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Comment by samdoidge | Hacker News Reader

Shock because the price seemed to high, or too low? This seems reasonable / a good deal to me. I recently found the website useful- they have a lot of data, and offer a good incentive to acquire more data (Add a salary / review to see more).

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I think the price was too high. However this is without the knowledge of the size of the operation, or their sales numbers. I think a lot of people are going overboard with the data is the new oil philosophy, as the rate in which data is being generated is growing exponentially. Since the supply of information has increased so much one would reason that its value should be decreasing, not increasing. (Presuming that there is no uniqueness or monopoly of the type of data)

Another HN commenter mentioned their sales numbers at $170M and growing at 30% annually. Why do you think a $1.2B price is high? it seems pretty reasonable for me. Buying at 7x total sales with a 30% growth rate seems like a normal purchase price.

I didn't see that until after I posted the previous comment. That number certainly changes the conversation, however I'm usually a fan of valuing companies via net profit instead of revenue. Although I will admit that valuing startups is a whole different ballgame than traditional companies.

It's very hard to value most companies that are at this stage on net profit because most of them are just breaking profitablity (so their net profit will be 0). Basically if you valued companies on net profit you would never acquired a startup (since most of them are unprofitable). Thus, they tend to use other financial metrics (including total sales) and also build a business operating plan to ensure the company can move to profitablity. This is the case for all companies in the early stage (it's not something new to the internet age).

The expected path for startups is: 1) find product market fit 2) build growth 3) build revenue 4) move to a sustainable operating model where at least your gross margins are positive 5) move to cash profitability 6) congrats you've made it and now are a normal sustainable company

Glassdoor was on step #4 and was probably close to #5. Valuing based on net profit would only work on companies in step #6.

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