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37signals valuation tops $100 billion after bold VC investment (2009)
- dannowatts 13y agothis is amazing!! fucking hilarious.
- deleted 13y ago[deleted]
- snapoutofit 13y agoThe irony :) [ref. twitter], however quite a bit more change than 1$ changed hands this time around.
- anilshanbhag 13y agoThat formula deserves an award !
- RossM 13y ago(2009)
- iancarroll 13y agoThis is from 2009, just saying.
- z92 13y agoIs there a way to add the year [2009] in the title? I remember reading it back then. It's interesting how it's still relevant after all these years.
- snapoutofit 13y agoYeah, I caught that 2009 bit later into the post/parody :). Agreed it should be there in the title.
- robryan 13y agoSurely looking at a 10x return by now? :P
- wslh 13y agoIn 2000 (dot-com peak) the value would be $ 1 trillion ;-)
- lukashed 13y agoUnfortunately I can't edit the title anymore, so a mod has to do it. Sorry for that, will remember it next time!
- heedit 13y agoMore like $5.
- deleted 13y ago[deleted]
- trendoid 13y agoCan anyone explain why 2009 news being posted now? OP has some context in mind?
- pearjuice 13y agohttp://blogs.wsj.com/digits/2013/11/13/snapchat-spurned-3-billion-acquisition-offer-from-facebook/ http://blogs.wsj.com/digits/2013/11/13/snapchat-spurned-3-bi... http://www.theverge.com/2013/11/15/5106950/google-snapchat-4-billion-buyout-rumor http://www.theverge.com/2013/11/15/5106950/google-snapchat-4...
- trendoid 13y agothanks, funny I am being downvoted for not being up to date.
- Killswitch 13y agoWhether it's an article from 2009 or not, Jason has some good points.
- bachback 13y agoa timely repost. ====== value revenue profit TWTR 25B$ 0.3B$ -0.08B$ AMZN 170B$ 61B$ -0.04B$ CRM 34B$ 3B$ -0.27B$
- roasm 13y agoPoint taken, but I highly doubt most investors would roll their eyes at AMZN's numbers. It's not that they can't turn a profit; they're opting not to at this point.
- walshemj 13y agoOr taking advantage of tax loop holes around licensing to move the profit offshore - or "sorry Mr Cameron we are just a poor loss making company can we have a taxpayer hand out to subsidize our minimum wage workforce ;-)" even mad Nad aka nadine dorries can see through that one.
- shaneofalltrad 13y agoAmazon is playing the game to take over, not get the small wins. There will be a day when no other business model or even the thought to dream up one will exist because Amazon will sell everything for less, to your door on the same day. They will be a UPS/Walmart for everything under the moon. The future is dark.
- notacoward 13y agoIt's like a joke I heard about Icelandic banks a while ago. Neither of us have any money, but if we're banks I can sell you a cat for a billion dollars and you can sell me a dog for a billion dollars so that we're both billionaires. The way that insufficiently regulated banks and stock/commodity markets effectively allow certain people to create new money from nothing and then trade it for things of real value is only a tiny bit more subtle than that. Of course, sooner or later what happened in Iceland will happen anywhere that such things are allowed to occur.
- riffraff 13y agois there something forbidding me and you to trade pets for billions of dollars, as opposed to banks ? I think the problem appears when other people are buying shares of our pets as if they were actually worth billions.
- anpalton 13y agoThe analogy is false. One of the problems with what Icelandic banks were doing was this: "The rules prevent banks from posting their own debt as collateral (Central bank of Luxembourg). The three banks circumvented this rule by posting each other’s collateral at the CBL. This process is known as issuing ‘love letters’. However, CBL later restricted this type of funding. This, however, continued in other places such as Central Bank of Ireland (CBI)." From: http://financetrain.com/how-icelandic-banks-funded-their-risky-business-models/ http://financetrain.com/how-icelandic-banks-funded-their-ris...
- notacoward 13y agoIt's a funny thing about analogies and metaphors: they don't have to be absolutely perfect in every detail to have explanatory power. What actually happens is slightly more subtle (as I said) but the principle still applies. Thank you for providing an example.
