Another short term (capital gain) exit: SiteAdvisor is picked up by McAfee

One of the by-products of early startup take-outs is that investors end up paying short term capital gains based on their income tax bracket instead of 15% for long term ones. Not sure if this is the case for investors of SiteAdvisor, but since the company was founded not too long ago, it must have been very close as they just got acquired by McAfee.

I met Chris Dixon a couple of months ago to get a preview of the service he had built, which is awesome. In short, SiteAdvisor crawls web sites, registers unique emails and profiles, downloads whatever is available for download, and checks for any malware, spam, email frequency, etc. Once you have installed an extension, you can get web site ratings alongside search engine results – indicating the risky and nefarious ones. Hyper useful (see this example on Claria).

Chris and I had a discussion regarding business models, distribution strategy and I remember telling him that this was something Symantec or McAfee would probably want to pick up very quickly because it was so complementary to their other anti-malware products. I am not surprised they made a move now. As to the terms of the deal, they are not disclosed and only Valleywag has a rumor ($75M) for now.

Congratulations to Chris, his team, and the Bessemer guys who funded the company, and must have gotten a sweet return on their seed investment.

Update: I have no clue as to the actual transaction price, and maybe we'll find out something in the footnotes of McAfee's 10Q. However people seem to be pretty quick at dismissing a “reasonable” acquisition price like the ones which are rumored. I very much doubt that SiteAdvisor was in a dire state/financing squeeze - which can only mean to me that they managed to get above the “magic number” that made investors and management happy to sell there and then.

Tags: siteadvisor

Comments

[Greg Linden]

Just in time too. It appears similar technology is about to be integrated for free into popular browsers and e-mail programs.

Microsoft will be integrating anti-phishing technology into IE7 as part of the Vista launch. Google already has anti-phishing integrated into GMail and their Firefox toolbar.

[David Ulevitch]

Jeff,

I find the price tag McAfee was reported to have paid pretty steep considering it's a technology that has yet to really launch *AND* most importantly that google (now that it employs core Firefox developers) can easily defeat with their Safe Browsing extension which now comes included on the Google Toolbar.

Plus, there are a *LOT* of other companies in this space doing similar kind of work. Seems a high price to pay just to eliminate a threat. SiteAdvisor does have some interesting IP on how they do what they do but it can be easily avoided by a competitor.

I'm pretty skeptical of the price reported by ValleyWag. Maybe they forgot a decimal point? :-)

-david

[Dan Sideman]

The commenters above obviously never bothered to try SiteAdvisor. It has absolutely nothing to do with anti-phishing. Toolbars like Google's Safe Browsing are technologically trivial - they look at some simple indicators like WHOIS data and geographic location. SiteAdvisor has a huge datacenter that crawls the web analyzing websites for security-related characteristics. This is a great purchase for McAfee.

[David Ulevitch]

Dan,

You're incorrect. I've *more* than tried SiteAdvisor. I've talked with a lot of people who work in that space and know the company and its founders well.

You need to re-read my comments. My point is that I doubt the high price being reported -- not that it was a bad flip. Like many things, timing is everything and SiteAdvisor had some good technology at the right time regardless of the price. I think the market in this realm will change pretty dramatically in the next 9-12 months.