The Revenue Alexa

As Michael, Matt, and Fred continue to discuss Fred's assult on Matt's journalism skills.  The topic of how reliable Compete.com, Alexa, and Comscore are comes up again (disclosure note I own a bunch of comscore stock via a  venture fund I am involved with).  All of these are fine services and on the whole do a good job with the resources at their disposal.  The issue is not which of these to use, but rather why as Web 2.0 matures we should use any of them.

I would ask every reporter to get a new metric for evaluating how startups are doing.  Having lived through 2000, I know this venture funding party will (has?) come to an end.  The falling stock market  / debt markets may have already started but process, but once it does revenue and profitability will be the only real metric for a startup.  Both in updating Matt for this article and updating Michael for our last article I showed the two of them our revenues.  I asked them not to write the specific number for competitive reasons, but I showed them the financials so that they could have the first hand information of how we were really doing by the main metric that matters for a business.  What if every startup did this?  What if there was an Alexa for revenue.  Obviously in some ways this is silly, but it isn't silly for reporters to ask to see this before writting a positive piece about a startup.

Years ago in 2000 (2001?) my last company Andale was covered by Nick Wingfield who was at WSJ at the time.  He was putting us in "Under the Radar" a column that show cased new startups.  He told me that the last few he had written about had gone under and he wanted to make sure we wouldn't.  He asked to see our financials.  I let him and he wrote the story.  Unlike hundreds of other startups at the time Andale didn't go out of business and grew into a profitable company.

Why can't Michael, Matt, Om, and others start asking for this info before writting positive pieces about companies.  They don't have to publish the numbers just use them to verify the veracity of the story.

On a side note - even revenue is not he right metric, we eventually need to get to profitability which we hope to achieve this year, but let's at least move in this direction.

Comments

[dave mcclure]

well, i think the alexa for revenue just means the public markets.
if you're talking about for private companies, then i'd agree that could be an interesting play.
i'm an investor in a recent startup called TradeVibes that's trying to do something like that

however, i think the exercise in reporting is one that will always be somewhat subjective.
even revenue is weird when you start counting EBITDA and writeoffs and other stuff.

more important is that the company internally has some #'s they use to guide their own decision-making.
i've written more about this in my articles on Startup Metrics, more info here:
http://500hats.typepad.com/500blogs/2008/02/zynga-marc-pinc.html

in any case, congrats on the recent upswing & hope it continues :)

[dave mcclure]

whoops, sorry... wrong URL:
http://500hats.typepad.com/500blogs/2008/02/zynga-marc-pinc.html

[Munjal Shah]

Thanks Dave - it does seem more complex to use this as a measure than previously thought, but traffic just isn't the right metric

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