Six Apart Moving
Six Apart is moving to new offices in San Francisco from San Mateo to hire more talent and get the space they need. As of this article they plan to add 60 more people in the next year and a half. As this year ends I will try to think out loud a bit about a company that truely interests me.
They pulled in some $2 million in 2004 and might make some thing like $5 million next year as of the article. I presume those numbers to be off a little bit though especially as Berkowitz says they are close to break even. In one of my latest posts about Six Apart I linked to an article where they stated their employee numbers as around 50. I presume in the new article, the 40 people cited there are USA only, meaning that a further 20+ are added by Europe and Japan, which again fits with the new article. All in all they then have 60 employees. To go a little lower (than last time) in employee costs I will take $7000 average per month. This means that they had costs of $420.000 in December per employee. For the cash flow positive bit, I would like to point out that most people will pay their blogs for a year and the people that started on TypePad are renewing their first time and we are going into a part of the cycle where they have new yearly subscriptions and yearly renewals each month. Kick ass. A fairly predictable business model. If they really have something like $500.000 in costs per month, they need 5000 sign-ups or renewals per month at a $100 average. Very much possible if you ask me.
Let’s look at it from another point of view. At an average of $10 per month per blogger hosting her blog(s) they need something like 50.000 blogs to cover their costs if don’t have a lot of extra costs. I said 50.000 last time and now it also fits with their CEOs idea of $5 million plus (because the $2 million comes from Mena and he just said +150%, so I am not sure he means $5 million, I think he means more :)) in revenue next year. But now look behind these numbers. In January they need 50.000 blogs, but they actually just need 5000 yearly payers. If we presume they have 1500 that renew, they only need 3500 new ones, putting this at just a little over 100 a day. As you see, I am presuming no more growth, because with this calculation they will have the same numbers in december of 2005. But then comes the kick, as in the following year, if 20% don’t renew, they have 4000 people renewing in January 2006, and another 3500 new ones and voila, 7500 accounts, hence almost $8–9 million.
All this doesn’t factor in MovableType or revenue share deals with co-branded blogs. Cool ey? And hey, I am even happily paying them for my Pro account. Great stuff.