Jason Fried over at the Signal vs. Noise blog has an entry entitled Don’t believe BusinessWeek’s bubble-math where he writes
This week’s BusinessWeek cover story features a beaming Kevin Rose from Digg. Across his chest it says “How this kid made $60 million in 18 months.” Wow, now that sounds like a great success story. Too bad it’s a blatent lie. BusinessWeek knows it. They prove it themselves in the article: So far, Digg is breaking even on an estimated $3 million annually in revenues. Nonetheless, people in the know say Digg is easily worth $200 million. $3 million in revenues and they’re breaking even. That means no meaningful profits. That’s the first hint no one has made $60,000,000. Their gross revenues aren’t even anywhere close to that number. And let’s leave out the “people in the know say it’s easily worth” fantasy numbers. And certainly don’t use those numbers to do the math that makes the cover (we’ll get to that in a minute).
Too bad it’s a blatent lie. BusinessWeek knows it. They prove it themselves in the article:
So far, Digg is breaking even on an estimated $3 million annually in revenues. Nonetheless, people in the know say Digg is easily worth $200 million.
$3 million in revenues and they’re breaking even. That means no meaningful profits. That’s the first hint no one has made $60,000,000. Their gross revenues aren’t even anywhere close to that number. And let’s leave out the “people in the know say it’s easily worth” fantasy numbers. And certainly don’t use those numbers to do the math that makes the cover (we’ll get to that in a minute).
I can't believe BusinessWeek ran such a misleading cover story. I guess sensational, fact-less headlines aren't just for the supermarket tabloids these days.