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I had a conversation with LinkShare Chairman and CEO Steve Messer on Wednesday, just two days after his company was purchased for $425 million by Rakuten, a large Japanese e-commerce player.
Since I gave the detractors of the deal their say in prior blog posts, now it?s Messer?s turn.
He called the whole experience over the last month, “crazy and exciting.” He was clearly excited about LinkShare?s transformation following the acquisition from ?a fast growing privately-held company to part of the 7th largest Internet companies in the world overnight.?
Rakuten, established in 1996, has more than 4,000 employees and a market capitalization of nearly $10 billion dollars.
?They talk about Rakuten in Asia like we talk about Google here,? he says. ?We are lucky to be part of it.?
What Messer was not as enthusiastic about was some of the negative comments on the affiliate forums and message boards as well as some blogs (this one included).
?It?s easier to be a follower and not shake the boat, but that?s not what we are about,? he says. ?Things can get bumpy when you take a leadership role.?
He acknowledges that LinkShare has its fair share of critics.
?We are controversial. People love us or hate us, but I think there are more people that love us. For the most part, with the exception of some very vocal affiliates, I think we have done a great job keeping affiliates and merchants really very happy.
Most of the critics questioned why his company was able to command such a hefty price, given what some of his competitors sold for over the last couple of years.
Commission Junction was bought for $58 million in cash and stock by ValueClick in October 2003; ValueClick previously purchased affiliate network BeFree in March 2002 for $128 million in stock; Performics was acquired by DoubleClick in an all cash deal estimated of $58 million (plus an earn-out of up to $7 million) in May 2004; DoubleClick was later (July 2005) acquired by Click Holding Corp. in a deal valued at $1.1 billion.
He was quick to point out that “markets are effective and things are bought for what they are worth.?
As proof of that, he claims Rakuten was not the only bidder interested in LinkShare. He also noted that the other interested party, which he declined to name, was willing to pay a similar amount.
?People do go out and spent this kind of money haphazardly. And they were not the only bidder in that range. The markets truly value assets,? he says.
As for those that questioned the specific metrics of the deal based on LinkShare?s earnings and financials, Messer defends the deal saying professional and well-established investment houses conducted it. Morgan Stanley advised Rakuten and Goldman Sachs handled the LinkShare side in the transaction.
Messer wishes that some affiliates would view the deal as a positive affirmation and validation of their own industry.
?This is the first time the world has recognized affiliate marketing for its real value and contribution,? Messer says. ?It shows that affiliates are worth it.?
Rakuten is using LinkShare, which will retain its brand identity, as its jumping off point to take on Yahoo! Both in Japan and the U.S.
Messer says the he plans to stick around as does Heidi Messer, the company?s president and COO. The company will remain headquartered in New York.
?They plan to use Heidi and I was the core of the strategy to enter the market. From our perspective this is not about us leaving or cashing out,? he says. Instead, he?s looking forward to helping to ?take the company to the next level.? Where LinkShare will compete with MSN, Google and Yahoo!
Messer is also not worried that Rakuten is a large conglomerate with very diverse assets including a professional baseball team, Rakuten Golden Eagles.
?Their diversity is an asset. They have a depth of resources, a large global presence and they company is a big believer in affiliate markets,? he says, noting there is some real synergy with Rakuten Ichiba, which caters to small and mid-size merchants. ?That is the perfect platform for us to take the market to a new place where we can grow and make it better.?
As for the future, Messer was a little vague on the specific details. He says that work on projects that are currently underway will continue uninterrupted.
?Every project was completely unaffected by this deal. Yesterday, we celebrated and today it was back to business as usual.?
Messer says he celebrated in a very low-key way ? he went to sleep. ?It?s been a long few months.?
