21–30 of 134 posts
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[1] http://en.wikipedia.org/wiki/Mark_Pincus
[2] http://www.forbes.com/sites/nathanvardi/2012/10/05/zynga-kee...
Unfortunately it seems like a lot of the time people are building companies for exits, rather than long term products. There's exceptions of course, but how much of that is now the expectation that to get the funding to do something you've got to be aiming for $xm dollars at exit. I've got no problems with people exiting like that, but it makes me wonder where all the pressure to sell up and move on comes from.
The pressure often comes from the VCs who put a lot of money down in an initial investment, and need at least some of their bets to pay off within a short time-frame. Are there any long-term VC funds which accept stock and then wait for dividends?
This is diplomatic and charitable. When I see a repeat pattern of GroupOn and Zynga type companies I see someone who knows how to pump and dump. It's not quite fraud but it's getting close, given how loose these sorts of people typically play the truth.
VCs do due diligence - success for them isn't just funding a real business, but more along the lines of cashing out at the right moment.
Finally someone is talking about this! I've always felt that the "new" tech companies bring very little value to consumers and are thus not profitable long term (but of course the early investors and founders already made their money) The incentives of many VCs and "angels" are at opposite ends with sustainability, consumer value and long term success.
What kind of bugs me is why the small start-ups who are actually making money from day one don't really receive much money. I mean, $700,000 (pulled from thin air) in funding is good, don't get me wrong - but if they're making money and they have a decent business plan, why aren't THEY receiving $41,000,000 in funding?
VCs tend to care principally about how big it could get, to the exclusion of other potentially important principles.
A good counter-example to Color is actually Bingo Card Creator.
It's a great product, very well managed and fine-tuned by patio11, but it has a pretty rigid ceiling on its opportunity.
VCs avoid businesses that seem limited or overly niche so as to create a limited maximal market opportunity.
Another contrast would be anything in the ad business. It's such a huge business that a lot of startups that go into the ad industry end up making a sizeable amount of money fairly early on.
VCs tend to be keen on advertising startups that want to build a large platform or catch-all service that all the buyers/content providers will want to use. Nevertheless, they'll still invest in smaller scope ad startups that have an opportunity to expand.
They are one of the most successful internet things and yet they still don't seem to have any really solid way to monetize that. They are now part of culture but are they revenue positive?
The things they are doing lately don't make sense until you take that into account:
Restricting 3rd party apps and APIs? Seems to be driving users away... Except that if all your users are costing you money, then less users is in fact good.
And the only money making thing they seem to have is "paid tweets" that you are forced to see (aka ads) and so yeah, obviously they don't want 3rd party apps and APIs that could filter that one weak still mostly crappy source of money. So if they loose some freeloading users, why would they care.
So yeah. Why has no one else mentioned Twitter in this discussion as the grand-daddy-king of unsustainable companies?
This is diplomatic and charitable. When I see a repeat pattern of GroupOn and Zynga type companies I see someone who knows how to pump and dump. It's not quite fraud but it's getting close, given how loose these sorts of people typically play the truth.
Agree on GroupOn and Zynga, and there are still plenty of popular services which are far from being economically sustainable and yet everybody says what a "great company" that is, when in reality all it is is a "great product/service" with no revenue proposition (still, kudos for building it). See Path, Foursquare, Turntable.fm, Tumblr, etc. If the liquidity from large companies such as FB, Google, AOL, Yahoo, etc. d…
Doesn't mean all their money making problems are solved of course, but they're further down the line than turntable.fm are, who continue to confuse me in terms of their lack of business model.
I'm surprised no one's mentioned Twitter. They are one of the most successful internet things and yet they still don't seem to have any really solid way to monetize that. They are now part of culture but are they revenue positive? The things they are doing lately don't make sense until you take that into account: Restricting 3rd party apps and APIs? Seems to be driving users away... Except that if all your users are…
I think their road map to financial success is mainstream media related (second screen etc.).
I'm surprised no one's mentioned Twitter. They are one of the most successful internet things and yet they still don't seem to have any really solid way to monetize that. They are now part of culture but are they revenue positive? The things they are doing lately don't make sense until you take that into account: Restricting 3rd party apps and APIs? Seems to be driving users away... Except that if all your users are…
Earlier quoted context omitted.
I have to strongly disagree with comparing Groupon to any of the OP's failed examples. Groupon may well run into the ground, but consider that: a) It was the first big success in its space b) at its peak, hired dozens (hundreds?) of actual employees, even copywriters from journalistic institutions. c) Had a huge, huge base of customers Groupon's leaders should be faulted for the various strategies and actions that ha…
Success? GroupOn isn't profitable, it hasn't even returned via income the equity invested + accumulated losses. Anyone can hire tonnes of people, pay them, provide a service/product, and still deliver negative equity returns. Anyone.
I probably gave more than $200 to Groupon during the time that I found it useful. I checked into Color over a period of weeks and never stayed on for more than a minute.
So while both are money-losing ventures, I think Groupon should still be ranked higher than Color.
Earlier quoted context omitted.
GroupOn had also this ridiculous idea that small businesses can earn return customers by offering them extremely huge discounts.
If you look at it as a form of advertising, it is a great idea. And I am sure there are a number of returning customers.
Giving discounts may induce the most price sensitive to use your service. They will continue to be price sensitive, and stop using your service once the cost returns to normal.
If the opposite were true, and if business actually did profit from this approach, then it is likely that Groupon would be killing it.
At the end of the day, some types of retailers find ways to profit even off of the price sensitive, but it seems to be the case that the same is not true for most Groupon-trying businesses.