Exactly. These guys are the opposite of the lean startup. All air and venture funding with ambitious growth plans. No product, nothing tested, just on theory. That seems like how a lot of famous dotcom companies launched to great fanfare only to discover the market wasn't interested. Pets.com and webvan come to mind.

amazon proves enough people will buy many things online

costco (and even amazon prime) prove the membership model

past experience proves the founder can build a large ecommerce company

there is a little more validation than just theory

Except that there is a small but significant anti-correlation between running a successful startup in the past and doing so again.

So having a founder with past experience in a successful company gives you a slightly lower chance of success than taking a random first-timer. The existence of wildly successful second-timers does not answer this fact. This slight anti-correlation predicts the existence of wildly successful second-timers. Just fewer of them than you'd get if you selected an equal number of random first-timers.

Secondly, comparison to an existing major player is never a good move for a startup. One of the more frequent arguments I've had in startup environments has been countering the claim that "Microsoft (or Apple, or whoever) does it this way!" as justification for some particular business practice. It is surprisingly difficult to gently disabuse a sincerely committed individual of the notion that their ten-person zero-revenue startup is meaningfully comparable to pick-your-multi-billion-dollar behemoth with tens of thousands of employees, a universally recognized brand, a world-wide distribution network, and a generation of technical expertise.

So there is in fact little more than theory to support the validation. Factual validation necessarily involves paying customers. Lots of them.

'Til then, this looks like a late entry into a market dominated by Amazon, with Amazon Prime already owning the membership space for online sales. Unless their execution is perfect in every detail (which is could be but more likely is not) and/or they offer some compelling advantage over Amazon's delivery model and Amazon Prime's membership model it's hard to see how they are going to put significant dents in Amazon's position. Maybe they don't have to, if they're lean enough and clever enough, but that's a pretty risky bet.

amazon prime is itself taking a series of risky bets -- I bought into it as a fast shipping service. Over the last two years, they've made the shipping shitty with the rise of add-on items, and turned it into a backlist tv / movie service. I don't use, or really want, that -- I just want fast shipping, which has gotten a lot suckier. I'll give jet at $50/mo a try.

$45/year not month

That sounds good in theory, but there's no way to know if it will be like that in practice. Those are unproven assumptions when applied to a new entity. Many of the same things could have been said of Pets.com. Just like no battle plan survives contact with the enemy, no startup survives contact with its customers.

No doubt it's a big gamble, but amazon's market cap is is $173B. That justifies a big gamble.

They have a very long way to reach Amazon and that's given that Amazon stays still all the years to come!

That sort of high level speculation has a mixed history at best.

Anyone can model some numbers for a big market and make impressive Kurzweil shaped graphs.

> But Jet.com is a company worth $600M with no product

This is a common misconception. They are not "worth" $600M just because investors put a little money in at that valuation.

Buying 10% of an old car for $60M doesn't make it worth $600M to anyone.

Exactly right, "worth" should only really be used if someone else would pay $600M for it today.

But buying one share of a publically traded company makes it worth number of shares * value of share?

getting, no doubt, investor shares -- ie their cash is out first

Is it public money (IPO) or private money? This makes a difference.

The article says "convertible debt" and lists some investors. Google Ventures, Goldman Sachs, etc.

I know, I was referring to the bubble comments. If private money wants to value a company at a stupid high valuation, thats their prerogative.

If it was public money valuing this company, we'd definitely be in a bubble.

No launched product. These are the guys who have done it before, so can probably model some numbers. Goldman and Coatue presumably like those models.

I can think of quite a few examples of people who had "done it before" and went on to have a very disappointing experience. Often, the people who have done it before will fail because they assume the same strategy will result in the same payoff. It is often easy to overlook the importance of luck and chance.

Goldman liked credit default swaps, too.

Where's the Snapchat's revenue or Instagram's or WhatsApp's?

It appears that WhatApp was profitable in 2014 with $16m in revenue and $13.5m in expenses. With that said, the value to Facebook was purely strategic and was worth far more than their business model.

http://techcrunch.com/2014/10/28/whatsapp-revenue/

And that justifies $16B?! There were strategies during the Dot-com bubble as. Facebook's leading strategy for acquisitions is insecurity.

I was responding to your point about revenue. I agree that $16 Billion is an outrageous amount for that company.

No product? A mailing list is a product, no?