5 ms·

This funding seems nuts to me.

swartkrans 12y ago
$6m is not a lot of money. It's big for the average series A for YC, and $6m is a 4 year runway for a 30 person team if they don't blow it on a fancy office. High quality traffic + a job board. The $22m valuation seems high though when you think about what they think that company will be worth.
- jschuur 12y ago
  30 people for 4 years seems far more than PH should need for even for even ambitious expansion plans. When you consider the highly concentrated audience of product development users of the site, the valuation makes sense.
  - GamblersFallacy 12y ago
    Repeat traffic demographics is destiny.
- wslh 12y ago
  How did you calculate that?
- ibdknox 12y ago
  I'm not sure where $6M would carry a team of 30 for 4 years, but it certainly isn't in any of the tech hubs. Total cost for an employee around SF is between $150-180k (office, taxes, benefits, etc). For the sake of being generous, let's say we're in Seattle and it's 120k: 120,000 * 30 * 4 = $14.4M Even at 60k total cost you break 6M in 4 years: 60,000 * 30 * 4 = $7.2M > It's big for the average series A for YC That's not true, it would be huge for a Seed, but that's a fairly middle of the road series A. Big would be in the 10M+ range.
- korzun 12y ago
  > $6m is not a lot of money It's a shit load of money that tons of companies would kill for. You are living in a fantasy land.
gizmo 12y ago
Product Hunt has an audience of tech enthusiasts and is at least marginally useful to every VC and Angel investor out there. This by itself is sufficient to easily justify the valuation. In addition Product Hunt is also focused on email, which is a relatively easy to monetize medium. The job board, podcast, and the data they're collecting has additional potential. Once you take into account that investment money is plentiful and valuations are a back-of-the-envelope practice anyway then backing this YC startup is a financial no-brainer.
- brianstorms 12y ago
  This is precisely why it seems nuts to me. Haven't they learned anything over the past 10 years, that products that are limited to a tech audience largely based in SF Bay Area, and ESPECIALLY a product that appeals to VCs and angels, is extremely, extremely niche-y? So, duh, they're obviously gonna try to expand it to consumer verticals. Where it winds up being Pinterest with a Reddit/YC upvote/downvote UI. Not worth $7M total in funding imho. And guess what. Consumers don't do deal flow. VCs and angels NEED a river of announcements all day long, and a way to gauge interest from others (that's the lemming DNA talking).
  - gizmo 12y ago
    As a general rule, making something that people with money care about is a good business strategy. It's niche-y, sure. Another word for that is "focused". Even if they end up pivoting in a consumer/pinterest direction (my guess is they won't) they can do very well. Reddit is valued at $500 million and pinterest at 10 times that, after all. I think that people tend to get really hung up on the dollar amounts involved here. Millions of dollars for something that's little more than a proof of concept seems like a lot. But it's not that much money in the big picture. Businesses and gov't squander millions of dollars on pilot projects all the time (but behind closed doors). As long as a couple of those projects make it big the economics of it still work out.
  - bobsil1 12y ago
    Yup. It's like all the funded meals-for-startups startups.

$6m is not a lot of money. It's big for the average series A for YC, and $6m is a 4 year runway for a 30 person team if they don't blow it on a fancy office. High quality traffic + a job board. The $22m valuation seems high though when you think about what they think that company will be worth.

jschuur 12y ago
30 people for 4 years seems far more than PH should need for even for even ambitious expansion plans. When you consider the highly concentrated audience of product development users of the site, the valuation makes sense.
- GamblersFallacy 12y ago
  Repeat traffic demographics is destiny.
wslh 12y ago
How did you calculate that?
ibdknox 12y ago
I'm not sure where $6M would carry a team of 30 for 4 years, but it certainly isn't in any of the tech hubs. Total cost for an employee around SF is between $150-180k (office, taxes, benefits, etc). For the sake of being generous, let's say we're in Seattle and it's 120k: 120,000 * 30 * 4 = $14.4M Even at 60k total cost you break 6M in 4 years: 60,000 * 30 * 4 = $7.2M > It's big for the average series A for YC That's not true, it would be huge for a Seed, but that's a fairly middle of the road series A. Big would be in the 10M+ range.
korzun 12y ago
> $6m is not a lot of money It's a shit load of money that tons of companies would kill for. You are living in a fantasy land.

gizmo 12y ago

Product Hunt has an audience of tech enthusiasts and is at least marginally useful to every VC and Angel investor out there. This by itself is sufficient to easily justify the valuation. In addition Product Hunt is also focused on email, which is a relatively easy to monetize medium. The job board, podcast, and the data they're collecting has additional potential. Once you take into account that investment money is plentiful and valuations are a back-of-the-envelope practice anyway then backing this YC startup is a financial no-brainer.

brianstorms 12y ago
This is precisely why it seems nuts to me. Haven't they learned anything over the past 10 years, that products that are limited to a tech audience largely based in SF Bay Area, and ESPECIALLY a product that appeals to VCs and angels, is extremely, extremely niche-y? So, duh, they're obviously gonna try to expand it to consumer verticals. Where it winds up being Pinterest with a Reddit/YC upvote/downvote UI. Not worth $7M total in funding imho. And guess what. Consumers don't do deal flow. VCs and angels NEED a river of announcements all day long, and a way to gauge interest from others (that's the lemming DNA talking).
- gizmo 12y ago
  As a general rule, making something that people with money care about is a good business strategy. It's niche-y, sure. Another word for that is "focused". Even if they end up pivoting in a consumer/pinterest direction (my guess is they won't) they can do very well. Reddit is valued at $500 million and pinterest at 10 times that, after all. I think that people tend to get really hung up on the dollar amounts involved here. Millions of dollars for something that's little more than a proof of concept seems like a lot. But it's not that much money in the big picture. Businesses and gov't squander millions of dollars on pilot projects all the time (but behind closed doors). As long as a couple of those projects make it big the economics of it still work out.
- bobsil1 12y ago
  Yup. It's like all the funded meals-for-startups startups.