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Journalismism

Defector’s Valuation Is $333 Million, According To Very Real Business Math

A stack of coins
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Big news: The website you are currently reading is worth about as much as an NHL franchise. Perhaps you doubt the fact that a dumpy little worker’s cooperative that has been operating for less than two years could carry such a hefty price tag, but that is only because you are not a smarty-pants who reads The New York Times.

We do read The New York Times, of course, and today came across a story about how the newsletter platform Substack is giving up on trying to raise to new money to fund its growth because “investors are preaching austerity and halting new deals, particularly for companies that spent aggressively on growth with no signs of profits.” Sad!

As sorry as we felt for Substack while reading this story, we couldn’t help but notice some other little tidbits of information contained within. For example, here is how the Times described Substack’s discussions with potential investors:

Substack held discussions with potential investors in recent months about raising $75 million to $100 million to fund the growth of its business, said the people, who would speak only anonymously because the talks were private. Some of the fund-raising discussions valued the company at between $750 million and $1 billion, they said.

New York Times

And reported on its 2021 revenue:

Substack has told investors it had revenue of about $9 million in 2021, the people with knowledge of the fund-raising talks said, meaning that the discussions valued the company at a hefty premium relative to its financial results.

New York Times

A hefty premium indeed! And also great news for us!

If a company with a relatively simple business plan—1) make newsletter platform, 2) profit—can be valued at one BILLION dollars despite pulling down just $9 million in 2021 revenue, what could that mean for your pals at Defector? Well, we made $3.2 million in revenue in 2021, and so according to the extremely sane and logical calculations that have apparently made Substack worth one BILLION dollars, Defector is worth at least $333 million.

Maybe you’re wondering, Hmm, are these wildly inflated valuations, which we’ve seen touted by media companies like Vox and BuzzFeed in the past, anywhere close to being a true reflection of the worth or longterm viability of a company? or, Is this fraud? This kind of sounds like fraud? All we have to say to that is: We don’t make the rules. This is the market at work.

Anyhow, congrats to us.

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