- ye 13y agoTaxes
- antidaily 13y agoI'd buy $SGNL.
- wensing 13y agoSnapchat isn't being valued on revenues or potential monetization, but rather as a piece of someone else's (eg Facebook's) business model. In the Steve Blank sense I don't think it's even right to call Snapchat or any of these "growth looking for a home" things "startup"s. They aren't actually searching for a business model. Their plan is to grow until they dock with the Deathstar.
- wpietri 13y agoI don't have the reference handy, but somewhere Steve Blank basically says, "If there's another bubble, ignore all this advice. Building a real business only makes sense when the market is sane." The only way I could look at SnapChat as a startup is that their market isn't consumers, it's Mark Zuckerberg plus a few people who are trying to compete with Facebook. We know that Facebook is willing to buy things perceived as threats to their business model, or perhaps to buy large sets of users they've failed to capture. It's a stupid business to go into, in that the odds of success are really bad: low barrier to entry, lots of interest, lots of competitors, a winner-take-all game. But if you win the lottery you can get zillion-dollar offers from Zuck and feel like a genius. Bubble 1.0 was filled with built-to-flip companies, and one of the things I like best about the Lean Startup movement is that it demands building an actual business. Sad to see that the pendulum might be swinging back some.
- d0m 13y agoDunno, I firmly believe that once you have that many users, you're sitting on a gold-mine just waiting to be exploited.
- notahacker 13y agoThe evidence from companies that have that many users certainly points towards high revenues, but not revenues commensurate with a $3billion valuation. Facebook is a mature advertising platform with far more to offer advertisers than Snapchat is ever likely to, and earns revenues of less than $7 per active user per year. If Snapchat is as effective at monetising at Facebook, which sounds optimistic, it would take them 17 years to make $3billion in revenue off ~25million active users. I don't doubt that Snapchat's user base will continue to rise in the short term, but I also don't think it'll be around in 17 years... If you compare Snapchat not with the internet's leading repository of user metadata, and more with similarly popular locations for ephemeral meme-sharing amongst teenagers, its current user base more closely resembles that of the Cheezburger Network, whose decision to lay off a third of their workforce earlier this year hardly points towards stratospheric advertising revenues from their own ~25 million users
- maerF0x0 13y agoomg this is so funny
- codex 13y agoIsn't it funny how VCs really invest in order to take advantage of the mania of later VCs or the public. Perhaps that's why founders found, too. A noble calling it is not.
- taylorhalliday 13y agoI get that DHH doesn't believe in this whole trend of over-valuation of companies that don't make any cash, but doesn't this article give you the sense that they're a little bit jealous that they're not in that group?
- alexmarcy 13y agoI think their take is that the valuation is a BS metric. Sure it is a calculation based on the cash paid for the equity but that doesn't mean that someone is going to go in and pay the $X valuated for the 100% equity. I imagine that 37 Signals is doing just fine with their revenues and all told will probably be laughing their way to the bank with their total lifetime value when all is said and done.
- esmevane 13y agoThis article was written in 2009 by Jason Fried.
- jarkko 13y agoAs they say, profit doesn't make you happy but I'd rather cry in a Pagani Zonda.
- linuxhansl 13y agoThe scary thing is that I believed it for a minute before I followed the link. Valuations have become so inflated, nothing is impossible.
- thrush 13y agoIs it possible that Snapchat is interested in slightly more than money? When a few 20-something year olds get valued at ~$3 Billion, I think it's fairly likely that they've made some money already, probably to the point that they will be set for life. It seems that Snapchat is an opportunity for them to leave their mark on the consumer software world. Besides, Snapchat is certainly an outlier and I don't think that bubble indicators rely on outliers. A better indicator may be the new selfie app that Bieber backed, but I'm not sure that I'd lump the two together in the same category (Snapchat is many degrees of magnitude more popular and successful at acquiring a user base).
- frankdenbow 13y agoExactly. They already cashed out 10mm each for the founders so makes sense to go for the win.
