3 ms·

Cameo (an example in the article) is an interesting one. It seems like a stable, steady business, making money, should be easy to accurately value if you have

by rwmj 4mo ago

Cameo (an example in the article) is an interesting one. It seems like a stable, steady business, making money, should be easy to accurately value if you have access to the financials. No surprise that the "It's $1bn!!!" valuation came from Softbank Vision Fund. https://en.wikipedia.org/wiki/Cameo_(website) https://en.wikipedia.org/wiki/Cameo_(website)

TZubiri 4mo ago
It also peaked during the COVID lockdowns, lots of actors needed alternative sources of funds. Maybe the numbers for 1BN came from multiplying revenue into the future, or hell, expecting it to grow even.
- ares623 4mo ago
  No need for "maybe". We know by now how these people think
- rwmj 4mo ago
  Absolutely right, but you can also see how this can be a sustainable if not spectacular business going forward even in normal times. There are plenty of "resting" actors and grifting politicians who don't mind doing 60 seconds of work for the price of a round of drinks. It's not a failure even if VCs think it is.
  - zmgsabst 4mo ago
    I feel like there is a business in taking successful startups-gone-lifestyle, buying the name and IP from the “rocket ship” and letting them have more funds for a pivot.
v5v3 4mo ago
I'm assuming there is a lot of local competition to Cameo in other countries? As it has a large potential market if it did dominate globally.
- simiones 4mo ago
  The very concept is quite culturally contingent - both in how much buyers would care about getting such a service, and in how much celebrities would be willing to engage in this type of fan service. Going global would also require a huge amount of celebrity contractors, a big problem for scaling.
golddust-gecko 4mo ago
This is I think a very common issue. The term "startup" has two connotations: a nascent business trying to find its product/market fit and "a private business whose capital structure is dominated by VC money" Companies that fall out of the first definition -- they've found their market, such as it is, but it's smaller, more competitive etc., than is needed for hypergrowth -- but are still in the second definition are in a bind. They've generally used up all their ideas, and have created a nice, small business. This should be a win, but in SV it's the worst kind of failure. The VCs aren't going to want to book a loss, so the company thrashes about trying to figure what else to do while trying to keep its business running. They should and ought to be evaluated using normal accounting, but that would mean the value of the business is a fraction of its "valudation" This ends in the company being strangled by its own mal-investment, or sheer exhaustion when everyone, the management and the VCs, face reality, take the L, and leave the business for private equity to run off the remaining terminal value. Maybe sometimes this becomes a lifestyle business, but more than likely it's just a transition from the washing machine of "this month's great idea for growth" (they never pan out) to the grind of cost-cutting and extracting any customer surplus out of the system, leaving everyone miserable.
- wildzzz 4mo ago
  Its like giving every monkey in the zoo a gun and expecting it to become an Olympic-level competitive shooter and not just blow its own foot off.
  - dieselgate 4mo ago
    That's an interesting and novel analogy
- tqi 4mo ago
  > they've found their market, such as it is, but it's smaller, more competitive etc., than is needed for hypergrowth... so the company thrashes about trying to figure what else to do while trying to keep its business running In a lot of cases I think it's even worse than that-- VCs advise their portcos to keep swinging for the fences, even if it means pivoting away from their modestly successful niche, since a single and a strikeout are effectively the same to them.

by rwmj 4mo ago

TZubiri 4mo ago

It also peaked during the COVID lockdowns, lots of actors needed alternative sources of funds. Maybe the numbers for 1BN came from multiplying revenue into the future, or hell, expecting it to grow even.

ares623 4mo ago
No need for "maybe". We know by now how these people think
rwmj 4mo ago
Absolutely right, but you can also see how this can be a sustainable if not spectacular business going forward even in normal times. There are plenty of "resting" actors and grifting politicians who don't mind doing 60 seconds of work for the price of a round of drinks. It's not a failure even if VCs think it is.
- zmgsabst 4mo ago
  I feel like there is a business in taking successful startups-gone-lifestyle, buying the name and IP from the “rocket ship” and letting them have more funds for a pivot.

v5v3 4mo ago

I'm assuming there is a lot of local competition to Cameo in other countries? As it has a large potential market if it did dominate globally.

simiones 4mo ago
The very concept is quite culturally contingent - both in how much buyers would care about getting such a service, and in how much celebrities would be willing to engage in this type of fan service. Going global would also require a huge amount of celebrity contractors, a big problem for scaling.

golddust-gecko 4mo ago

This is I think a very common issue. The term "startup" has two connotations: a nascent business trying to find its product/market fit and "a private business whose capital structure is dominated by VC money" Companies that fall out of the first definition -- they've found their market, such as it is, but it's smaller, more competitive etc., than is needed for hypergrowth -- but are still in the second definition are in a bind. They've generally used up all their ideas, and have created a nice, small business. This should be a win, but in SV it's the worst kind of failure. The VCs aren't going to want to book a loss, so the company thrashes about trying to figure what else to do while trying to keep its business running. They should and ought to be evaluated using normal accounting, but that would mean the value of the business is a fraction of its "valudation" This ends in the company being strangled by its own mal-investment, or sheer exhaustion when everyone, the management and the VCs, face reality, take the L, and leave the business for private equity to run off the remaining terminal value. Maybe sometimes this becomes a lifestyle business, but more than likely it's just a transition from the washing machine of "this month's great idea for growth" (they never pan out) to the grind of cost-cutting and extracting any customer surplus out of the system, leaving everyone miserable.

wildzzz 4mo ago
Its like giving every monkey in the zoo a gun and expecting it to become an Olympic-level competitive shooter and not just blow its own foot off.
- dieselgate 4mo ago
  That's an interesting and novel analogy
tqi 4mo ago
> they've found their market, such as it is, but it's smaller, more competitive etc., than is needed for hypergrowth... so the company thrashes about trying to figure what else to do while trying to keep its business running In a lot of cases I think it's even worse than that-- VCs advise their portcos to keep swinging for the fences, even if it means pivoting away from their modestly successful niche, since a single and a strikeout are effectively the same to them.