How Many Millions was SageTV bought for?

[joe123]

Anyone wants to guess at how many millions ( stock options and/or real money) Google paid for SageTV?

I am thinking ~10 - 15 million.

In stock options, that's a small penny for Google.

Another way to find out is by the size of Jeff's smile on his face. Anyone seen him lately?

[Fuzzy]

I'd be surprised if it was that high.

[tmiranda]

42, that's always the answer.

[Brent]

Originally Posted by joe123

Another way to find out is by the size of Jeff's smile on his face. Anyone seen him lately?

Havent seen him, but I hear he went to Disneyland

[joe123]

Originally Posted by Fuzzy

I'd be surprised if it was that high.

Have you seen what Google is paying for lesser companies / software?

I was being conservative. It's probably a heck of a lot more. For Google, 100 mill is the same as a penny for us.

No, not 100 mill for SageTV, but I am thinking in the 20's - ~25 million?

The preparations must have been going on for several months now - Jeff kept a poker face.

[wayner]

This is very tricky - it is not like Sage was generating ongoing cashflow like a cable or phone company where you would pay $X per sub. My guess is in teh $5-10 Million range but the price would be based purely off of what Google thinks the perceived value would be.

Patents in the tech space seem to be worth more all the time - so it is too bad that Sage doesn't appear to have many, if any, patents. Nortel's patents just sold for $4.5B which is over twice the original estimate and it may make the bondholders in the company whole.

[peternm22]

Since Google is a public company, will we eventually find out?

[Fuzzy]

Originally Posted by peternm22

Since Google is a public company, will we eventually find out?

not necessarily, if it is small enough of an expenditure, it may not appear on any reports.

[broconne]

Since SageTV was a private company I don't think they are required to post the amount of the purchase specifically for SageTV...

They can just say in the quarterly report.

"Acquisitions of $50 million in 3rd quarter."

Which would cover all their acquisitions.

[joe123]

I wonder how many times a day Jeff takes a look at his bank account to see all the extra millions that just showed up.

[IVB]

I see little chance that its much more than $5M. Even that seems high. Could be $2M-$3M.

[reggie14]

I'm with IVB on this one- no more than $5 million, probably less. And who knows how much of that went to Jeff versus the mysterious investors that were referenced in some sort of alumni magazine years and years ago.

I'm guessing Jeff got a decent lump sum, but not enough to retire off of.

Sage has a small user base, no patents that can be found, and (I'm guessing) probably a fairly limited amount of directly reusable code. It doesn't seem like Google would have had to pay very much. This was probably more an acquisition of Jeff than of SageTV.

[will]

Originally Posted by IVB

I see little chance that its much more than $5M. Even that seems high. Could be $2M-$3M.

I agree. According to this NY Times article on Google's Deal-Making Math:

Originally Posted by NY Times

But the company [Google] tries to exercise some discipline by adhering to a simple formula. For example, if Google finds a 10- person team with unique intellectual property, it will consider how long it would take for an in-house to build a similar product and at what cost, according to Mr. Schmidt.

“So what’s a year worth? We then calculate the value of the team plus the value of the year, and that’s the amount of money we’re willing to pay for the company,” he said. “These are $10 million, $20 million, $30 million kind of deals.”

I'm thinking a five-person company with little IP probably went for well under 5 million plus a contract to work for Google for one year. I am sure Sage did well but I don't think they did so well that they can retire "into the lap of luxury." Google is a pretty smart company, they tend not overpay for things unless there is a lot of hype around the product/company in the general public (which Sage did not have...unfortunately).

[heatvent]

Not sure I would fully agree with the quote. That's how you price an employment contract. You have to pay for future cash flows to buy a person out of a business.

I think what they are talking about is this is how Google would intenally price a buy/make decision. So this is option A (hire 10 people and get to work over xx timeframe) which was compared to Option B[uy] SageTV now. There may be non-quantitative considerations like leadtime as well, probability of success, etc.

I am in the less than $2M club. I don't know the tech industry but for manufacturing companies 1-3x revenues is a decent range. You really want something at 3x. I think tech usually goes higher but lets be realistic here, we all have a lot of respect for Jeff but I don't think he was splitting atoms here. If you can guess at what SageTV's annual revenues are you might be have somewhat of a basis. So lets say he gets $500 out of the average user (couple of licenses and a couple of extenders). To get to $2M with a 3x multiple that's 1,333 $500 sales per year. Not sure SageTV was quite there yet. He may have gotten a $1M and a nice 3-5 year contract with bonus/options and a chance to lead/take a key role in a part of a Google project.

