Three-person Meebo just got funded by Sequoia Capital at a $10mm pre-money valuation. From what I see, it’s a site that gives a web interface to IM. I think this an of itself is a really cool idea, but if I apply some very simple tests to it, it fails miserably:
1. No barrier to entry. If 3 ppl can create this, a small army of India programmers can too. Cheap.
2. No lock-in. If/when GYM (Google/Yahoo/Microsoft) launches something similar, what’s to keep the customer at Meebo?
3. No money. I didn’t see any apparent revenue model (other than perhaps seeing some ads) on their site.
Clearly, Sequoia is not stupid and they obviously see something I don’t. It will be fun to find out what that is. Right now, I can’t see how I would value this at $10M other than because they have 250k subscribers and delicious with 300k subscribers just sold for probably $30m. And if that’s the case, this is a case of more hot air inflating a bubble, meaning that one no-revenue company’s valuation is pushing up another no-revenue company’s valuation.
When you start seeing zero revenue companies getting $10m A round valuations, you can’t help but yell “Bubble!”.
What VC’s look for in a business plan
/in Entrepreneur Tips and TricksDraper Fisher Jurveston posted this powerpoint presentation on a business plan competition site in India and I’ve mirrored it here. It provides a very clear collection of bullets that serves an excellent checklist of what you should have in your business plan. I would also think you should be able to summarize these things in your executive summary and presentation as well.
I suggest you download and take a long, hard look at it.
Great VC and Angel Pitch tips
/in Entrepreneur Tips and TricksLong ago I read this collection of 3 articles, “How Software Entrepreneurs can be Successful Presenters to Investors” from Angel investor Edward Harley and it really made a profound influence on how I did my own presentations. I was so impressed by this that I created a blank powerpoint slide deck that incorporated his comments in the notes section.
Anyone that feels anything less that 100% confident about their presentation should take a serious look at Edward’s articles and then if you find my powerpoint deck helpful, have at it!
Article Part 1
Article Part 2
Article Part 3
Powerpoint Slide deck embedded notes.
Where’s the Meebeef?
/in ObservationsThree-person Meebo just got funded by Sequoia Capital at a $10mm pre-money valuation. From what I see, it’s a site that gives a web interface to IM. I think this an of itself is a really cool idea, but if I apply some very simple tests to it, it fails miserably:
1. No barrier to entry. If 3 ppl can create this, a small army of India programmers can too. Cheap.
2. No lock-in. If/when GYM (Google/Yahoo/Microsoft) launches something similar, what’s to keep the customer at Meebo?
3. No money. I didn’t see any apparent revenue model (other than perhaps seeing some ads) on their site.
Clearly, Sequoia is not stupid and they obviously see something I don’t. It will be fun to find out what that is. Right now, I can’t see how I would value this at $10M other than because they have 250k subscribers and delicious with 300k subscribers just sold for probably $30m. And if that’s the case, this is a case of more hot air inflating a bubble, meaning that one no-revenue company’s valuation is pushing up another no-revenue company’s valuation.
When you start seeing zero revenue companies getting $10m A round valuations, you can’t help but yell “Bubble!”.
Putting pants on one leg at a time
/in ObservationsThe next time you pitch to an investor, keep a simple thing in mind: this person is not a God. They are human and make huge mistakes just like you and me. The wisdom they do have (assuming they are experienced) is that they’ve seen many, many business plans and pitches cross their desk and have the experience of seeing many, many of their own investments take off and die.
This context gives them some insight to decide if they like you or not.
And just in case you ever think they are God, just read this article about the recent death of a Bubble 1.0 artifact. Read the big names. Read the big dollars invested. Read about the stupid expenses, then read about the big failure.
Then repeat the mantra: “They put their pants on one leg at a time”.
Bubble 2.0 building?
/in ObservationsCongrats to the recent del.icio.us acquisition but I can’t but wonder: what does it indicate when a zero revenue company that has 300k hard-core geeks as non-paying customers is acquired for millions of dollars?
What kind of a signal does this send out to startup X that’s dreaming up stupid Web 2.0 app Y and pitching it to investor Z that just read about the Yahoo acquisition?
Here’s a cool quote from Paul Kedrosky’s blog that kinda says it all:
Pricegrabber sold for $485M in cash
/in ObservationsWhat’s impressive about this deal is not just the pricetag, but the fact that it was done without VC.
They hat $60mm in sales with $25mm EBIT. Nice work, ladies!
Opportunities in Search engines?
/in ObservationsI’m reading Tech Beat, “Amazon Thinks Out of the Search Box, Again” and John Battelle’s “Alexa (Make that Amazon) Looks to Change the Game” and I’m thinking there may be some kind of an interesting opportunity here.
Alexa is essentially going to turn their whole model inside out and allow anyone to essentially pay for using their content and infrastructure. You will now be able to write code that sits atop their 100 terabytes of data and oodles of computing power to mashup your own search engine.
I can see this warranting some in-depth research for my search-engine impassioned client, for sure, and for anyone else that wants a potential piece of the current search engine frenzy market.
Update:
Then again, Here’s Jeff Clavier’s “Repeat after me: the index of a search engine is a commodity” take on it.
Don’t visit this site!
/in ObservationsIf you like coming up with good ways to spend a lot of time on doing basically nothing, yet feeling you’re getting something done, check out:
http://tones.wolfram.com/
where you can use mathematical formulas to come up with your own ring tones. Very cool.
Here’s what I came up with after “investing” 15 minutes:
http://tones.wolfram.com/id/GqAr7bT6K3NsPnBu23ZVHFEDYElwlwmdixIKNicWkRynse
Have you Googled your Market Lately?
/in Entrepreneur Tips and TricksI just read Paul Kedrosky’s post “Marketing 101 in the Google Age” and he brings up some simple, so-obvious-I-don’t-do-it things that every marketer should do:
Now, ask yourself, when was the last time you did this for your company?
Net TV startup a threat to BBiTV?
/in ObservationsMy good friends at BBiTV have a cool idea which, among other features, allows end-users to publish video content which is then viewed by other digital cable subscribers.
I just read about Brightcove, a $16M startup which is taking a slightly different spin in that it lets anyone syndicate their content and sell it. Brightcove inserts ads and earns a % of the total revenue. Check out the news.com articles, “Site will cater to offbeat films” and “Net TV start-up lands $16 million in funding” for more info.
I think Brightcove typifies the type of stiff competition that BBiTV will be facing. While digital cable is going to be around for a while, I think the key will be to tie the Web/Internet to my TV.
What I would DREAM about having would be a way to surf around the web, find (legal) videos, then direct them to be downloaded to my Tivo, which I could then watch at my leisure. And if the site has an RSS-type feed, let me subscribe to it, podcast-like, and get new videos sent to my Tivo.
Now you’re talking.