NYT buys Wirecutter for $30 Million

That's insane. Ive been going to the wire cutter for a lot of inspiration as Im working in the same niche.I will be paying closer attention to this site now for sure.
Good motivation for me too I must say lol.
 
I know the whole point to thewirecutter and thesweethome is quality over quantity, but just how much quality content is required to make that kind of money?

I pulled all the pages on both sites (https://docs.google.com/spreadsheets/d/1Or1b6IAGzn3OYHcMTL0JpLA6OcdK49vanaLC0jtReWg/edit?usp=sharing) and it looks like each site has 300+ in-depth product reviews spanning 20-30 product categories plus 100-200 blog posts.

Not an impossible task to create a similar site, but it's not a quickie project either.
 
What. The. Fuck.

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Edit, also dumb question about the site. How do you set up a site like that with Wordpress? Are they using a custom post-type for reviews? Or are they excluding review categories from their blog?
 
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There was a good discussion here at this thread just four months ago about thewirecutter and some of the details of the business-

Summary:

- Company is based on about a 1,000 pieces of content.

- Each Wirecutter post takes between 20 to 200 hours of research and testing.

- They mastered the process of updating articles (nobody else was doing this and most still don't)

- The site has a staff of about 60 and posts only a few dozen articles a month, yet it’s profitable. Last year, the Wirecutter drove $150 million in e-commerce transactions, Lam said.

- Wirecutter has no outside investors.

- Traffic is relatively small: it had 622,000 unique U.S. visitors in February, according to ComScore, a fraction of major tech websites like the Verge. The Wirecutter isn’t focused on traffic. It wants readers to buy products it recommends, so it takes its time, Lam said.

-Took Brian about 4.5 yrs to "hand-off" the business to his employees

So based on the $30M purchase rumor number (NYT will need to disclose the exact number in the next SEC filing), NYT paid about $30,000 per piece of content.

Based on the $150M total revenue and a conservative 7% average commission from Amazon + other ad revenue, wirecutter was probably doing at least $11M yr in net profit.

We live in some crazy times right now with opportunities that have never been seen before... don't let it pass you by! :cool:
 
SAnderson said:
I know the whole point to thewirecutter and thesweethome is quality over quantity, but just how much quality content is required to make that kind of money?
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Nice spreadsheet there.

I find the "quality content" bit rather funny. Let's be honest, it's just long content about someone's quick personal opinion with a lot of manf specs.

Those product reviews aren't definitive or better than anyone elses. They are just more in-depth, aka longer than the spammy pages you see all over the serps. They might list 10 products like phone cases; to someone in touch with good design, all 10 are ugly choices. No one is buying a tent and going camping for the next 10 years in the woods to prove this one's better than the others. No one is buying a wireless router and testing it for the next 5 years, while using it 24/7/365 like in the real world. No one is walking around in the same pair of shoes for the next 2 years to see how they hold up.

By then, all of those products if not the majority have been replaced by others in the market. Products all have life cycles. They constantly get replaced/outdated.

With that said...

I'm not surprised it was sold for $30M. The guy worked at Gizmodo for a bit, then started it. These people in the industry love to buy into that kind of shit. It's gotten to the point where $1M, like is $100K in real value when it comes to these buy outs. I could see the site selling for $3M, given it stays online and traffic holds up for the next 10 years. But $30 million? That's corporate making it rain cash.

Wirecutter didn't re-invent the wheel here. Amazon has 1000's of real customer reviews and comments, and answered questions on their product pages. Some even include photos and videos. And these are from people owning the product on day one to day one thousand and beyond.

What they did do, was get a lot of attention/press over the fact that guy once worked at Gizmodo. Plus, leverage his industry connections for links and special shit. The content isn't Shakespeare.. There's not a full gallery of every product angle with a video to match, alongside water testing, fire testing, wear simulation testing machines, etc. I could go on...

No hate, I'm happy to see success... Just speaking from reality here.
 
Playa Haters' Ball came early this year...

 
But the content is better. They actually bought and used the products and it shows in the reviews. How many affiliate have have done that? Not many at all.

They tested them pretty heavily and it's obvious they aren't just quoting specs.

If I'm wrong link me up to those pages, because the ones that have crept up on me in the serp's were damn good and forced me to rethink my content strategy.

Update: well shit. It looks like some of the pages are just long reviews assembled from info on other sites. Believe me there are pages on those sites that are absolutely amazing with real world testing too. The only ones I ever bothered to look at are the ones that landed in "my serp's". But I do stand corrected in that there is a bit of a mixed bag in there.
 
