We know Plaxo is for sale, presumably looking for north of $100 million and telling people around Silicon Valley that they’ve had an offer for north of $200 million. Revolution Partners, an investment bank, has been pitching them to all the big potential buyers.
There are now more rumors about the acquisition; specifically that Facebook is the buyer. VentureBeat is saying they have a source confirming the deal is “100%” happening. Our sources (and common sense) say its very unlikely any offer has been made, let alone accepted, and that Facebook may be just one of many companies taking a look at Plaxo.
Let’s look at the numbers. Plaxo reportedly did around $5 million in 2006 revenue, doubling that to $10-$12 million in 2007. 2008 projections are $20-$25 million. The company has just 1.8 million worldwide visitors per month (Comscore), less than 2% of Facebook’s 100 million monthly visitors. At current growth rates Facebook is adding around 10 million unique visitors per month. Putting this deal into perspective: Facebook grows a Plaxo every six days or so. And Comscore says 25% of Plaxo visitors are already coming to Facebook anyway.
Plaxo’s users also visit the site infrequently compared to Facebook users. Facebook’s 100 million visitors generate 42 billion or so monthly page views. Plaxo sees just 11 million page views per month, a tiny fraction of that. As an aside, Facebook generates the equivalent of a month’s worth of Plaxo traffic every 10-15 minutes.
Why would Facebook part with the rumored $200 million for a service that is so relatively small?
Crazier deals have been done, but this one isn’t happening (yet). Plaxo is a valuable property. It has a large professional social network and a great new product in Pulse – the sort of anti-Facebook news feed in that it pulls stuff from a variety of social networks instead of just Facebook. But it’s value will be greatest to someone that doesn’t already have those assets. Facebook does.