Theo Paphitis is robbed of £200k for 30% of affiliate site Gaming Alerts in Dragons Den TV show
Theo, if you are reading this, I can save you £100k and get you 100% of a company, not just 30%.
Maybe its me but I always see Dragons Den as a kind of “last chance saloon”. In other words if you business hasn’t grown organically or been able to attract investment from other sources then give Dragons Den a go. I mean why else would you put up with the humiliation the Dragons always dole out and the exorbitant percentages of the companies they demand when investing? Just my opinion.
Anyway tonight’s episode saw affiliate site Gaming Alerts pitching for £200k investment. To be honest the site is nothing special or unique, it compares offers, deals and promotions from gambling merchants and displays them on their site. They have a downloadable desktop widget which delivers these deals to their user base. Nice touch but hardly revolutionary. To be honest the only good thing I can say about the site is that it was designed by Dave Naylor’s company, Bronco and looks really slick and professional.
However I have to question whether Theo really understands the online gaming industry and affiliate model at all. I don’t think he does. Otherwise why would he invest £200k for only a 30% share in a new site that is growing slowly and organically and not turning over any real revenue? For around £100k he could built a site from scratch just as good and employ a couple of decent people to develop it. He would then save £100k straight away and one 100% of the company, not just 30%.
Am I wrong? Is £200k just way overpriced for 30% of a site that as far as I can see is nowhere in the search engines, gets very little traffic and has a bingo forum with even less users than mine? Where is the value?
What I’m listening to right now: Jagged Edge - “Baby Making Project”
Tuesday, October 23rd, 2007 at 12:05 am and is filed under Affiliate Marketing, Making Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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[...] Kieron I was quite stunned to see what essentially is 4 gaming affiliate sites obtain £200,000 based on [...]
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[...] is the new black - for cars that isPrince concert review - O2 arena London Friday 3rd August 2007Theo Paphitis is robbed of £200k for 30% of affiliate site Gaming Alerts in Dragons Den TV showCompetition - Win a completely new blog design worth $799 [...]
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[...] all know that last year Theo made a similar mistake and blew £200k on another online business, but you would think he would have learned by now [...]
Welcome to my blog. My name is Kieron Donoghue and I run UK Offer Media Ltd. I thought it would be fun to post a daily (well hopefully daily) blog, writing about my experiences in Internet Marketing and more specifically Affiliate Marketing. I'll include some personal stuff too, probably about my other passions, music and cars. Please feel free to post your comments and thoughts too.
Got to say I was incredibly surprised with this offer. I’ve no idea how “big” they are or whether the £200k for 30% is good value. My personal opinion is that Theo has been done over good style.
Perhaps he was sucked in by the bingo player numbers they quoted? I don’t recall any info about number of downloaded alerts, userbase etc? I’m not sure the brand is that valuable either. The forum registration numbers of 117 isn’t exactly a good sign
Still fair play to Gaming Alerts for bagging the cash. It will be interesting to see how they develop now, and it’s always good to see a Dragon’s Den segment that is quite close to home.
Jason
Actually, I think Theo is smarter than you may think. Think of the exposure the site now has, people will talk about it and link to it. Casual viewers that otherwise wouldn’t have thought to look for something like that, may now give it a go.
Build up the userbase, rankings etc - then sell up 6 or 12 months down the line, at least doubling his money along the way.
There are *a lot* of people willing to buy something just 6 or 12 months old if it’s done well. It doesn’t have to be different or clever, just done well - and there is seriously big money out there for people willing to sell.
Kieron, I 100% agree with you.
I almost choked on my dinner when Theo announced that he was willing to fork out the whole £200K. We all know there is a killing to be made in online gambling if you play it right, but to invest that much in a start-up for something that is a) so easily replicated and b) not yet making any real money, is crazy.
However, what surprised me most was that Duncan Bannatyne, who apparently owns a casino, was completely unaware that people played bingo online… maybe he hasn’t seen the recent Sun Bingo ads!
Paul
I have to agree, I almost choked on my dinner when Bannatyne discussed his opinion of online bingo!
I had a feeling that every UK affiliate would be talking about this one and your bingo site is the first one I thought off when they pitched the idea.
I have been doing some business with one of the 5 dragons recently and they asked me to explain the model and its possibilities in depth, after this I see why!
Yeah, I couldn’t believe it, £200k!?
Apparently a good portion of the offers made at the den are withdrawn due to “minor technicalities” source: Sunday Mirror , or as Theo is about to discover a crap business model with projected earnings that just laugh in the face of reality.
Will people really download 5.7 mb of annoying pop ups containing the “latest offers”?
After 18 months this site has managed to get about 239 links and most of them are from their other sites. I could get them more in a hour.
The site crashed yesterday so I’m guessing it had at least 50,000 uniques after the program.
Wonder if I should try to sell my fledgling porn site on Dragons Den? No traffic and just a holding page at the moment, I’d settle for £500K.
Worth a punt.
