“The company that grew out of business.com — a search engine used by businesses to find products and services — is now on the auction block, and could fetch anywhere between $300 million and $400 million, according to people familiar with the matter. Closely held business.com is expected to attract a host of interest from the likes of media companies such as Dow Jones & Co. and New York Times Co., these people said. Requests for comment from Business.com and the New York Times were not returned yesterday evening. Dow Jones, publisher of The Wall Street Journal, declined to comment.
While the coverage today is focusing on the domain name and the search-engine, it should be noted the company recently launched a “user-generated-content” component of the site called “work.com” — a very wiki-like platform. I might add, work.com seems very influenced, to the point of flattery, by an approach and ethos of the first iteration of SmallBusiness.com — an iteration that was retired in 2002. (I’m in no way suggesting work.com is a knock-off, merely that it follows much of the same spirit and approach of the 2000-2002 version of SmallBusiness.com*.)
The “work.com” part of business.com is, to me at least, the most compelling aspect of the site. Almost everything else you can find on business.com is standard data licensed and aggregated from third-parties. And while the search functions are impressive and have been honed through years of work — while most people thought they were out of business — the site’s business model has appeared to depend greatly on a form of advertising arbitrage that buys traffic from other search engines and resells that traffic to advertisers — at a higher rate. (Note: I am not implying that “arbitrage” is in any way an inappropriate business model in this case. It can be in other cases, i.e., splogs that carry Google ads. However, in their case, Business.com is adding value to the search by narrowing its focus to business-related websites, resources and products. Also, if someone from Business.com wants to challenge my suggestion that advertising arbitrage is the key to a significant portion of their revenue, I will be glad to add that clarification to this post.)
[Update & Clarification: As the coverage of this news on the tech-blogosphere has been heavily dominated by the suggestion that what is in play here is a domain name for $300+ million, I feel more compelled to point out that, despite it’s snarkiness, Nick Denton at least understands what the business value of the strategy the folks at business.com have followed. As I noted, the arbitrage business is scalable and profitable. The “user-generated-content” portion of the strategy — work.com — adds a component of “social” and “user-generated-content” to the site that is, no doubt, contributing greatly to the SEO, link-pulling mojo of the site. In other words, like it or not, there’s a business at business.com — not just a domain name. Also, Om Malik explains other assets that go far beyond the URL that Business.com represents, primarily the affiliate relationships, etc.]
My main point is this: It’s not a URL they are trying to sell for $300-$400 million. It’s technology, traffic and a proven and scalable business model that is currently generating (according to the report) $15 million in profit — and some traction in showing they have a model that will attract engaged “participants,” not just one-off “users” or “searchers.”
That said, I will note it’s an incredible brand/URL for the right purchaser — and I hope Jake and Sky receive a massive boat-load of cash for everything they’ve put into it.
*Background and disclosure: Hammock Publishing today owns SmallBusiness.com, so one might assume I’d like to perpetuate the myth that the news today is all about the value of a URL. (Granted, it has quite a bit of intrinsic value, as a Google search for the term “small business” will display.) From 2000-2002, SmallBusiness.com was owned by another venture that I and others invested in. That venture failed. Its failure was a classic, poster-child dot.com bust story. It sucked. It was, without a doubt, the worst experience of my professional — and in many ways, personal, life. After archiving the content of that earlier iteration of SmallBusiness.com for three years, I launched a wiki-platform small-business knowledge base on SmallBusiness.com last year. The site is an avocation, passion and laboratory at this time. But, hey, I’m an entrepreneur, so go figure. Another disclosure: I’m a long-time fan of Business.com founder Jake Winebaum, from his magazine entrepreneurship days and of Work.com and Business.com editor Daniel Kehrer, who I knew in his magazine-editing days and later. (More about the history of SmallBusiness.com here.)