How Many Millions was SageTV bought for?

[Brent]

SageTV was doing quite well as I understand it. Development was in full swing, sales continued to be strong (compared to past years). So I definitely do not buy into the few who have speculated that SageTV was having trouble, going out of business etc etc.
That being said, Google didn't buy them for their sales or profitability potential imo.
Here's my take on why Google purchased SageTV. I have no idea how much money was involved in the purchase and it's unlikely we'll ever know. But the Kardatzke clan understood their business. Dan Kardatzke (Jeff's Brother) is a finance guy and understands mergers & acquisitions - so it's my educated guess that they did well in this deal. No idea how much money or other kinds of compensation was involved, but I doubt it was a bad deal for anyone.

[sleonard]

Didn't Dan leave Sage several years ago?

S

[Brent]

Originally Posted by sleonard

Didn't Dan leave Sage several years ago?

S

Dan left the operations of SageTV and was no longer an employee. He was still an investor (read owner) as far as I know. He also lists "consultant to SageTV" on a networking profile. Third, he's still Jeff's brother - I think that alone solidifies my point above.

[wayner]

I still say that Google was not valuing SageTV on a multiple of EBITDA or revenue since they didn't buy Sage to earn this revenue - therefore the expected cashflow out of Sage is irrelevant. They bought Sage for technology to use in GoogleTV or other products and I am definitely in the camp that the price was north of $5 M but not too far north.

[sleonard]

Originally Posted by Brent

Dan left the operations of SageTV and was no longer an employee. He was still an investor (read owner) as far as I know. He also lists "consultant to SageTV" on a networking profile. Third, he's still Jeff's brother - I think that alone solidifies my point above.

Oh, I agree. I wasn't trying to argue. I'm sure that even if Dan had nothing to do with Sage anymore he would still give his brother advice.

S

[heatvent]

Originally Posted by wayner

I still say that Google was not valuing SageTV on a multiple of EBITDA or revenue since they didn't buy Sage to earn this revenue - therefore the expected cashflow out of Sage is irrelevant.

It isn't irrelevant to Jeff. Let me ask you this, when you hire someone, do you just look at what you are willing to pay, heck no. You find out what the person was making and offer them a bump. Similar concept to buying a business. There's two at play and even if what they bought Sage for was going to double the size of Google, they wouldn't just walk in and offer Jeff billions. They would pay him what his business was worth because to Jeff that is what is relevant. Then they would look at their return on their investment. If it meets the minimums set by Google senior mgmt, then it's a go. Now maybe Jeff resisted and maybe Google really wanted SageTV and he got a nice price, but I highly doubt he got 10x what the business was worth.

I still think Sage was a small business. Extenders would have been a great shot in the arm but Jeff would have to contract them out and not sure how he priced them. He was also growing a business, trying to increase volume, etc. so he may have taken a low margin (maybe who knows). By the looks of the HD200 (plain black steel project box with some holes in it and a sticker), I don't think he was making much off of them.

Let's see, to get to a $50M purchase price at 10x revenues (which I think would be considered good for any industry), that means $5M of annual sales. Hmmm, if Jeff was able to sell each of us an average of $1,000 per person which would be say a server license, a placeshifter license and 6 extenders per year, then he would have 5,000 customers. Seems a little hard to swallow.

Oh, and let me add, when you are buying a company and you want the owner to come work for you, it's not a good business strategy to make him too rich too quick, he may not want to work anymore. So you are better off having him on a decent salary going forward with a healthy bonus that pays out if he meets the objectives you acquired his company to meet.

[joe123]

Originally Posted by heatvent

then he would have 5,000 customers.

I would think that there is a lot more than 5,000 SageTV customers around the world. Has to be much more than that.

One thing is certain however. For Jeff to agree to stop selling SageTV extenders without any notice and screw his customers that way, Jeff must have gotten a LOT of MONEY.

Many folks have invested thousands of dollards in SageTV hardware/software to now be left holding the bag with no way to purchase any more SageTV extenders or the future of the product.

I know of one real live case. A person who I recommended SageTV to has been screwed becuase he cannot buy any more HD300 extenders.

Does this matter to Jeff? My guess is NO given all of the smilies he put in his posts regarding the sale of SageTV.

[Fuzzy]

If there was no future to sage, and everyone holding any part of a sagetv system is screwed, the few who do choose to sell their extenders would not be pulling in the prices they are. Prices will remain elevated until enough people start leaving sage and flooding the market with their items. That will be the only indication that a lot of people are leaving sage. Most will stick around for at LEAST a year (probably more), as there is really no where else to go, and no reason to NOT be happy here.

[GKusnick]

Originally Posted by joe123

Does this matter to Jeff? My guess is NO given all of the smilies he put in his posts regarding the sale of SageTV.

Of course it matters to him. But hard as it may be for you to imagine, your convenience is not the only thing that matters to him, or even the most important thing. He also has employees, investors, and family who matter to him. Should he have screwed them by turning down the offer just to make you happy?

[joe123]

Originally Posted by GKusnick

Of course it matters to him. But hard as it may be for you to imagine, your convenience is not the only thing that matters to him, or even the most important thing. He also has employees, investors, and family who matter to him. Should he have screwed them by turning down the offer just to make you happy?

No, I was not born yesterday. You and I would probably have done the same thing. So no saints here.

The only thing I take beef with is those here insinuating that Jeff would not have dropped the ball on SageTV customers by screwing them. Saying that Jeff is so nice that we still have these forums, bla bla bla.