As far as Google disclosing this, it would have to be hundreds of millions before they would be close to something that needed to be disclosed to investors. This is a tiny amount to them so I doubt they will be talking about it anywhere. I think Jeff was important to SageTV, but I think he's a small fish in the Google pond. Also, anyone who thinks Google, just because it's big, throw's millions and millions at anything they want is just wrong. You don't get to be a Google by throwing money down the toilet with no return.

As far as Jeff's actual package goes, however, I guess we will never know.

[mayamaniac]

I don't think Jeff sells for less than 5 million. Unless you have some accurate ways of calculating the number of sales of licenses and extenders sold in a month or year, there's no way to tell what SageTV is worth. What we do know is how great the technology and intellectual properties in the products and personnels. And how do you calculate that value.

I asked this question before in the SageTV acquired by Google thread, and someone guessed 60 Mill:

Originally Posted by wado1971

Google paid $30M for Gizmo5 (the voip startup). I would guess sagetv, with both the hardware & software would be higher. My guess is $45M...... Edit - make that $60M ($30 for technology, $20 for hardware, $10 because it's not just a startup)

My guess was 50 Mill.

[hoep]

my 2 cents:
i can only report my experience from the industry - for small companies (to < 50 mio) you would normally go to a multiple 3-5 on the EBITDA basis, very specialized assets could change this multiple; mostly this is driven by the fact that the business risk conc. small companies is higher, as they are usually built arount a small amount of people (owners) who would leave the ship during a transition period. bigger companies (to > 50 mio) could go up to a multiple of 5-8 on the EBITDA basis as you normally also buy a stable organization.
but i saw an acquisition of a small software company (very specialized) these days in my area (Europe) where a multiple of 10 on the total turnover was paid .. which in the industry would be a nogo - so it's difficult to predict. concerning the power of google i would assume the multiple would be maybe 5-7 on EBITDA basis

[MitchSchaft]

Your hopes are too high. 250k tops. Sage is now vapoware and Google will run it through. We've been sold out for pennies, folks.

[simonen]

Originally Posted by MitchSchaft

Your hopes are too high. 250k tops. Sage is now vapoware and Google will run it through. We've been sold out for pennies, folks.

Agreed. They probably had very little inventory...not uncommon to reduce taxes. It was code Google could have developed on their own. They probably got some cash, stocks and jobs at Google (that brings more financial security than selling boutique software). Just because Google buys something, it doesn't have to be for millions.

[pjpjpjpj]

Originally Posted by MitchSchaft

Your hopes are too high. 250k tops. Sage is now vapoware and Google will run it through. We've been sold out for pennies, folks.

Considering that Jeff and crew are in California, where $250K is only a little higher than a starting salary for a first-year lawyer at a big firm, I think you're way off.

And then there's this: http://forums.sagetv.com/forums/show...4&postcount=46

Does that look like the reaction of a CEO who just sold all the fruits of his labor, that's he's been struggling to build for years, for half of the NBA minimum wage? I don't think so.

[Tiki]

Originally Posted by wayner

This is very tricky - it is not like Sage was generating ongoing cashflow like a cable or phone company where you would pay $X per sub. My guess is in teh $5-10 Million range but the price would be based purely off of what Google thinks the perceived value would be.

It's true that Sage didn't have any subscription-type revenues, but they were starting to charge for major upgrades and there was a lot of active development going on. I think they could have started releasing a major upgrade once per year and the upgrade fees would have almost been like a subscription.

Actually, I'm surprised by the number of people who have suggested that Sage may have been close to going out of business before this takeover (not necessarily your post, but many others). Sure, anything is possible, but my sense is that Sage was really taking off - thanks primarily to the extenders. I don't know what sort of profit margins they had on those extenders, but they sure seemed to be selling them as fast as they could get them manufactured. They repeatedly ran out of stock. Based on what people have posted in these forums, I get the impression that most Sage users had at least 1 extender and many people had several.

Before they started selling the extenders, I wouldn't be surprised if they were struggling, but since the extenders came out, I'd say no way.