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I'm new to this startup world, so please correct me if I'm missing something. A group of investors pooled $2M together and invested it in ZipList. They are exp

by route3 16y ago

I'm new to this startup world, so please correct me if I'm missing something. A group of investors pooled $2M together and invested it in ZipList. They are expecting that the company (in just a few years) will be worth quite a bit more and likely sell to a larger company. The investors fully anticipate making back their investment plus considerably more. Is that correct? Does this seem a little much for an application that manages your shopping lists? To repeat something I've heard oh-so-much here on HN, are they really solving a problem?

ig1 16y ago
Imagine you're the brand manager for a new new brand of ketchup. How much would you pay to advertise to a customer who's standing in a supermarket looking to buy ketchup ? That's why it's worth so much.
- route3 16y ago
  Interesting point. I don't want to take your example too far, but I would be more interested the labeling of my product which reaches 100% of potential ketchup buyers (assuming their eyes scanned the shelves) not just the 0.0001% who might be using ZipList AND decide to snag your brand as opposed to the brand they usually buy. Reading about how an application like ZipList raised $2M is surprising to me. I'm not angry or jealous (I'm happy for those involved, for sure) but it seems like a product someone would do for university project or something similar. Every recipe website I've been to has a button to print a shopping-list style ingredient list. I'm used to seeing numbers like $20k revenue for a popular shopping list app, not $2M in funding.
  - ig1 16y ago
    I imagine the majority of that money is going to be spent on marketing to build a user base large enough to attract advertisers rather than on tech development. I'm guessing the ROI on advertisements would be considerably higher than TV/magazine/web/poster advertising where a large chunk of FMCG ad spend goes today.

by route3 16y ago

ig1 16y ago

Imagine you're the brand manager for a new new brand of ketchup. How much would you pay to advertise to a customer who's standing in a supermarket looking to buy ketchup ? That's why it's worth so much.

route3 16y ago
Interesting point. I don't want to take your example too far, but I would be more interested the labeling of my product which reaches 100% of potential ketchup buyers (assuming their eyes scanned the shelves) not just the 0.0001% who might be using ZipList AND decide to snag your brand as opposed to the brand they usually buy. Reading about how an application like ZipList raised $2M is surprising to me. I'm not angry or jealous (I'm happy for those involved, for sure) but it seems like a product someone would do for university project or something similar. Every recipe website I've been to has a button to print a shopping-list style ingredient list. I'm used to seeing numbers like $20k revenue for a popular shopping list app, not $2M in funding.
- ig1 16y ago
  I imagine the majority of that money is going to be spent on marketing to build a user base large enough to attract advertisers rather than on tech development. I'm guessing the ROI on advertisements would be considerably higher than TV/magazine/web/poster advertising where a large chunk of FMCG ad spend goes today.