What's The Rush?

It feels like Companies are rushing in the web space.

I am not sure if we are rushing because we are nervous of Facebook, nervous of running out of money or the pressure of being the next Twitter, Zynga or now Groupon. Groupon is running fast because of all the ‘clones’ copying him …it could also be the 19 month old $1.35 billion valuation.

Here is an interesting fact about our aging population:

Of all the people in human history who ever reached the age of 65, half are alive now. (New Scientist)

Even though we live in a very old poulation cycle, I don’t understand the rush. The last time web companies were pieced together this fast (1998-2000), things ended badly.

It feels to me that Groupon has an age old financially engineered model. They see a window, a hole, and are bursting through it with nuclear speed. It’s not anything new. They want to be public and they want to get their fast. This is the exception, not the rule.

For the rest of us, rushing will only take a little of the fun out of it. Get the product right.

Groupon believes they have the product that can go global NOW. It will be amazing to see how this one turns out.

16 comments

  1. byrneseyeview says:

    I believe in The Rush.

    Once they have the product *right enough* that they can acquire users for less than the NPV of the extra profits those users will generate, they’re leaving money on the table every time they don’t pay up in order to buy new users. Look at Zynga: every bundle of users is basically an annuity for them, and that annuity is trading at a discount to its fair value.

    It would be interesting to see if the DST model (high valuations with fewer board seats/voting rights) gets extended further, and the next Zynga or Groupon is partially funded with junk bonds.

    • howardlindzon says:

      as i mewntioned…if the product is right and the math works ansd you get
      the money connection….i guess you go for it. rare and amazing to watch.

      • byrneseyeview says:

        Yep. I think one of the big problems in 99-00 was that a lot of these companies were ad-funded. And the easiest way to get new eyeballs is to get worse eyeballs. Groupon and Zynga are more disciplined, because they’re actually selling something; if they degrade the quality of their traffic, they’ll take the hit directly.

        But now that I think about it some more, those businesses are rare. The only other great example I can think of is Dropbox.

  3. byrneseyeview says:

    I believe in The Rush.

    Once they have the product *right enough* that they can acquire users for less than the NPV of the extra profits those users will generate, they're leaving money on the table every time they don't pay up in order to buy new users. Look at Zynga: every bundle of users is basically an annuity for them, and that annuity is trading at a discount to its fair value.

    It would be interesting to see if the DST model (high valuations with fewer board seats/voting rights) gets extended further, and the next Zynga or Groupon is partially funded with junk bonds.

  4. howardlindzon says:

    as i mewntioned…if the product is right and the math works ansd you get
    the money connection….i guess you go for it. rare and amazing to watch.

  5. byrneseyeview says:

    Yep. I think one of the big problems in 99-00 was that a lot of these companies were ad-funded. And the easiest way to get new eyeballs is to get worse eyeballs. Groupon and Zynga are more disciplined, because they're actually selling something; if they degrade the quality of their traffic, they'll take the hit directly.

    But now that I think about it some more, those businesses are rare. The only other great example I can think of is Dropbox.

  8. JasonRaznick says:

    groupon has some very smart people behind it like brad k, who has 4 companies traded on the nyse and nasdaq. long groupon and my friend brad

  9. JasonRaznick says:

    groupon has some very smart people behind it like brad k, who has 4 companies traded on the nyse and nasdaq. long groupon and my friend brad

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