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Well, no ill will to the Helium people - it seems like a somewhat smart idea. I wouldn't call it a "Web3" use-case though - as many have mentioned - they could
by erulabs 4y ago
Well, no ill will to the Helium people - it seems like a somewhat smart idea. I wouldn't call it a "Web3" use-case though - as many have mentioned - they could have done their own payment processing and it wouldn't change the underlying product much (except possibly in the excitement of customers / would-be hotspot hosters).
I guess my ill will here is with VC firms. Helium has raised 364.8M. With $6,500 revenue? I've talked to about a dozen folks like me, doing small, on-the-cusp-of-success startups, doing 3 to 5x that revenue with nowhere near the exposure as Helium, who get essentially laughed out of the room when trying to raise 500K.
I have a very hard time buying that the founders are ~600x better at fund raising than others, or that the idea even requires that much capital to prove out. Could they have not started with say, one neighborhood in SF, proved the idea, and raised from there?
The only conclusion is that the author of this piece is right - it's a scam to dump the hyped coin onto retail investors. If it ever comes out that A16Z did in fact sell at peak and profited massively from this, I cannot help but feel it is existentially damning for the concept of silicon valley. I say that as a lowly but devoted tech acolyte.
Well, at any rate, my response of being a bit annoyed at "what's your path to 100B" type questions from VCs will now change to "What makes you a capitalist and not a racketeer?".
- dmitriid 4y ago> With $6,500 revenue? I've talked to about a dozen folks like me, doing small, on-the-cusp-of-success startups, doing 3 to 5x that revenue with nowhere near the exposure as Helium, who get essentially laughed out of the room when trying to raise 500K. Try 20 billion dollars lost over 10 years... and still getting investor money (Uber; Lyft will soon be on par). There's a magic combination of no morals, a product and rampant speculation that investors flock to.
- duskwuff 4y agoYou're mixing up revenue (the amount of money coming in) and profit (what's left over after costs). Helium doesn't have $6500/mo profit -- their profit is, in all probability, deeply negative. They have $6500/mo revenue.
- dmitriid 4y agoSo they are in a good company then :)
- Dylan16807 4y agoWith who? Because Uber and Lyft are very much not in that group. They're losing small amounts at massive scale, while Helium is sitting at no scale.
- dmitriid 4y agoGood company of "magic combination of no morals, a product and rampant speculation that investors flock to."
- wmf 4y agoCould they have not started with say, one neighborhood in SF, proved the idea, and raised from there? No, they probably couldn't have. Nobody will build IoT devices for a network that exists in one neighborhood so they built a global network and now they're hoping that devices start appearing. Besides, this kind of "go big or go home" play is exactly what VCs were asking for. I'm still highly skeptical of Helium but there is a certain logic to it.
- erulabs 4y agoThey didn't invent a new protocol or wireless standard. They're hosting a LoRaWAN and charging folks to use it. Presumably, Lime, for example, didn't actually need to change any hardware at all to use their service - their scooters already operate the proper hardware - they just bought LoRaWAN service from Helium instead of from say, Verizon. So I see no reason why it couldn't have been proven in a single city at the least.
- tromp 4y agoCheck the article; Lime is not using Helium at all (apart from some early unsuccessful experiment).
- deleted 4y ago[deleted]
- davidgerard 4y agoso, that's another reason to assume ill will of Helium - they never had a deal with Lime. Helium was just lying.
- Clent 4y agoThis isn't for IoT home devices. This is a network for specific business segments, municipalities and researchers. The coins are just to convince people to buy the equipment and spread it out. Filling in the grid is more profitable than adding multiple nodes to the same segment. This causes a sort of mlm scheme where those who are 'in the know' are convincing family and friends to install these devices for a share of the profit.
- TheDudeMan 4y agoThey could have paid them in dollars.
- dcolkitt 4y agoHow is it any different than any other startup compensating its employees or vendors with equity instead of cash? Generally it makes sense for an early stage company to convince its partners to take equity or equity like instruments instead of cash. This is preferable for a number of reasons including: * Early partners are probably optimistic on the project (and hence why they're partners), and therefore want to participate in the upside. * It aligns incentives, where early partners are heavily invested in the success of the project. * It removes the cost, distraction and uncertainty of having to raise more cash to pay early partners by selling the equity to outside investors.
- ForHackernews 4y ago> How is it any different than any other startup compensating its employees or vendors with equity instead of cash? It avoids securities regulations around disclosure, insider trading, etc.
- miohtama 4y agoThe token exists to bootstrap the ecosystem and give early adopters upside. Otherwise getting necessary global adoption to get it off the ground is not possible. Like with all startups Helium has under 10% chance to make long term and for that upside to realise.
- davidgerard 4y agoI think there's plenty of ill will warranted for the Helium people - their business is scamming people with an investment scheme based around buying expensive node devices.
- joewadcan 4y agoNova Labs makes no money when people buy hotspots.
- DenseComet 4y agoYou and others have said this multiple times in this thread. Is this documented somewhere on their website? It's hard to just take your word for it looking at the prices.
- frozenport 4y ago>> damning for the concept of silicon valley Little too far. I work in the valley, raised a series B, and haven't heard of Helium. Strongly suspect the space is just poisoned.
- joewadcan 4y agoRevenue is a bad predictor of future value for a network effect business (here a literal network). VC is supposed to seek high risk / high reward investments over 5+ year periods - especially ones that have a self-reinforcing moat like a physically distributed network.
- erulabs 4y agoI understand what the logic is - I'm only suggesting that there is a gross disconnect between the capital available to grow small but profitable businesses and the capital available to gamble on a high-risk / high-reward situations where the "reward" is a share of a quasi-monopoly that more or less executed a hostile market takeover. That isn't so much capital allocation as something else entirely.
- delabay 4y agoSounds like your issue is with capitalism and not helium
- dcolkitt 4y agoThere's plenty of capital to grow small but profitable businesses. But it generally comes from in the form of a small business loan from a regional bank. Venture capital is explicitly a model seeking homeruns not singles. Being mad at a16z for not investing in your online t-shirt business makes about as much sense as being mad at Warren Buffet for not investing in complex interest rate derivatives.
- babyshake 4y agoThe biggest problem with A16Z dumping at the top while using the "we're so early" lines to get exit liquidity is that they are a seed/growth fund, not a hedge fund. It just ruins their credibility when talking about web3/crypto. If a hedge fund does this sort of thing, they're just trying to maximize profit, which isn't especially bad if they're not simultaneously telling retail investors that they are getting in on the ground floor. Edit: not saying A16Z is dumping on retail, just that it looks really bad for them if they are.