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Are there any good examples of startups creating a "massive user base" but not making any money? The likes of WhatsApp were valued significantly higher than th

by ak39 12y ago

Are there any good examples of startups creating a "massive user base" but not making any money? The likes of WhatsApp were valued significantly higher than the readings of their cash flows would convey. So such examples of massive valuations in spite of zero or negligible cash flow are not good examples.

TeMPOraL 12y ago
Could Quora be such example?
- ak39 12y ago
  Yeah. I think so. Found this while Googling for Quora's valuation: http://techcrunch.com/2014/04/09/quora-forever/ http://techcrunch.com/2014/04/09/quora-forever/
  - TeMPOraL 12y ago
    Yup, that's what I was thinking about. It was brought to my attention by @idlewords. From the article that is probably the most linked thing in comments this year, [0]. Take the case of Quora. Quora is a question-answering website. You type a question and a domain expert might answer it for you. Quora's declared competitor is Wikipedia, a free site that not only doesn't make revenue, but loses so much money they have to ask for donations just to be broke. Recently, Quora raised $80 million in new funding at a $900 million valuation. Their stated reason for taking the money was to postpone having to think about revenue. Quora walked in to an investor meeting, stated these facts as plainly as I have, and walked out with a check for eighty million dollars. That's the power of investor storytime. So yeah. No one games anything here. [0] - http://idlewords.com/bt14.htm http://idlewords.com/bt14.htm
silverbax88 12y ago
Probably not an exact match, but until Twitter shows a profit, it would fall into this category. It has millions of users but tiny amounts of revenue, yet did a big IPO and is valued at an incredibly-hard-to-justify share price. I mean, there are insurance and retail stocks that have billions in revenue, showing serious profit each quarter and their share price is half of Twitter's. But, to be fair, Twitter didn't 'growth hack', they did build something people wanted to use. But their exit (as of now) would have to be considered 'gaming the system'.
arjie 12y ago
Ecomom could be one. They sold below cost and essentially just bled money, if I remember correctly.
- thanedar 12y ago
  It seems like the question is talking about large, zero-revenue startups. Ecomom definitely doesn't fit here, since they were collecting over $1M/month in gross revenues. Of course, they were discounting so much that each order had a negative margin, but that is a different story. I think the most dramatic example of this (other than WhatsApp) is Snapchat.

by ak39 12y ago

TeMPOraL 12y ago

Could Quora be such example?

ak39 12y ago
Yeah. I think so. Found this while Googling for Quora's valuation: http://techcrunch.com/2014/04/09/quora-forever/ http://techcrunch.com/2014/04/09/quora-forever/
- TeMPOraL 12y ago
  Yup, that's what I was thinking about. It was brought to my attention by @idlewords. From the article that is probably the most linked thing in comments this year, [0]. Take the case of Quora. Quora is a question-answering website. You type a question and a domain expert might answer it for you. Quora's declared competitor is Wikipedia, a free site that not only doesn't make revenue, but loses so much money they have to ask for donations just to be broke. Recently, Quora raised $80 million in new funding at a $900 million valuation. Their stated reason for taking the money was to postpone having to think about revenue. Quora walked in to an investor meeting, stated these facts as plainly as I have, and walked out with a check for eighty million dollars. That's the power of investor storytime. So yeah. No one games anything here. [0] - http://idlewords.com/bt14.htm http://idlewords.com/bt14.htm

silverbax88 12y ago

Probably not an exact match, but until Twitter shows a profit, it would fall into this category. It has millions of users but tiny amounts of revenue, yet did a big IPO and is valued at an incredibly-hard-to-justify share price. I mean, there are insurance and retail stocks that have billions in revenue, showing serious profit each quarter and their share price is half of Twitter's. But, to be fair, Twitter didn't 'growth hack', they did build something people wanted to use. But their exit (as of now) would have to be considered 'gaming the system'.

arjie 12y ago

Ecomom could be one. They sold below cost and essentially just bled money, if I remember correctly.

thanedar 12y ago
It seems like the question is talking about large, zero-revenue startups. Ecomom definitely doesn't fit here, since they were collecting over $1M/month in gross revenues. Of course, they were discounting so much that each order had a negative margin, but that is a different story. I think the most dramatic example of this (other than WhatsApp) is Snapchat.