He got mugged! I also have to wonder how much of that 200K will go into marketing which I am sure will be done by their other company.
You just need to look at the bingo industry and see this download concept isn’t going to be a big hit. Most bingo sites now are making a non-download version of there game because people out there are not confident to download and install stuff, specially stuff that will pop-up alerts and be very annoying after awhile.
I think LB is right - they now have a link on this website and on Rob’s website - http://www.monetisethis.net/2007/10/affiliates-win-investment-on-dragons.html
As more people discuss this on their blogs, so the traffic will increase. Essentially this has now created a buzz which will help to propel the site’s popularity.
Even if Theo backs out, the site has had exposure, and now has some links on some good quality blogs - free of charge.
If he stays, I would guess that the site would benefit from a bit of PPC investment, giving it the push it needs. Infact, if you search Google for Dragons Den - http://www.google.co.uk/search?q=dragons+den - they have a PPC ad running.
At the end of the day, you have to remember that people like to invest in sites that don’t make a lot of money - so long as there’s potential. Youtube, Feedburner, Flickr, Del.icio.us….
(Kieron - I think my comment got swallowed up by your spam filter. It had a couple of links in it.)
(Kieron - Ignore me - it just took a few minutes to appear - d’oh!)
David, LB, I hear what you are saying about there being a lot of “buzz” about Gaming Alerts as a result of the Dragons Den show and blogs like mine linking to it. But will the visitors from say this blog convert to Gaming Alerts customers? I doubt it. So yes they are bound to receive a traffic increase and some links but I can’t see it having any kind of impact of revenue.
Not sure who mentioned it but there site was actually down last night with the extra traffic, so not a good basis for a £200k investment.
As others have mentioned, not sure that the desktop download is the most innovative idea to take the site forwards. If it was me that had developed the brand, I would have gone down a mobile application route or even a text message alert system, hitting all the punters at trackside, especially on the bookiealerts side.
It just goes to show, no matter how succesfull you have been in business, you can and still will make mistakes {IMO}, which is made worse by being televised to a captive audience.
Didn’t they originally try to get £200k for 10%, meaning their affiliate website, which is still in its infancy, was worth £2million?
I had to change my boxer shorts when I heard this, and had to change them once again when someone actually invested in the ‘company’. As you have said, £100k would have created his very own company where he could easily reap 100% of the profits and not 30%.
I think alot of the stats were simply blagged, as the lass first mentioned there were 3 million online bingo players, later on this was marked down to 2 million and that they chat’s were real busy. So 3 million, to 2 million yet the dragons didn’t pick up on it, had they of done, I would have then gone back and asked them to confirm turnover etc.
Am I jealous? No, however I think what the two salesmen did was fantastic at pulling the wool over the dragons eyes - something which the programme has proved, is VERY hard to do. Good luck to them, however I truely think that the opposition they face in the market is too much to make an impression.
I completely agree, certainly not a unique idea. But they certainly played it well by getting a lot of exposure. The £200k could easily be spent making a similar site including the development of the application and marketing. Maybe 8 years ago this would have been a great investment
i can see where you coming from guys, especially you being the competition and all…. but creating his own company is completely different from what dragons are doing…. every single one of them could create their own company that makes more money and is more successful than the one they invest in…. the point is: the couple Emmie and Ed obviously have some very good experience in the gaming industry… What does experience mean? good contacts and knowledge… the dragons either invest in people or the brand… in this case it was people…
Theo might have gone overboard with the 200k, but it was so clear that he did not want to let them go…. even after the 25% offer, which was supposed to be the last appeared… with the right people any business can do well. The dragoness would do the same but she pulled out expecting the conflict of interest…
I can’t say if any money will be gained by Theo, but I reckon that there is a potential… Making a brand… recognisable faces, recognisable design and so on… security and other issues are instantly sorted… wait and see what they do with the money and then you can try and be spiteful… at the end of the day they got the money… so i can say nothing but WELL DONE GUYS!!!
PS: dragons den - kind of “last chance saloon”??? u kiddin? What humiliation? Does it really matter if you want to make a business out of nothing and even if you have other opportunities, but getting one or more of the business masterminds on board… That’s worth any humiliation + if you really have an idea, you won’t be humiliated you know…. I don’t think there was a lot of that for Gaming \Alerts guys at all. Apart from the guy sweating… but that’s just natural..
what a load of rubbish - they had no real apprecitation of their target audience was and delivered their negotiation with no real credibility. Affiliate marketeers - get your appliations in for some investment from the dragons - it’s apparently like taking candy from a baby!
Just thought some of you may be interested in this thread http://www.casinoaffiliateprograms.com/bb/welldone-gamingalerts.23296.html? the owner of the site (who was on dragons den) is posting here about his experiences.
lets pretend I have no clue who Gaming Alerts are, but they have gained the attention funny enough for Bingo, maybe they need the money to play in Poker, Casino, football betting etc etc etc.
