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Secret Shuts Down

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Re: Secret Shuts Down

#141

Post by vonklaus »

zaidf wrote: post #114
vonklaus wrote: post #107

Earlier quoted context omitted.

Well, maybe getting an early payout caused them to lose the hustle. They turned the engine off, handed the keys back to the investors and walked. It would have been harder to shut down the company if they saw 0 upside, and all their sweat equity evaporated.

You seem to suggest that shutting the company down was definitively a worse outcome for investors vs. keeping it going. It isn't that black and white. For example, if they kept the company going and spent the remaining millions and still failed(most common outcome), it is a worse outcome than shutting it down now and returning the millions.

To clarify, the outcome of any company is unknowable, as is the future of everything. When you take a look at the guys from airbnb trying to make rent selling cereal and renting out an air mattress, that's the hustle. I am just suggesting that, hypothtically, if these guys were that hungry they would do anything to save the company. I saw Byttow's interview with Kevin Rose, he seemed passionate and intelligent, I don't want to discont their work. I just think that there are some people that won't (or financially can't) quit until the repo guys carry out their office. The people with that drive have a high correlation with success.

Re: Secret Shuts Down

#142

Post by abalone »

zaidf wrote: post #139
abalone wrote: post #136

Earlier quoted context omitted.

You're conflating valuation changes with cashing out. There's not problem, ethically, if a valuation swings rapidly either way. But cashing out ahead of a massive failure is a totally different move. That sort of thing in the public markets would prompt an SEC investigation for insider trading (despite it being "their money"). In the startup world it comes down to, these are not folks investors should be trusting.

In the startup world it comes down to, these are not folks investors should be trusting. Or "trust these guys: if they fail, they won't bullshit you and just give you the money they have remaining back." It's all about perspective. Luckily, most investors don't think like you. Ones that do don't survive that long in the business.

You mean, except for the $6M they kept for themselves.

I'm the sort of founder that thinks it's my duty to return value to shareholders. I should make money when my investors make money. I would argue that is the only perspective that survives the long term in business. Riding hype waves to enrich one's self without producing real product, that's not sustainable.

I know we're all founders here and would love to get the kind of deal the Secret guys negotiated (or Groupon, etc.). But it's not healthy for our industry. Basically the arguments in support of these guys is, well the investors knew what they were getting into. But that could be said for any scammy move by a founder. If they're trying to "do the right thing" they should return all the money to investors, minus a reasonable salary.

Re: Secret Shuts Down

#143

Post by bsder »

abalone wrote: post #35

"Secret will hand its remaining cash back to investors" Minus the $6M the founders took off the table? If they keep it.. if ever there were a case for blacklisting founders, this is it. It is definitely NOT cool to pull a move like that. You want to cash out early a little because you've been boostrapping, ok, but if you then bail on the company and shut it down within a year, then you start to look like a fraud who…

The point of letting the founders take some off the table is that the investors want to swing for the home run rather than a safer acquisition that the founders would probably take.

In fact, the investors probably let the founders take some off the table precisely to prevent the cashout. I suspect that Secret had an offer in hand from someone, but the investors wanted a bigger return.

The problem is that the little people who also had stock/stock options never got the opportunity to cash out and they would have almost certainly made the same choice as the founders.

Re: Secret Shuts Down

#144

Post by Perceptes »

beat wrote: post #48

From my very limited perspective from outside Silicon Valley, Secret looked almost like an exercise in Silly Valley self-parody - like an elaborate joke that went too far. Did it implode? Yeah, sure. Did it ever make sense in the first place? Not really. pg says that great ideas often look like bad ideas. But I think it's also true that bad ideas often look like great ideas.

Completely agreed. Secret was basically a manifestation of Poe's Law[0].

[0] https://en.wikipedia.org/wiki/Poe's_law

Re: Secret Shuts Down

#145

Post by 0x15_faces »

Giorgi wrote: post #122
testguy34 wrote: post #103

Earlier quoted context omitted.

Moderation on 4chan and /b/ has increased over the last year. Mostly to prevent the posting of peoples personal information. But the posting of shock images has also decreased. I don't know if they are being removed as well.

Yes, so-called "Social Justice Warriors" took over and made once uncensored board into heavily censored tumbr.

One visit to /pol/ will show you how incorrect you are about increased moderation and lack of free posting.

Re: Secret Shuts Down

#146

Post by zaidf »

abalone wrote: post #142
zaidf wrote: post #139

Earlier quoted context omitted.

In the startup world it comes down to, these are not folks investors should be trusting. Or "trust these guys: if they fail, they won't bullshit you and just give you the money they have remaining back." It's all about perspective. Luckily, most investors don't think like you. Ones that do don't survive that long in the business.

You mean, except for the $6M they kept for themselves. I'm the sort of founder that thinks it's my duty to return value to shareholders. I should make money when my investors make money. I would argue that is the only perspective that survives the long term in business. Riding hype waves to enrich one's self without producing real product, that's not sustainable. I know we're all founders here and would love to get t…

I'm the sort of founder that thinks it's my duty to return value to shareholders.

