TekChakra.com

The news is in.

I nearly fell off my chair.

Then, I ROFL (rolled-over-the-floor-laughing).

Firstly, a big congratulations to the Pahwa guys for striking this deal. Secondly, HT - if you want to get into the dot com / online media space - try to be a little more wise.

1. You should never have paid $10 million for DesiMartini.com. Its probably worth one-hundredth this price. Yes, you heard that right.

2. Do some “independent” research on traffic figures you’ve been fed.

3. A member base of 250,000 is nowhere close to what you should have got for the price you have paid.

4. Study your other options more. Do more R&D. Hire outside consultants to do this R&D for you. Honest people who know what is happening. Do your homework (the right way).

5. You may have a lot of cash as a group to burn -but sincerely try not throwing away hard earned money of other people in your group.

6. This investment is probably going to be a waste - and you’re not going to be able to cash in or recover it for at least 10 years - although i predict a closure of the site, not very far away.

7. The site does not even have a revenue model in place (other than the obvious advertising model). They claim to get 2.5 million page views per month (highly debatable… as after I used my stealth techniques to check, I get a figure of around 750,000 page views at tops). So, given that they do 2.5 mill page views per month - thats about $5000 revenue at max coming in with a $2 CPM rate (taken on the higher side).

8. Finally, lets do a little bit of basic math here. $10 million for 250,000 members is $40 per member. (assuming that these are active users / members and also not bogus entries). Now, if I were to build a similar site from ground up - it would cost me around $5000 tops. (given that I would outsource it to India, and not end up purchasing a similar ready-to-go social networking script … of which there are plenty stable and advanced solutions available for under $500). So, I put in $5000 make a great site and then I start running CPC ads on Google Adwords and other Ad networks at an average CPC of around 10 cents (very reasonable). Now, I’ve done this before - so these stats are realistic… we can assume (in the absolutely worst case) for every 10 visitors to the site 1 signs up. Thats $1 per sign up. So now, to get 250,000 genuine members in a span of say one month - I will have to invest $250,000 into my online media campaign.

Also, the viral effect of a small percentage of members inviting their friends to join in - will probably constitute to another 5% to 10% more members. Lets keep that as a bonus.

So, all in all - if I did this in-house, I can build my own website, brand and community of 250,000 for around $250,000. So, why would I pay $10 million ?

What this shows is that HT Media has not done their math. This is the WORST case scenario. I don’t believe Desi Martini has any established brand in the online space. All I can remember is when they did their brief stint of TV ads a few months ago. Apparently - their TV ad can be seen on their homepage, and has probably played an important role in earning them a higher valuation, as it is a very good ad and has been done very professionally.

HT Media - I know you guys have finally woken up from your cryogenic chambers and now want to get into this space desperately - but you need to first understand and catch up with what you have missed while in hibernation.

I see that you are looking for other acquisitions in other dot com verticals… but, please try not making blunders like this.

Oh boy! Bubble 2.0 cometh.

*added later* - my friend, Amitabh points out that it makes much more sense if they had developed and marketed their required Social Networking website from ground up, in-house… I couldn’t agree more.

— Vishal Lamba    Filed under: Uncategorized