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contract said:
I'm not surprised it was sold for $30M. The guy worked at Gizmodo for a bit, then started it. These people in the industry love to buy into that kind of shit. It's gotten to the point where $1M, like is $100K in real value when it comes to these buy outs. I could see the site selling for $3M, given it stays online and traffic holds up for the next 10 years. But $30 million? That's corporate making it rain cash.
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If thewirecutter is generating around $10-11M yr net income then the sale price of $30M puts it in the 3x multiple which is inline with other comps. NYT does $1.5B+ yr in revenues so it's a drop in the bucket to them. They can point all those eyeballs from their other properties to wirecutter probably double the revenue pretty quickly. Much more cost effective to them to just buy it than to try and replicate that success.
 
backwoods said:
If thewirecutter is generating around $10-11M yr net income then the sale price of $30M puts it in the 3x multiple which is inline with other comps. NYT does $1.5B+ yr in revenues so it's a drop in the bucket to them. They can point all those eyeballs from their other properties to wirecutter probably double the revenue pretty quickly. Much more cost effective to them to just buy it than to try and replicate that success.
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I don't see them hitting the $10M year mark or coming close, even 1M volume in traffic (600K or something mentioned above).

Plus, not all visitors are going to convert, be of the same country geo, etc.

I feel like these types of things are in the realm of gurus claiming their making or have made x amount of dollars online. All of it, just to get more attention/interest. Fake it till you make it I guess..
 
backwoods said:
Based on the $150M total revenue and a conservative 7% average commission from Amazon + other ad revenue, wirecutter was probably doing at least $11M yr in net profit.
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Looked into the numbers before this deal closed and I came to a similar conclusion, slightly lower profit based on staffing costs.

The point remains, they sold cheap. If we go by $11M, that's less than a 3x multiple.
Even John from down the street is selling his crappy niche site thebestlawnmowersforsummer.com at a 2-3x these days

So I'm thinking something is missing from these rumours, especially now that I'm hearing thesweethome was also included in that price (rumour rumour rumour so far). Brian either got stock options, didn't sell 100% or the numbers are way off... or he just sold under value. Who knows. Either way, for anyone interested in website investing this is something worth digging into to see exactly how the deal was structured, how they got the ball rolling, how long the close took and what extra incentives are laying round.

Sure, they didn't re-invent the wheel it's another affiliate site, but they are slowing taking over the SERPs and gaining quite a cult following too. Brian has networked incredibly to get cross promotion from all the main publishers and papers out there, so I don't see this going away anytime soon.

NYtimes got a steal here imo and prepare for some serious investment to get thrown into this in Q1 2017.

Thewirecutter and thesweethome, coming to a SERP near you, 2017.

Edit: people claiming 3x multiple is normal - yes, maybe for smaller sites. At the predicted revenue and considering companies purchasing, no way. I regularly (weekly - biweekly) see smaller sites go for 4-6x.
 
contract said:
I feel like these types of things are in the realm of gurus claiming their making or have made x amount of dollars online. All of it, just to get more attention/interest. Fake it till you make it I guess..
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There are lots of BS acquisitions - I would disagree this was one of them. They bought something with traffic and revenue, that right there is a step up from many companies that are bought for ~30mm in the last 6 years in tech.

This really should be an inspiration to people here. If you can build a better site then do it - you will make a ton of money.
 
I was just scanning the latest NYT 10-Q filings and found this:

On October 24, 2016, the Company acquired Submarine Leisure Club, Inc., which owns the product review and recommendation websites The Wirecutter and The Sweethome, in an all-cash transaction. We paid $25.0 million, including a payment made for a non-compete agreement. In connection with the transaction, we also entered into a consulting agreement and retention agreements that will likely require payments over the three years following the acquisition.

Interesting. So the actual number was $25M for the two sites. I was expecting the number to be higher than $30M but still clearly a great return for just a 5 yr old site :wink:
 
Lovely site, even their "about us" is exceptional. They have 14 writers plus editors and people responsible for updates. It was $25M plus some for both sites, so let's say just one is worth $12M, that's some nice money. If someone would like to go that way and create similar website in one of ever green niches, gathering 14 people might be challenging task, but starting with 3-5 people only, people who are actually experienced in this IM stuff would allow for a strong start I think. Assuming content is created by those people/owners of the site (at least at the beginning), they should be able to output some high quality content also, and grow their team during the process.

Here is good example of another website of this kind https://authoritynutrition.com/. They also have strong team of writers etc. and they are doing quite well. Content is good, maybe not as good as wirecutter's content, but much better than 90% of info we can find out there. And I'm sure evaluation would be interesting as well.

It's not that difficult at all, taking few committed people who want to grind on one project, and if they don't fuck around and hold in there, after two-three years they should have a little beast arising. One person party is much more difficult and I'm not even sure if it's still possible these days, for start only? Maybe. Also, few brains are better than just one.

