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It's not about PR. It's about a halo effect. DST needs a pipeline of new startups to continue the web x.0 hype-cycle, so he can offload his Groupon, Facebook &

It's not about PR. It's about a halo effect. DST needs a pipeline of new startups to continue the web x.0 hype-cycle, so he can offload his Groupon, Facebook & Zynga. positions. He can afford to gamble $6M on YC startups, if they will create demand in the market for his hundreds of millions dollars worth Groupon, Facebook, Zynga shares. It's a good assymetry position to have. If one of the 40 becomes the next google, he wins. If he can exit his DST positions, he wins. However if the web bubble burst, he is sh*t out of luck. And DST will be a huge bagholder.

hugh3 16y ago
DST needs a pipeline of new startups to continue the web x.0 hype-cycle, so he can offload his Groupon, Facebook & Zynga. positions. I don't get it, how does this help with that?
- nickpp 16y ago
  Read up on AOL's position during the .com boom.
  - pclark 16y ago
    can you just explain it?
    - nickpp 16y ago
      Startups made "collaboration deals" announcements with AOL then got funding based on those "perspectives". Large part of that funding would go to AOL to buy a front-page add. They say that the only limit to AOL's revenue from this was the amount of space on their website first page, not the number of interested startups. Basically the valuation of the giants stayed up for as long as easy funding was available to .com's. Their spending habits, without being backed by actual revenues, were more than enough to sustain the stock prices of the few big ones selling to startups whatever they needed (ad space, big iron or aerons). They all fell together when the crash came and easy funding dried up.
      - jacquesm 16y ago
        I don't see any such strings attached to this deal.
      - robryan 16y ago
        Expenditure is different this time round though, most of these startups aren't looking to blow heaps of investment on advertising and expensive offices and server costs are nowhere near where they were. Most startups now to know that building an audience isn't enough that they need a revenue model. Many startups being built to are good fits for acquisitions by the bigger players, generally less people getting funding for things that are unworkable. Also the public is far less adverse to sharing and purchasing online and innovations like the app stores and things like the kindle have opened up many more markets to generate revenue.
kjksf 16y ago
From the article: "Now he’s partnering (as an individual, not as part of DST)"

hugh3 16y ago

DST needs a pipeline of new startups to continue the web x.0 hype-cycle, so he can offload his Groupon, Facebook & Zynga. positions. I don't get it, how does this help with that?

nickpp 16y ago
Read up on AOL's position during the .com boom.
- pclark 16y ago
  can you just explain it?
  - nickpp 16y ago
    Startups made "collaboration deals" announcements with AOL then got funding based on those "perspectives". Large part of that funding would go to AOL to buy a front-page add. They say that the only limit to AOL's revenue from this was the amount of space on their website first page, not the number of interested startups. Basically the valuation of the giants stayed up for as long as easy funding was available to .com's. Their spending habits, without being backed by actual revenues, were more than enough to sustain the stock prices of the few big ones selling to startups whatever they needed (ad space, big iron or aerons). They all fell together when the crash came and easy funding dried up.
    - jacquesm 16y ago
      I don't see any such strings attached to this deal.
    - robryan 16y ago
      Expenditure is different this time round though, most of these startups aren't looking to blow heaps of investment on advertising and expensive offices and server costs are nowhere near where they were. Most startups now to know that building an audience isn't enough that they need a revenue model. Many startups being built to are good fits for acquisitions by the bigger players, generally less people getting funding for things that are unworkable. Also the public is far less adverse to sharing and purchasing online and innovations like the app stores and things like the kindle have opened up many more markets to generate revenue.

kjksf 16y ago

From the article: "Now he’s partnering (as an individual, not as part of DST)"