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Great summary .... the last sentence says it all. "I simply...

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clown333

221 Posts.

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02/08/17

21:14

Post #: 26251914
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Originally posted by HotCopter ↑

I think we just have a very different view on what their business model is. In the example I gave - Nestoria with property - they don't have any underlying business. They just have a cover page which is masquerading as a classifieds vertical but is simply arb'ing traffic to an actual classified site owned by someone else (Domain). Expedia actually owns the search platform, strong brand and has customer relationships with the hotels - that's how they get inventory. Nestoria doesn't have any brand, platform or inventory - it's a mirage.

In their latest investor pres they showed 34% of revenue from Adsense, which is a dying product, and 60% from CPC which is the arb stuff. 6% from new products (whatever they are) isn't moving the needle.

I also think the points about owning leading sites in certain markets is illusory. Anyone can buy traffic first of all from google, it's just a cost dynamic. Secondly they have been very smart about buying international sites with high organic traffic. They have charts in the investor pres showing 70% organic search traffic - that's incredibly high. You can then use that organic traffic (which is effectively zero cost) to arb to other partners through clicks and with garbage ad inventory (Adsense). But it has a very limited shelf life. That's what I think they are doing anyway.

As for online fashion - I think we all know how few companies have been successful there. It's a growing market for sure, but not confident on return metrics as the path is paved with many corpses.

But hey there is clearly money being made with this business model and the founders have made / are making a motza. I simply don't believe it's sustainable for very long

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Great summary .... the last sentence says it all. "I simply don't believe it's sustainable for very long"
This company reminds me of one of those little fish that swims around eating crap off a huge whale shark (aka google), until the whale shark gets annoyed and brushes them away.

MUA Price at posting: 57.5¢ Sentiment: None Disclosure: Not Held
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