Sure, if someone have deep pockets then he/she can go alone, but even then they will need other people at some point.

For me take away lesson from all of this is simple (besides content quality etc.), join forces with like-minded people and go get it. Even if those 3-5 guys would decide to sell it after many months of grinding for only $1M, that's still some nice cash in hand (to KICK start another project preferably...).

Anyone interested in joining forces in health/fitness/nutrition niche PM me sharpish mates :evil: I'm fucking sick of counting pennies.
 
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Lam said in an interview a while back that he pays $5000 - $10,000 per piece of content.

Still stand by my stance that this business was underpriced. Acquiring businesses like this is 90% of my life, if I knew it was for sale we would have seriously considered raising the finance to purchase.

NYT is going to benefit from this hugely. Keep your eyes on this.
 
I was hoping NYT would reveal some concrete revenue / traffic numbers on the Wirecutter and Sweethome in the latest filings or conference call but nothing so far. The $25M purchase price is only about 7 days revenue for them so it's a nominal amount so it's not going to move the needle in any significant way anytime soon. I believe this is their 3rd digital related acquisition this year.
 
From Wirecutter's About Us page:

What’s with those buy buttons and those Amazon links?
We support ourselves and our work off of those buttons and links. If you want to help support the Wirecutter, buy things from Amazon using this link.
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Not to be a tattle-tell, but is their wording not against Amazon Associates' TOS?

For example, Rand Fishkin's beard wife, the smelly twat Everywhereist, had her account denied because of similar phrasing:

A few hours later, I received notice from Amazon that they had rejected my application and cancelled my account. This was the explanation that they gave:

While reviewing your Amazon Associates application, we noticed that your web site announces that a portion or all proceeds of Amazon.com orders will benefit a particular individual, group, or organization. Associates are not allowed to offer incentives to visitors to purchase through their links by stating a certain amount will be earned, donated, rebated, etc.
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What's the difference?
 
Jared said:
From Wirecutter's About Us page:



Not to be a tattle-tell, but is their wording not against Amazon Associates' TOS?

For example, Rand Fishkin's beard wife, the smelly twat Everywhereist, had her account denied because of similar phrasing:



What's the difference?
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The Wirecutter plays on a totally different playing field than the small fish Amazon affiliate. They have formed a special partnership with Amazon that I'm sure allows them to abide by slightly different "rules". Many of Amazon's rules are up for interpretation as it is. For ex;

1. Sending Amazon Affiliate Links In Email - this is clearly stated against their TOS, yet the Wirecutter did this for a very long time in every newsletter they sent out and never got banned (now they redirect the Amazon links via MailChimp)

2. Manually listing prices of products - according to Amazon's operating agreement they aren't following their exact guidelines.

I am surprised that Everywhereist site had her account denied given I see similar wording on many sites today.
 
I read about Wirecutter years ago on Michael Martinez blog on a content marketing strategy going after only really in depth articles instead of for massive amounts of content.

Cool to see their success. Should also be noted to BuSo inspirationalists that Lam obviously had a big leg up from his Gizmodo days so that helped as well but the content marketing dream is still alive and well.
 
I actually think wirecutter sold for too little if their earnings were 11 million/yr in profit.

NYT got a great deal. It's clear they we're looking for a strong affiliate revenue based website.

These type of sires are heavily dependent on organic search. NYT drops links for thewirecutter everywhere and they can 10x the revenue in a month.
 
I see NYT reported Q4 earnings couple of weeks ago. They stated Wirecutter and Sweethome did $29 Million in revenue during the qtr.

http://finance.yahoo.com/news/edited-transcript-nyt-earnings-conference-221650018.html

"Early in the quarter we acquired The Wirecutter and The Sweethome home recommendation websites that serves as a guide to technology gear, home products and other consumer goods. The affiliate revenue we earn from readers who purchase products recommended on these sites is recorded in other revenue line in our financial statements. In the fourth quarter other revenues grew 16% versus the same quarter in 2015 to $29 million, largely due to this acquisition."
 
Read it again carefully @backwoods - it GREW to by 16% to $29 million last quarter - not that thewirecutter did $29 million in last quarter for them. Thewirecutter just added the 16% increase.

Edit: it comes out to an increase of $4 million in revenue growth.
 
CCarter said:
Read it again carefully @backwoods - it GREW to by 16% to $29 million last quarter - not that thewirecutter did $29 million in last quarter for them. Thewirecutter just added the 16% increase.

Edit: it comes out to an increase of $4 million in revenue growth.
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Where are you getting $4M?

Their consolidated Q4 statement has a line item with "Other" (c) at $28.6M

(c) Other revenues consist primarily of revenues from affiliate referrals, news services/syndication, digital archives, rental income, our NYT Live business and e-commerce.
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