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VC funding isn't frozen. VC funding has cut multiples on high-growth companies to a fraction of their previous numbers. Giphy hasn't monetized, so the normal co

VC funding isn't frozen. VC funding has cut multiples on high-growth companies to a fraction of their previous numbers. Giphy hasn't monetized, so the normal conversation about revenue multiples that's killing everybody else doesn't apply yet. The likely thesis is that there WILL be monetization around gifs and gif sharing, and Giphy WILL be the company that dominates that. It's probably not hard to size that market as pulling in $1bil / year, so if Giphy points out they're the furthest along and the competition won't catch up, it's not an unreasonable bet. Another way to think about it is to find things you don't believe in. For Giphy, that might look like: - You don't think "gifs and people sharing gifs" is a trend that will last. - You don't think it's possible to monetize gifs and sharing gifs, or at least the first company will screw it up so bad it tanks their business. - You don't think Giphy is the clear market leader, or you think what they've done is easily replicated (incl. brand).

api 11y ago
> "Giphy hasn't monetized, so the normal conversation about revenue multiples that's killing everybody else doesn't apply yet." I keep hearing this kind of thing: that it becomes harder to raise once you start to have revenue. Really?
- trjordan 11y ago
  A LOT of sales conversations (VC or otherwise) are about eliminating reasons to say no. Revenue is a hugely thorny subject, and getting revenue growth to look uncontentious is hard. You need high growth, low churn, lots of expansion, a plausible path to find new customers, and specifically for giphy, a story about why you couldn't monetize the entire market immediately (why do you need time to ramp up? hiring sales reps, implement the same feature on different platforms, what?). Lots of details, lots of speed bumps that would tank an otherwise compelling story. On the other hand, it's not easy to sell without revenue, but if you find somebody who's a believer in the space, you've eliminated a TON of questions. So it's not easier per se, because a lot of investors will turn you down for not having revenue, but among those who say yes, there's no further questions, because there's nothing to dig into.
- thanatropism 11y ago
  Well, before first revenues, it's a lot harder to determine the "type" of a firm, in the parlance of mechanism design theory. Are some firms being gipped by revenue multiples heuristic? Maybe: if VCs are reading revenues as a type revelation mechanism but they're still a noisy signal. Cue in stories about having one's first low grades in college.
- AndrewKemendo 11y ago
  There is, ironically, a Silicon Valley episode where this is explained satirically [1]. That the person responding to you basically repeats this argument says something - not sure what exactly. [1]https://www.youtube.com/watch?v=BzAdXyPYKQo https://www.youtube.com/watch?v=BzAdXyPYKQo
- icedchai 11y ago
  It probably becomes even harder once you have profit. You don't hear much about profit these days, especially on HN. That's reserved for real companies... oh, sorry, we call those "lifestyle businesses." You know, companies that actually make money.
AndrewKemendo 11y ago
>VC funding isn't frozen. According to some high placed people at NEA it is.

api 11y ago

> "Giphy hasn't monetized, so the normal conversation about revenue multiples that's killing everybody else doesn't apply yet." I keep hearing this kind of thing: that it becomes harder to raise once you start to have revenue. Really?

trjordan 11y ago
A LOT of sales conversations (VC or otherwise) are about eliminating reasons to say no. Revenue is a hugely thorny subject, and getting revenue growth to look uncontentious is hard. You need high growth, low churn, lots of expansion, a plausible path to find new customers, and specifically for giphy, a story about why you couldn't monetize the entire market immediately (why do you need time to ramp up? hiring sales reps, implement the same feature on different platforms, what?). Lots of details, lots of speed bumps that would tank an otherwise compelling story. On the other hand, it's not easy to sell without revenue, but if you find somebody who's a believer in the space, you've eliminated a TON of questions. So it's not easier per se, because a lot of investors will turn you down for not having revenue, but among those who say yes, there's no further questions, because there's nothing to dig into.
thanatropism 11y ago
Well, before first revenues, it's a lot harder to determine the "type" of a firm, in the parlance of mechanism design theory. Are some firms being gipped by revenue multiples heuristic? Maybe: if VCs are reading revenues as a type revelation mechanism but they're still a noisy signal. Cue in stories about having one's first low grades in college.
AndrewKemendo 11y ago
There is, ironically, a Silicon Valley episode where this is explained satirically [1]. That the person responding to you basically repeats this argument says something - not sure what exactly. [1]https://www.youtube.com/watch?v=BzAdXyPYKQo https://www.youtube.com/watch?v=BzAdXyPYKQo
icedchai 11y ago
It probably becomes even harder once you have profit. You don't hear much about profit these days, especially on HN. That's reserved for real companies... oh, sorry, we call those "lifestyle businesses." You know, companies that actually make money.

AndrewKemendo 11y ago

>VC funding isn't frozen. According to some high placed people at NEA it is.