previous seed investors Brightspark and Growthworks out of Toronto. NowPublic said that after a road show with about 20 venture funds, it wound up with nine term sheets or expressions of financing interest.
The deal is a major vote of confidence not just in NowPublic, but in the idea of “crowdsourced” journalism or “citizen reporters,” and stands in sharp contrast to the recent closure of Backfence.com, a high-profile citizen-journalism project that had half a dozen local sites.
I talked on Friday with CEO Leonard Brody, who co-founded the company two years ago with Michael Tippett and Michael Meyers, and he said NowPublic is now the largest citizen reporting venture in the world, with more than 100,000 members in 140 countries and 3,800 cities.
Brody said that the company considered the acquisition offers, but “made decision that we felt we could grow this thing” and that it was just too early to sell. The NowPublic CEO said the company is focused on its plan to “build the largest news agency in the world” and that he is convinced they are building what will become “a billion-dollar company.”
NowPublic has 20 staff employees in all, with offices in Vancouver and New York and several employees each in Germany, Hungary and Slovenia. Unlike OhMyNews.com, which has about 50,000 members, NowPublic does not have any professional editors on staff, although a former CTV reporter plays the role of “Actual News Guy” in helping select stories.
NowPublic has also expanded its previous content-sharing deal with Associated Press. Under the original arrangement, AP’s foreign bureaus could have access to NowPublic photos and news reports, and Brody said that relationship has been expanded to include the wire service’s U.S. bureaus.
Brody said the money would be used to expand operations, beef up NowPublic’s technology — including adding more mobile features such as automatic GPS geo-location — and that the company is also looking at compensating members who submit eyewitness news reports, photos and video.
Compensating members of a “crowdsourcing” effort such as NowPublic or even a video-sharing site such as YouTube has been a major source of debate over the past year or so. While Brody said he doesn’t think most members submitting things to the site are motivated primarily by money, NowPublic is thinking about ways of compensating them, monetary and otherwise.
Some NowPublic members have already done deals with AP as a result of items they submitted to the site: a member from Oman who posted photos of a storm later sold his shots to Associated Press and they were used by Yahoo News, Forbes magazine and several other breaking news sites.
Of the Backfence.com closure, Brody said it was “a sad day for citizen journalism — they were pioneers.” But he said that NowPublic has a much different model from Backfence, which focused on “hyper-local” reporting, while the Vancouver site is targeting a global market. Interestingly, Brody said he didn’t see hyper-local journalism as a very good business model, at least not for younger Web users.
“For people 35 and under, hyper-local doesn’t mean anything any more,” he said. “Local weather, news and that kind of thing is a commodity, and there’s lots of places you can get it. We’ve moved from that to hyper-personal news… younger users check their Facebook feed way more times a day than they check CNN.”
Congratulations to the team at NowPublic on closing the deal. It will be interesting to see what kinds of uses they can put that $10.6-million to over the next year or so.
In hindsight, that was kind of a red flag (or white flag, depending on your perspective) about Evan’s intentions toward Odeo. So it’s not that surprising to hear he and some other members of the team have bought out their venture backers and taken the company back in house, renaming it Obvious Corp. And while Evan has taken some flack for blowing it with Odeo and/or not knowing what he really wanted to do when he grew up, like Fred Wilson I think he should be congratulated.
From what details we can gather from Om and others, the VCs who backed the company have been “made whole” (to use the curiously Biblical term favoured by Wall Street types), and now Evan and his team can concentrate on doing more experimental things. Will any of them work out? Who knows. But they should be congratulated for knowing when to change the playbook.