The download software would cost you 40k a year for the licence, that I do know.
and they are SEO’s so they would have to budget something for that.. and what would any Aff pay the get the media attention that we just did
DaveN
Seems like the bingo comapanies already have their own:
EG:
http://www.virgingames.com/bingo/alerts/default.aspx
Helen
Firstly I am not being spiteful, as I mentioned in my original comment. I am not jealous, but I admire them for extracting money from someone, who didn’t have a clue what they were talking about. If they went to an internet investor, there is no chance whatsoever they would have been successful.
As for last chance saloon - sadly this is true. It’s a means of raising funds that they would never be able to achieve otherwise. If this wasn’t the case, then why would they hand over 30% of the company to someone? It’s always been last chance saloon, when many have explored other avenues, but have always been faced with dead ends.
By the way, this is coming from someone who is NOT their competition, so my view is completely unbiased IMHO. It continues to completely bewilder me, and I truely believe that he will not see a penny for his investment.
The dotcom bubble bursting all over again, but on a very minute scale thank goodness
If we saw all the presentation and not an edited version I can’t understand what Theo was thinking. I’m sure he will back out of the deal as someone else suggested.
As for this being a last chance saloon, I have to agree, however, there are some people who are never really after the investment and use the program to promote themselves. Ling springs to mind. Great way to kick start a business if you can get the dragons interested and then turn them down.
I’m sure there’s a lot we don’t see - it’s highly unlikely a Dragon would invest £200k without even asking where it would be spent!
I have to say I was a bit surprised when Mr P agreed to the 30% share - I’d been quite happily telling the other half that he wouldn’t go for it.
Being cynical I’d think that the aim was for getting publicity for the site which does seem to have been paying off for them.
I wish them all luck and hope they all get what they want out of it and when Theo’s finished with them I’m more than happy to take his money too…
I’m sure if he spent 200K on buying it he must have some marketing vision - for these sums I’m sure I could find some people to help him realise this vision :p
I can’t believe that not even a single dragon asked about the sites search rankings! More like Dickhead’s Den.
Its a great show though especially when you get people with hair brained ideas, well thats entertainment.
Don’t believe everything you watch on the telly…
Having been in television production, I can say that quite a bit of it is scripted, even for documentary and “reality” TV.
There might be elements which aren’t apparent to views or not deemed “soundbyte” worthy…
It’s sad that many venture capitalists don’t understand online business.. Overpaid is an understatement hehe
But still they have plenty of time to make money of the site
@Partick Bateman
you saw 12 mins from 1and 1/2 hours of pitch and QandA ..
DaveN
I disagree with the topic.
Theo knows what he is doing, within a few weeks I am sure the will get more hits with bigger bandwith. He is a marketing guru.
……… also look at the traffic it is going to get from this site.
Not saying I disagree with this topic but a few weeks ago (early November/late October) I saw Bingo Alerts ranking on page 1 of SERPs in Google for a number of major bingo keywords, at least the names of bingo sites like Gala, etc.
Like someone said earlier, many links are from their own site. Not sure how well the “alerts” will be but beyond bingo, adding all their sites together (gamingalterts et al) and £200k then couldn’t this business model work over the next few years?
Would be interesting to get some feedback from those who have done well in bingo/gaming. How’s your bingo site done Kieron?
When I saw the program I thought exactly the same. No way this site is worth over 600K. Ha Ha Ha.
They would be lucky to turnover that in the next 5 years.
on DD right now - he signed the cheque so hasnt backed out now - ok not the wisest move hes ever made to be fair but he has acquired a couple of people who should understand the affiliate / gambling space very well and could be applied to other ventures - just checked out the site now - really does look like an affiliate-one-man knock up job!
That’s crazy. My freaking blog gets more traffic than that site.
Dont believe all this, calm down you lot. These dragons know the script, that theo is a clever cookie and so is jimmy c aka james charlton caan. I think the guy that lives in the den has the pedigree to be on the panel, fairdos he is no brad pitt but neither is deborah meaden and shes had a shot. I think the best two dragons are peter and duncan. They are sharp and don’t mess about unless it’s a good looking bird and that old casanova bannatyne might have a pop obviously at the buisness idea. Me and my two friends watch it on a weekly basis and have all the latest posters, dvds, books, scarfs, bedcovers, phonecovers, the lot. We are DD thats dragons dens biggest fans. One of my friends scarf say ‘Go on james blow your cash again’.
Glory Glory Leeds United
Hiya,
That’s right, you could build a new gaming site within 6 months with £30 and get more traffic than Gaming Alerts. The sites linked to a affiliate program which pays a commission, nothing new in the internet marketing game.
I wish Theo would invest £100 on me, I would be making that back in no time. By the way I’ve already done it.
Hi there,
A year ago I was watching the show as well and I agree with you, I thought “Theo are you mad??”. Might as well just throw your 200k in the bin.
You may like to see that I came across this press release and it looks like they diverted their efforts a little bit now.. http://www.prleap.com/pr/127501/ Haha, not sure whether they’re in Theo’s best books anymore.