knowsnothing613

yeah, and Yahoo bought Flickr for hundreds of millions. And Flickr never became a profit center for yahoo. Now, Yahoo is laying off thousands of workers, and is close to dead poool, because of all its malinvestment in web1.5 (flicker, geocities, delicious, etc).

Video has a higher value proposition than photos. Look @ how hard flickr has struggled turning photos into a sustainable business model.

I'm comparing apples to apples. You're comparing apples to oranges.

yeah, but they paid $1 BILLION dollar for a company with NO business model.

This buy was just another way for connected Silicon players to cash out on the facebook IPO, since the IPO window for web 2.0 is closed.

Groupon is a ponzi. They need money from new groupons to pay out past groupons. This is why they are constantly buying out smaller companies for new markets, and getting into higher end groupons. If the new money coming in is less than the money payed out to previous groupon, the companies collapses, just like a ponzi.

As long as they can make the company look healthy in the near term (accounting tricks), they hope investors won't notice the medium-long term liabilities, or the flow of funds necessary to keep the company afloat, but by then insiders would have sold out the bulk of their positions, and someone else is holding the bag.

Groupon will signal the bursting of web bubble 2.0, and will drag down the Facebook IPO. And if the Facebook IPO falters, silicon valley hits the skids, because everyone in Silicon Valley is in that play. Everyone.

My accounting buddy says 'Material Weakness' is code for accounting fraud.

If so, it explains why Andrew Mason and Eric Lefkofsky massively cashed out pre-IPO, and may have left everyone else holding the bag.

My accounting buddy says 'Material Weakness' is code for fraud. If so, it'd explain why Andrew Mason and Eric Lefkofsky cashed out before the IPO.

Thoughts?

Facebook is extremely overvalued. You cannot rationalize a 80B market cap for facebook on annual revenues of 2-3B, considering how Zynga's business model is faltering (social gaming fad waning), and a large part of facebook revenue comes from Zynga.

Also, Tumblr is becoming the new 'it' social network site. And Google & Apple & Amazon will continue to launch social products to erode market share (measured by social activity, and not eyeballs).

Lastly, since common folk are pulling out of equities, and the US economy is following Japan's deflationary path, after her property bubble, P/E should likely converge to a value of 8, which was seen in Japan.

Therefore Facebook @ 16-21B is a better valuation, but still overpriced in a deflationary macro environment.

The float is too thin to short. That is why all new web 2.0 IPO have thin floats. It's easier for larger stake holders to push the price around, and sucker in ma & pa, and momentum traders. But if you look @ ICI data, common folk are getting out of equities. If you own risk in this market, going into 2012, you are a fool. There's a high probability of a financial collapse in Q1 2012.

or you can say that investment bank client couldn't find dumb money to offload their shares to on opening day. And Pincus & insiders were probably fcking over investment bank clients by offloading their shares.

Investment bank clients are gonna be pissed that their P/L is already negative, day one, because of Pincus offloading.

A large part of Reddit winning was Kevin Rose fumbling while CEO of digg. Reddit had open sourced its code by then, and Digg didn't even bother adding some of the useful functionality.

this article should do wonders for its IPO /sarc

It's part of the built to flip mentality of the VC world. Look @ Groupon for godsake. The sustainability of its business model is dubious, but they still rushed the IPO, so they could flip it to ma & pa. But ma & pa aren't buying, so Investment Bank clients that got in during the roadshow are unloading en mass, and has sunk the share price below the IPO price, despite the low float.

web VCs fund companies they believe they can flip. It's also why they are biased towards late stage funding, since they have a higher chance of flipping over their positions.

wtf. If you live in Europe, you should be selling Euros and buying property in London/Germany/USA, and prepare for the collapse of fiat currencies.

if the ECB prints to bailout the PIIGs, it'll cause hyperinflation, and the disparity between the 99% and 1% will widen.

Already the drums of war are beating for Syria (a proxy for Iranian war, and control of the oilfieds around the Strait of Hormuz) to distract the masses from the inevitability of economic collapse, whether it be in the short, or medium run.

#occupyWallStreet is the shapes of things to come.

seed funding usually provides an 18 month runway before more financing is needed. Mid stage runways are for a 2-5 years. You had a seed/angel funding bubble in 2010, so those companies are likely close to the end of their runways now, so they will need a cash influx. If there is a liquidity crisis, it'll be highly unlikely for them to get funding.

Also, they is still alot of inventory (mid stage web startups) from the 2007 funding bubble to work through.

Mid stage companies, funded in 2007, and had a 2-5 year runway, were waiting on the recent IPOs (Groupon, LinkedIn, Pandora, Zynga, ..) to raise appetite for their stock, but Groupon & LinkedIn, and Pandora IPOs are busts. So the capital markets will likely be closed off to them, and their will have to turn to the secondary markets. But once again, if there is a liquidity crisis, they will not get funding, and they will face a cash squeeze over the next 9-12months, depending on their burn rate.

So you have two web bubbles that will collapse, if the EZ fails. The 2007 funding bubble (digg, etc), and the 2010 angel funding bubble.

if the EZ fails, there will be a liquidity crisis, and IPO runways will have to be extended, so all seed to mid-stage startups will go bust over the next 8 months, as their cash dwindles, and they can't get financing. Expect massive layoffs in the web 2.0 space, if it happens.

Cash is king. Conserve it.

groupon is a pseudo ponzi scheme. For any market X there exists a high variability for profitable, volume adjusted, daily deals (resource {R}), which people want. After time t, the most desired deals r in resource R are exhausted, leaving behind lesser deals (deals which make substantially less revenue-share). So as t >> T, only less desired deals remain for market X, hugely eroding profits margins, given the high fixed cost to set the deal. So the only way to maintain margins is to enter a new market Y, where r (very profitable daily deals) is in high supply. But eventually this market will be exhausted of r, and margins will again collapse. Therefore Groupon must continually enter new markets to maintain margins, which it has been doing. But there are only a finite number of markets. So eventually Groupon will collapse. This is an intrinsic problem of the daily deals market. Google may overcome it, if it can implement it's near field communication strategy, or automate the bidding process. But other daily deals site, like Living Social, with high employee counts, are bound to fail.

And how many of these companies are EBITDA profitable, and not lifestyle companies.

I remember the business week cover of Kevin Rose, which gave a similar mythos-narrative. But Digg never lived up to the hype. It flamed out.

But in a gold rush, you make money selling the dream

you'd have to adjust for cost of living.

Someone living in SanFran, or New York will get paid multiples than someone in the Midwest for the relatively same skill set.

Your survey may suffer from selection bias, if most of the respondents are from the major tech hubs, or are working in startups.

It was the best of times (Silicon Valley). It was the worse of times (rest of country).