You can be a founder that thinks it is your duty to return value to shareholders and still take money off the table. In fact, there are situations where not taking money off the table hurts your shareholders.

Example: you're a poor founder with $400K in loans and 0 in saving, you're running a startup with good traction. You get a $20M acquisition offer and you accept it thinking it lets you clear debt and not be super poor anymore. Problem? Your investors barely get their money back so an exit you consider successful is not that successful of an exit for your investors.

Now imagine the investors let you take $1M off the table to clear debt and get a little comfortable. Now when the $20M offer comes in, it is easy for you to turn it down because you aren't in debt and you have a decent life. As a result, you end up building a $500M company. Your investors come out ahead because the equity they got for $1M cash you took off the table made them $10M, not to mention it gave you the mindset to turn down the $20M acquisition offer.

For many funds, they would rather you fail trying to make a company that is valued at $500M than be successful in building a company that is only worth $20M. Letting founders take cash off the table can help founders think as big as their investors do about the max potential of the business.

Re: Secret Shuts Down

#147

Post by barrkel »

sethbannon wrote: post #101
nostrademons wrote: post #72

This shutdown - and some of the comments here that indicate how nasty Secret had become before it died - is quite interesting in light of the conversation surrounding Google's Real Names Only policy. Secret cofounders David Byttow and Chris Bader-Wechseler were both veterans of Google+. Byttow, in particular, I recall being quite well-respected as someone who got shit done, quietly and efficiently, by the rest of the…

I'm not so sure it's wise to call G+ a "dead" social network. According to recent research by Pew, it's more popular than Twitter and just as popular as LinkedIn. http://www.journalism.org/2014/10/21/section-2-social-media-...

It's currently impossible to create a Youtube playlist without a G+ profile.

Every time I want to create a new playlist, I create a new G+ profile, then delete it immediately afterwards. It is tedious. I'm sure many other people, when faced with roadblocks like these, create a do-nothing profile but don't bother deleting afterwards.

Re: Secret Shuts Down

#148

Post by duderific »

Gaussian wrote: post #61
abalone wrote: post #35

"Secret will hand its remaining cash back to investors" Minus the $6M the founders took off the table? If they keep it.. if ever there were a case for blacklisting founders, this is it. It is definitely NOT cool to pull a move like that. You want to cash out early a little because you've been boostrapping, ok, but if you then bail on the company and shut it down within a year, then you start to look like a fraud who…

That's silly. Everybody involved understood why the founders would choose to do this. It has everything to do with risk and opportunity and likely nothing to do with some kind of malevolent avarice. And bailing while returning a significant sum to investors takes courage. It's easier to sit in board meetings and pound the table and tell them how you're going to turn things around, even if you don't believe it.

> It's easier to sit in board meetings and pound the table and tell them how you're going to turn things around, even if you don't believe it.

I don't know if that's true. They have $3 million in the bank "off the table" money -- given that, it's probably easier to chill for a while and then start another company than waste time on a company you don't like anymore.

Re: Secret Shuts Down

#149

Post by simplexion »

droopyEyelids wrote: post #138
w4 wrote: post #128

Earlier quoted context omitted.

> Then, at least in SF, it started being almost entirely about gay sexual fantasies. Friends in my circle started using it less, so it got less interesting to me. Eventually I stopped using it when nobody I knew was posting. This happened in Boston as well. It was really odd how rapidly it changed from a mix of different types of posts to nearly all gay sex posts. I wonder if that won't flow over to Yik Yak now that…

Secret didn't have a mechanism to remove offensive posts that was as effective as Yik Yak's is. Yaks can be raunch as all get out, but there has to be something for the average person to relate to. If you follow it closely, you'll see there are many posts made while the author has lost their mind with hormones, but they're voted off in about 120 seconds.

Yik Yak's mechanism for removing "offensive" posts is exactly why I stopped using it. The amount of mundane posts of mine that were deleted was incredible. Too many people take offense to so many things.

Re: Secret Shuts Down

#150

Post by kovvy »

ryandrake wrote: post #119
harryh wrote: post #79

Earlier quoted context omitted.

I'm certain that if you can build a product that generates a huge buzz and gets millions of people to sign up that you will have absolutely no trouble raising that kind of money. So go for it!

Ahh, but we're not talking about building the whole product and generating buzz, etc. We're talking about the stated purpose for raising $25M: "The funding will be used to implement two new features, a Facebook login and the ability to follow posts on a certain topic". $25M. For TWO features. Hell, ignore my previous offer. I'd have given them a 92% discount and done that for a cool $2MM.

Pace yourself. Be a little less eager to drop your price when you bargain. Try $24.5M first, then $24M. It's still a discount compared to the competitors.

You're already asking for a price so low you might end up barely scraping $100,000 an hour.

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