$450M... for a todo list. #perspective
Seemingly simple things done well and actually used can be extremely valuable.
Why Trello Failed to Build a $1B Business
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Re: Why Trello Failed to Build a $1B Business
#32This is hilarious. Only in the bizarre world we live in could a half billion sale be spun out into a failure to get a billion. Would a billion have satisfied the author or would it have then needed to be two?
His next article - "Why Google failed to build a $1T+ business"
Re: Why Trello Failed to Build a $1B Business
#33The idea of pricing a product like Trello should be taxing the added value it creates. What can indicate added value in Trello? Not emoji stickers, for sure. It's the number of cards and lists. If a user creates many cards/lists s/he clearly sees added value of the product. Trello should've limited the number of lists or cards in the free edition and charge a fee for an unlimited edition. Those users who don't see much value in Trello won't use many lists/cards anyway.
We've been using Trello as the main tool for project/product management for years and quite happy with it. I would gladly pay a reasonable monthly fee for it, but they didn't even try to charge me. I feel like it could've been a bigger business.
Re: Why Trello Failed to Build a $1B Business
#34This is hilarious. Only in the bizarre world we live in could a half billion sale be spun out into a failure to get a billion. Would a billion have satisfied the author or would it have then needed to be two?
>Only in the bizarre world we live in could a half billion sale be spun out into a failure to get a billion.
I can't speak for the author but selling Trello "for only $425m" is a failed outcome if the growth expectations was for it to become a massive $1 billion business.
How do we know that? Because Trello took $10 million in VC money in 2014.[1] So we can just work backward from the $1 billion goal using basic math:
VC firm Index Ventures buys 25% ownership of Trello for $10 million.[2] They manage several funds and I don't know which one they used to write that $10 million check but let's assume the money came from the 6th Fund of $442 million they raised in 2012.[3]
Over the 10-year life of that fund, they basically need to grow that $442 million into ~$3 billion. Since most startups in the fund will turn out to be money losers, they need at least one of their investments in the portfolio to become a $1 billion+ company. And keep in mind they only own 25% which means that even if Trello sold for $1 billion, they'd only cash out their position for $250 million. For Index Ventures to get to ~$3 billion, they need one or a tiny handful of winners from their portfolio to return ~$10 billion! (Assuming they take ~25% ownership in each startup and therefore cash out at ~2.5 billion.)
Yes, IndexVentures still gets ~$106 million (25% of $425m) from the sale to Atlassian but as you can see from the math above, $106m hardly moves the needle toward ~$3 billion. That's a $10 million opportunity cost that they could have put into a different company in 2014.
So, if you're a financial analyst, or one of the Limted Partners in IndexVentures fund, or possibly even J Spolsky, the failure to reach $1+ billion is indeed a "failure."
tldr: because of algebra, if a VC invests in a company, that means they expect the startup to reach a multi-billion market cap.
[1] https://www.crunchbase.com/organization/trello#/entity
[2] https://www.quora.com/At-what-valuation-did-Trello-raise-10M...
[3] http://vator.tv/news/2012-06-17-index-ventures-raises-442m-e...
Re: Why Trello Failed to Build a $1B Business
#35Because it is a trivial todo app?
Nothing at this scale is trivial.
Re: Why Trello Failed to Build a $1B Business
#36Counterfactual history can be fun but it's highly speculative. That's true even for well studied historical events - it's even more true for something opaque like a private company's growth. What were Trello's main customer acquisition channels? Without knowing that how can you hope to derive an alternative history?
Re: Why Trello Failed to Build a $1B Business
#37A couple of months ago there was another article about Trello here on HN that basically held Trello up as a model of disruptive success:
Re: Why Trello Failed to Build a $1B Business
#38While we're talking counterfactuals, how about the scenario where Trello chased that $1B dream, lost focus on what users liked about the product and ended up as an acqui-hire.
Which, I'll point out, is an extremely common scenario. The guys behind Trello stuck to their vision of the product and made an obscene amount of money. Good for them.
Re: Why Trello Failed to Build a $1B Business
#39What is this article, I can't. In what world do we live in where we paint a $425m exit in a bad light? > They built their servers on top of Node and used MongoDB to store data so that the web app would load really fast. I stopped reading here.
Trello is actually slow, because of that backend stack, I imagine. I thought the author was going to point to that.
Not at all. Trello is quite snappy and back when I first started using it in 2013, it was remarkably so compared to all other similar tools I'd seen.
Re: Why Trello Failed to Build a $1B Business
#40This is hilarious. Only in the bizarre world we live in could a half billion sale be spun out into a failure to get a billion. Would a billion have satisfied the author or would it have then needed to be two?
>Only in the bizarre world we live in could a half billion sale be spun out into a failure to get a billion. I can't speak for the author but selling Trello "for only $425m" is a failed outcome if the growth expectations was for it to become a massive $1 billion business. How do we know that? Because Trello took $10 million in VC money in 2014.[1] So we can just work backward from the $1 billion goal using basic math…
That's only a failure on the VC overall fund level, not the company or investor level. That investment is not a failure, even if the fund is. If most the investments are money losers, but this one "only" paid out %1000, it's still contributing towards making the fund pay out, even if it's not doing well enough to account for the losing investments. You wouldn't classify a stock that tripled in price over a few years as a failure, even if overall your portfolio was a failure, and this is the same thing.