.com's are no longer important, blekko, duckduckgo, drop.io and similar companies are proving this. It's not a big deal anymore. Every time I pitch Reward.io I get asked "how will It make money" so saying that profits don't matter anymore is a big understatement in my opinion. New business models are being developed and used to make money like Freemium and more subscription models.
There will always be some startups with over valued valuations but the big thing is startups don't think they are invincible, with Digg and Myspace startups know they could die if they don't work hard and try and find a way to make money, even twitter which has gone almost too far recently with DickBar.
I don't know about the rest of the world, but we sure are in a bubble here at Hacker News. There seems to be a real disconnect between what people want to build/invest in and what people in the real world actually need and want to pay for. Just as sample of what I've witnessed in the past few years: Ask HN: How do you like my file sharing app? Ask HN: How do you like my social app for niche ? Ask HN: How do you like…
The $41m injection might well kill the company. I've never seen startups with too much capital early on to become the next Google/Facebook/Twitter - you lose your chance to become "relentlessly resourceful"!
there is a big difference between having the capital available and actually spending it.
Doesn't it make you a bit relaxed? I've seen the effect of "too much money" first hand, regardless of spending
Hmph. If nothing else, posts like this are terribly offensive to the entrepreneurs that dedicate their lives to products like Color. Did anyone consider that maybe Sequoia, who have invested in companies that make up over 10% of the NASDAQ know what they are doing? Companies like Color, AdKeeper and Flipboard have "crazy" valuations based on the founders having ridiculous resumes. They have all created billions of do…
- If it is going to take them a few years to get to their eventual, profitable, goal, why invest $41M now? Why not invest $20M now and another $21M when they're on the track that will be truly profitable, once they've demonstrated where they are going? - Is calling the investment "crazy" really offensive to the entrepreneurs? It is more a compliment to them than anything else. The investment may be crazy, but the ent…
Picking up on your third point, if your investment thesis is that mobile social networks are a huge untapped winner-takes-all market, spreading your cash index-fund-style over the most promising 80 mobile social startups (kids in college dorms without the resume maybe...) and saving the rest of your war chest and partner attention for the ones showing signs of traction would also probably be a safer bet.
From everything I read, Color has a fantastic team and the Techcrunch article is actually pretty positive on the idea. I'm sure that the company will succeed. But saying a company will likely succeed and deserves an investment does not mean VCs shouldn't be making rational valuations based on real business metrics. And as the OP remarked, this is probably funding at a $80m+ valuation for a company with no product (wh…
Right, this puts their valuation above those of already very successful companies.
Actually it puts their valuation around the same that Lala was purchased for!
I don't know about the rest of the world, but we sure are in a bubble here at Hacker News. There seems to be a real disconnect between what people want to build/invest in and what people in the real world actually need and want to pay for. Just as sample of what I've witnessed in the past few years: Ask HN: How do you like my file sharing app? Ask HN: How do you like my social app for niche ? Ask HN: How do you like…
Hmph. If nothing else, posts like this are terribly offensive to the entrepreneurs that dedicate their lives to products like Color. Did anyone consider that maybe Sequoia, who have invested in companies that make up over 10% of the NASDAQ know what they are doing? Companies like Color, AdKeeper and Flipboard have "crazy" valuations based on the founders having ridiculous resumes. They have all created billions of do…
- If it is going to take them a few years to get to their eventual, profitable, goal, why invest $41M now? Why not invest $20M now and another $21M when they're on the track that will be truly profitable, once they've demonstrated where they are going? - Is calling the investment "crazy" really offensive to the entrepreneurs? It is more a compliment to them than anything else. The investment may be crazy, but the ent…
Wait, it's insulting to other entrepreneurs who have created apps similar to color? Since when was capitalism fair? The large funding just might mean color will have the resources necessary for years to completely dominate the mobile photo market.
As someone else commented, Facebook could easily add a feature to show pictures from friends geotagged with your current location. (Not a perfect replacement but a lot of the magic.) Apple also appears to be getting aggressive in this space with the new version of mobile me. Color has an interesting vision, but I think traction as a photo sharing add-on is going to be tough once the social network and the mobile devi…
What is far more likely is for Color to try to get themselves acquired by Facebook. If this is their real company strategy, the $41M investment actually makes sense.
that's exactly what I was thinking. I see this as being a very novel concept that if reaches a certain threshold of brand-awareness and good design could be a perfect acquisition target because merely replicating the feature-set would be like Google Video before Google acquired YouTube (it wouldn't be about the technical capability as much as the culture and community around the novel concept).
Don't follow the hype:)
The way i see things is simple.
X angel/vc knows how to play the game of taking some Y startup with non super unique idea/product and sell it to the Z highest bidder.
When X invest money the most important thing is to make Big News.
The Z are full with money to spend, they know that money need to circulate in order to multiply.
They watch The News.
They react. With money.
On the other side of the line are X, they also watch the news, dream for success and want to be Zuckerbergs.
And so on.
From my perspective the smartest move is to connect demands of Z and availability of Y. Be a X or The News channel.
But i am small, insignificant, away from first hand experience and everything that i think is away from The Game that is x,y,z.
Thinks i can do with one million funding, if i have it, in terms of product development, team building, business development, are so old school and simple that are not interesting to put here at all.
For me in this position the only valuable model is bootstrapping everything, test early in real world and iterate slowly and carefully in terms of technology and business model.
But i deeply respect The Game of x,y and z, not so in direct meaning but as side effect. If all this money are 20% effective they push new technology to the limit and test the audience and give as a valuable lessons without risking money that we don't have.
So if Z want to spend it's their decision to make.
Our is to choose a) to be valuable Y or b) to be other letter in the equation making our own working function, with our own proven methods and variables:)
I don't know about the rest of the world, but we sure are in a bubble here at Hacker News. There seems to be a real disconnect between what people want to build/invest in and what people in the real world actually need and want to pay for. Just as sample of what I've witnessed in the past few years: Ask HN: How do you like my file sharing app? Ask HN: How do you like my social app for niche ? Ask HN: How do you like…
That's really unfair. Whilst I agree there's a disconnect, I wouldn't say it's specific to HN, but rather to the entire industry. The reason why you see those Ask HN posts is because people are looking around and realizing that those types of services have been getting tons of funding and attention. There's a disconnect, but it's in the social web world, not just HN. And I would say HNers are trying to capitalize on…
I disagree.
I think the reason you see those kind of posts is that those kind of applications are low-hanging fruit. The development of Yet Another File-Sharing App or Social Media Service can be accomplished by anyone with a "Learn Rails In 21 Days" book and a credit card.
Companies that are also getting tons of funding right now are biotechnology and solar energy startups, but I have never seen anything along the lines of a "Ask HN: Review my research on getting 3.3% more current per solar flux unit by doping gallium with boron" post, despite the fact that such an accomplishment would likely garner extremely good investment and/or business prospects.