Glam.com, glam media, tim draper, venture capital

Why Tim Draper's latest virus isn't catching

Draper's Glam story Glam Media is the "fastest growing company on the face of the earth," according to its backer, the always hyperbolic Tim Draper. In an interview with AlwaysOn's Tony Perkins, Draper compares Glam, an online ad network, to past investments like Hotmail and Skype. But aside from enjoying his backing, there's little resemblance. A better comparison? Enron, another company with metastasizing revenues.

What does an online-ad company have to do with an energy concern? Like Enron, Glam's true business isn't selling; it's arbitrage. Glam grows its revenues, rivals say, by acquiring ad inventory from websites and then attempting to sell it to media buyers at higher prices. Buy low, sell high is a time-honored business model. But it's not a recipe for exponential growth spurred by viral marketing, as Hotmail and Skype were.

Nothing in Glam's business encourages a Glam advertiser to sign up other advertisers; nor does it spread from publisher to publisher unbidden. All Glam has going for it is the size of its wallet, which is why it's so desperate to raise money. Only with fresh capital can Glam continue its ad-buying spree, providing the illusion of growth that will allow it to gather more money, preferably in an IPO. At some point, investors will be left holding the bag. Maybe that's where Draper sees a connection: He unloaded Hotmail to Microsoft and Skype to eBay long before their buyers figured out there was no money in them.

1:42 PM on Tue Feb 5 2008
By Owen Thomas
1,120 views
8 comments

Comments

clubvoila at 03:36 PM on 02/05/08
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As I have said to other people who ask me -as a member of the Glam Network - what is it about Glam that I value: It is all about a good partnership. Glam is not perfect but they see me as a strategic partner and not as just another site where they can place banner ads. I do not feel disposable as I did when I belong to another network. Would I change some things? absolutely. However, I am part of a vibrant community of bloggers and websites that together with Glam are creating a new publisher economy. Just like ebay did for sellers.
Rockwell at 03:41 PM on 02/05/08
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Glam publishers remind me of Scientologists.
Bagbliss at 03:58 PM on 02/05/08
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Rockwell just because we like Glam does not mean we don't think for ourselves (if that's what you are implying). E-mail me at bag.bliss@yahoo.com and I can tell you more about what is like. The good and the less good.
Glam is simply a new model; one-that distributes both content and advertising and a model not everyone has taken the time to understand. If everyone did I am positive there would not be so many haters out there.
Hopeless at 05:54 PM on 02/05/08
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@clubvoila: Do you work for the Glam PR department? Sounds suspiciously like a company line.
clubvoila at 05:27 AM on 02/06/08
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Hopeless nope I am not but thanks that means I write well :)
sggrf at 07:49 AM on 02/06/08
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clubvoila ONLY writes about Glam, which is why we know you're part of the company --- good try.
Fetterman_07 at 09:54 AM on 02/06/08
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Tony Perkins and Tim are lovers?
rebump at 10:04 AM on 02/06/08
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Real funny that the scientologist remark is followed immediately by yet another supporter...in true Scientology fashion. I think.