NerdWallet’s IPO proves you can write your way to a unicorn valuation

You can make a lot of money if you create software and sell it online. Because of low-cost distribution, it is conceivable to develop a single line of code and sell it several times, resulting in large profit margins. Add in a broader industry trend toward recurring pricing rather than one-time sales, and you have got yourself a solid platform for high software firm valuations.

Writing meant to be the same, but it did not always go as planned. Although the internet allows you to write once and disseminate your thoughts to anybody at a very low cost, economics proved to be somewhat difficult. The true method to earn money writing online turned out to be treating words like code and releasing them under a subscription model, allowing media organizations to resemble modern software corporations far more than we thought in the early days of the internet. The New York Times is a wonderful illustration of how this may work, with 68 percent subscription revenue in Q2 2021. Another example of the approach is TechCrunch+, but we are a thousand times smaller.

NerdWallet’s IPO proves you can write your way to a unicorn valuation

The paradigm of writing and sharing content free on the internet based on advertising rates transferring from traditional media such as television and print to the internet. Even though specific newspaper niches may currently attract respectable ad prices, they largely did not. Then there is NerdWallet, a company that has proved that not only can you earn a lot of money writing on the internet without charging for it, but that if you can do it off, you can also provide a lot of value. At TechCrunch, we love a good counterexample.

The company’s IPO pricing information was released this week, providing us a glimpse into its estimated public-market valuation, and the good news for aficionados of making words appear for others to consume is that NerdWallet is likely to fetch a unicorn price once it begins to trade.

Naturally, NerdWallet’s work differs from traditional journalism. However, as we highlighted in a previous story on the company and a writing-focused episode of Equity, the firm makes a lot of noise about its writing crew being editorially autonomous. In principle, the company’s writing teams are working for the reader rather than the revenue and marketing units’ short-term objectives.

NerdWallet even said in its IPO filing that the company will avoid sugary-sweet, short-term revenue hits in order to maintain long-term reputation, i.e., it will not accept extra payments from customers in exchange for recommending inferior items. NerdWallet’s business strategy is based on trust: it will recommend the finest goods regardless of how much commission it receives for directing consumers to them.

As a personal financial expert NerdWallet’s connection with end customers is built on wirecutter, trust, and the effort the firm does to sustain it. Returning to values, NerdWallet aims to sell stock in its IPO for $17 to $19 per share, based on a non-diluted share count of 64,747,341, or 65,834,841 inclusive of shares held for its underwriting banks, giving it a market capitalization of $1.25 billion. That must be more than $1 per word, according to NerdWallet, signaling a decent return on scribbling.

The company’s fully diluted valuation at the midpoint of its IPO price range is $1.3 billion, according to Renaissance Capital, my favorite gang of IPO heads. That sum grows to $1.37 billion at $19 per share.