Secret Shuts Down • Hacker News Board

Re: Secret Shuts Down

#21

Post by cwilson » Wed, Apr 29, 2015, 7:37 PM UTC

look_lookatme wrote: post #15

sharkweek wrote: post #3

For the curious, pulled their deal history from PitchBook: Secret raised their B last July at a post valuation just over 130M ( http://i.imgur.com/jNXw5PZ.png ). They had some major investors backing them up, and then the hype train just... stopped. I remember so many people being so high on it when it launched, with several friends all raving about how fun/addicting it was, then just poof it disappeared from convers…

Crunchbase says they have 11-25 employees... how did they burn through all of that money? Is it possible they are pivoting or returning money to investors?

Very likely returning money to investors.

Re: Secret Shuts Down

#22

Post by hiby007 » Wed, Apr 29, 2015, 7:40 PM UTC

Well in the last few months activities in the app was similar to omegle.

People posting nude photos and stuff.

I think the curation of content was a huge challenge for them., and also not to mention the new app design was not at all intuitive with lots and lots of bugs.

But having said that, I had lot of hope in this app.

Re: Secret Shuts Down

#23

Post by minimaxir » Wed, Apr 29, 2015, 7:44 PM UTC

Here's the official Medium post by the cofounder, in which there is confirmation that they are returning the money to investors: https://medium.com/secret-den/sunset-bc18450478d5

The post also includes the phrase "incredible journey" verbatim.

Re: Secret Shuts Down

#24

Post by tommoor » Wed, Apr 29, 2015, 7:45 PM UTC

nedwin wrote: post #6

This is going to be used as a case study of why not to let founders take cash off the table in early rounds for years to come.

I believe it was highly criticized even at the time...

Re: Secret Shuts Down

#25

Post by rdl » Wed, Apr 29, 2015, 7:47 PM UTC

It seems kind of crazy to me that people talk about startups and try to apply completely the same model for everything to:

1) A social app like this, which is essentially hype-based and self reinforcing. Success seems entirely down to virality and adoption, followed by monetization.

2) Some very vertical market focused SAAS offering which can be developed with minimal outside capital, own a niche, and where capital can then be applied to expand to other verticals, accelerate the sales process, etc. (Say, a scheduling application for vets)

3) A capital intensive project in a well understood field (IAAS, hardware, lab stuff, etc.)

4) Entirely new technology deployment (not discovery, which tends to be hugeco or lab, but first commercialization)

Clearly there are some commonalities, but there are a lot of areas like employee vesting periods, how you recruit, etc. which probably should be different in these different kinds of companies, but tend to be the same.

Re: Secret Shuts Down

#26

Post by josu » Wed, Apr 29, 2015, 7:50 PM UTC

sharkweek wrote: post #12

SandersAK wrote: post #8

Earlier quoted context omitted.

Investors (and the team) were looking at the wrong numbers. In apps, it's basically all down to having meteoric growth week over week. It can't be based on spikes as this was. Taking money off the table in a B makes sense for the founders, and I can't blame them for leveraging their situation. Ultimately this falls on the investors for biting on hype, and not having a deeper understanding of the product (and it's pot…

Totally makes sense - but I also completely get why the investors would bite on hype - missing the next billion dollar company is way worse than incorrectly picking a few duds.

I don't know, at a 130m valuation, a 100x exit was no longer possible, and even a 10x didn't even seem that likely.

Re: Secret Shuts Down

#27

Post by cahoodle » Wed, Apr 29, 2015, 7:50 PM UTC

r0naa wrote: post #10

joshstrange wrote: post #7

While I have heard of Secret the majority of my friends who are still in college haven't and it's all about Yik Yak on campus right now.

Same here. I am curious as to what caused Secret to disappear so suddenly. I am not a power user of social networks but something that really struck me was the really poor UI of Secret relatively to the crystal clear interface of YikYak.

Yep agreed, same confusion here. TechCrunch seems to cite the slow response to Cyberbullying criticism as one of the reasons for Secret's downfall, but doesn't YikYak have the same problem, if not worse with college students?? What gives?

Re: Secret Shuts Down

#28

Post by xrange » Wed, Apr 29, 2015, 7:53 PM UTC

kra34 wrote: post #2

How much do Unicorn horns fetch on the black market?

Pound for pound, about the same as black swan foie gras.

Re: Secret Shuts Down

#29

Post by benologist » Wed, Apr 29, 2015, 7:53 PM UTC

josu wrote: post #26

sharkweek wrote: post #12

Earlier quoted context omitted.

Totally makes sense - but I also completely get why the investors would bite on hype - missing the next billion dollar company is way worse than incorrectly picking a few duds.

I don't know, at a 130m valuation, a 100x exit was no longer possible, and even a 10x didn't even seem that likely.

130m x 100 is only 1/4th of uber, not really impossible anymore.

Re: Secret Shuts Down

#30

Post by hkmurakami » Wed, Apr 29, 2015, 7:54 PM UTC

"It rode the hype to massive funding, which allowed the two founders, David Byttow and Bader-Wechseler to each take $3 million off the table. They essentially traded stock for cash, putting money in their pockets though the business wasn’t earning any."

Wow. I guess their round was oversubscribed so they were able to sell this to the vcs. This is the first case where I heard of where a startup failed recently after founders took significant money off the table. I wonder if vcs will be able to use this as an argument to combat founders wanting to do the same in the future.

I have mixed feelings about the whole affair but I have to hand it to the founders. That was really smart of them to take life changing money when they could.