For goodness sake, ALL SageTV customers ALREADY have been SCREWED loyally the second Jeff took the money and dumped SageTV.

SageTV is DEAD. Recent customers have been SCREWED because they cannot buy SageTV extenders. Old customers have been SCREWED because they can no longer replace their dead SageTV extenders or sofware or grow their setup.

There is only ONE winner here folks and that is Jeff and why he has so many smilies.

[panteragstk]

Originally Posted by joe123

No, I was not born yesterday. You and I would probably have done the same thing. So no saints here.

The only thing I take beef with is those here insinuating that Jeff would not have dropped the ball on SageTV customers by screwing them. Saying that Jeff is so nice that we still have these forums, bla bla bla.

For goodness sake, ALL SageTV customers ALREADY have been SCREWED loyally the second Jeff took the money and dumped SageTV.

SageTV is DEAD. Recent customers have been SCREWED because they cannot buy SageTV extenders. Old customers have been SCREWED because they can no longer replace their dead SageTV extenders or sofware or grow their setup.

There is only ONE winner here folks and that is Jeff and why he has so many smilies.

The smilies at the end of your post are throwing me off. Are you angry...sad...happy...I can't tell...

[tmiranda]

Originally Posted by joe123

SageTV is DEAD.

That's obvious, and doesn't tell us much. I'm much more interested in what Google will bring to market now that they've acquired Sage.

[heatvent]

Originally Posted by joe123

I would think that there is a lot more than 5,000 SageTV customers around the world. Has to be much more than that.

5,000 annually? they have been in business since 2001/2 ish so 5,000 x 10=50,000 customers with $1,000 of equip & software. Wow.

Here's a couple of sites that somehow got some data on size and estimate under $500k of sales per year.

http://www.manta.com/c/mm0hwfn/sagetv-llc
http://start.cortera.com/company/res...8kvk6q/sagetv/

The forum has 16k members over 10 years and 1,300 active members. There were about 1,200 new members in 2010 and about 7-800 for this year. So lets say Jeff gets 1,500 new SageTV purchases per year and people go for 2 extenders and a server license. About $400 per person. Let say another 500 users buy 2 extenders each year so there's $300 and maybe they upgraded last year so $350. Now we multiply and get....~$775k per year....believeable but probably a little high. I wouldn't be outrageous that he got $2M+. But to go much higher I think reasonability starts going down.

[joe123]

Originally Posted by panteragstk

The smilies at the end of your post are throwing me off. Are you angry...sad...happy...I can't tell...

The smilies are from Jeff. Jeff is so happy that he is causing a disturbance in the universe force. So I was simply projecting Jeff's extreme happiness.

So for the rest of us, you me and the thousands of the now SCREWED SageTV bag holders, it's

Is there an icon for a screw?

[joe123]

Originally Posted by heatvent

5,000 annually?

No, I meant that there must be well north of 5,000 SageTV Bag Holders world wide.

How many SageTV customers world wide do you assume SageTV has?

[gplasky]

Originally Posted by joe123

I would think that there is a lot more than 5,000 SageTV customers around the world. Has to be much more than that.

Why would you think that? Forum membership is Members: 16,401, Active Members: 1,373. I'm pretty sure every member didn't own Sage and/or extenders. And if you look at the pre-order numbers when the extenders (HD100) first came available it looked like they were ordering in batches of 300. Probably the minimum order the factory would produce and ship. This product isn't Windows Media Center that gets shipped with every OS. I doubt that the numbers reached 5,000.

Gerry

[joe123]

Originally Posted by gplasky

Why would you think that? Forum membership is Members: 16,401, Active Members: 1,373.

Generally speaking, forum memberhips usually account for 15% or less of a product. 16k membership is pretty high.

[heatvent]

Originally Posted by tmiranda

That's obvious, and doesn't tell us much. I'm much more interested in what Google will bring to market now that they've acquired Sage.

Likely nothing you will be interested in.

[reggie14]

Originally Posted by gplasky

Why would you think that? Forum membership is Members: 16,401, Active Members: 1,373. I'm pretty sure every member didn't own Sage and/or extenders.

Similarly, not every Sage user has a forum membership. Compared to other software products I'd guess a very high percentage do (perhaps around 50% or so).

In the "real world" I only knew two people that ran Sage systems, and neither one used the forums (and both stopped using Sage long ago).

I think its hard to estimate the number of paid customers (or even current users) from the number of forum members. I'd guess the number is around 15-20k paid customers, with around 5k current users. I don't see how Sage would have stayed in business without sales at least that much, and I don't see how they could have gotten much bigger than that.

Though, I haven no justification for those guesses.

Originally Posted by gplasky

And if you look at the pre-order numbers when the extenders (HD100) first came available it looked like they were ordering in batches of 300.

I didn't realize anyone estimated that using sales numbers. Back when the HD100s were failing I estimated they were purchased in batches of 500, but it was only based on the reports of failures in the forum, and the 1% one-year failure rate reported by Sage. Those two estimates are relatively close, so I'm tempted to believe it (and I'm guessing your 300 unit estimate is more accurate than my 500 estimate).

[heatvent]

Originally Posted by joe123

Generally speaking, forum memberhips usually account for 15% or less of a product. 16k membership is pretty high.

Only 1300 of 16000 active (8%) so a lot of potentially older users. This is also a hobbyist DIY solution, I would think it's a relatively high rate of customer/forum membership. There is also a lot of people who bought years ago (I think I at about 2) who haven't bought squat since initial purchase. I bought the $49 upgrade. There are also those that signup just to find out about the product and don't buy anything.