- isalmon 13y agoJason probably spent too much time with guys from Vooza: http://vooza.com/videos/remote-working/ http://vooza.com/videos/remote-working/
- jarkko 13y agoQuite certainly considering that Matt was the first employee of 37signals.
- nrao123 13y agoIf 37signals put thier money where the mouth was & actually shorted the companies (FB & Twitter), they would be in a lot of pain now. This original post by Jason Fried was making fun of Twitter which went from 1bn to 25bn. More background here: http://www.forbes.com/2009/10/15/venture-capital-software-technology-enterprise-37signals.html http://www.forbes.com/2009/10/15/venture-capital-software-te... Another post from DHH said that the value of FB was not 33bn & it's now roughly 120BN http://37signals.com/svn/posts/2585-facebook-is-not-worth-33000000000 http://37signals.com/svn/posts/2585-facebook-is-not-worth-33... Not saying 25BN & 120BN are the "right" valuations but most people would agree that the prices that 37s made fun of seems like great deals. They could still go back to less than 1bn & 33bn (users leave, consumer trends change, get bored etc) but those are different risks not monetization risks that 37s is making fun off.
- calinet6 13y agoIt would be insane to short any of these companies, because the perception is so far from reality; and it's perception driving the price, not reality. That's the point.
- mdparker89 13y agoThe market isn't necessarily efficient at a given point in time. Just because the stocks are going up, doesn't mean the valuations represent the intrinsic value of the company. Shorting is a dangerous strategy, especially if you feel the prices are delusional. "The market can stay irrational longer than you can stay solvent."
- nrao123 13y agoYes- agree with you. I think DHH/JF & 37s were not making as much fun of the actual valuation but the lack of monetization. If we stretched the valuation analogy, it could be applicable to AMZN/Bezos as well- where there is always discussion on their lack of profits & nose bleed valuation. FYI - Bezos is an investor in 37signals. I have lots if respect for Bezos, JF, DHH etc. I just think it's a little "unfair" (for lack of a better term) to make fun of companies before their monetization plans have kicked in.
- deleted 13y ago[deleted]
- kimar 13y agoIt's funny because it's true.
- shaohua 13y agoApril fool
- omonra 13y agoEven though I'm tired of all the [Political / NSA / Women in Tech] discussions, posts like these make it worthwhile to check back in.
- tzury 13y agoIf Facebook is worth X, and there is a raising service which generates x/40 of social traffic, then it will make sense for Facebook to evaluate the new kid as Facebook/40, or to say the least, the owners of the raising service will expect the offer to be at that rate. If there is a bubble, the bubble is at Facebook and Twitter, and not at Instagram or Snapchat or Pinterest or any of those zillion-terabytes-daily-uploads services. There were several articles recently telling how teens are away of Facebook, and for them, it shall be rather natural to try to stay the ultimate social hub.
- pyrrhotech 13y agoThe VC industry is largely a scam. VC funds underperform passive investment in the S&P 500, and greatly underperform similar risk asset classes such as the Russel 2000.
- paul 13y agoIt's funny that people here think he's making fun of snapchat, but the article is from 2009. He was making fun of facebook's $6.5b valuation (or maybe it was $10b). The fact that he was completely wrong (fb is now over $100b) doesn't stop people here from thinking that there's wisdom in this nonsensical post.
- wensing 13y agoIs there any way to know with any degree of confidence whether something is a flash in the pan or a viable company? It isn't just about growth is it?
- paul 13y agoIt helps to know the founders and internal metrics, which nobody here does. I honestly don't know if Snapchat is worth $3B or not, but I certainly wouldn't dismiss them.
- outside1234 13y agoits not nonsensical. there is truth in pointing out that a VC valuation does not equate to a true valuation - either in the upside or downside.
- csomar 13y agoFacebook generates $8bn of revenue per year. I guess those who valued Facebook at $6bn at that time were quite wise. You can't say anything about the current investors. Only the future will tell if it's a wise investment.
- auctiontheory 13y agoValuation is a very complex topic, but in "classical" finance, it has more to do with earnings than revenue.
- mkramlich 13y ago> I guess those who valued Facebook at $6bn at that time were quite wise. strictly speaking: or fools that got lucky