Experimental Lex

Playing with words.

Tag Archives: startups

Instant and Implied Social Networks

Powerful words were spoken by Sequoia Capital regarding their investment in Color Labs along with other major investors.

“They told us that every 10 years or so a company and a marketplace and an opportunity come together that’s transformative,” …. “Not since Google have we seen this.”

All told, the series A funding total was $41 million.  The funding was announced in conjunction with the launch of their iPhone app and website at color.com.  (sidebar:  If it looks like a bubble, walks like a bubble and talks like a bubble.com, then it is probably a bubble).

And if you ask around, you will find mostly negative opinions of the app, the website, and the 41-million-fucking-dollars.  Maybe a good question to ask is: Does bubble equal stupid? I think the answer was yes during the first bubble over a decade ago.  This time round, I don’t think this is automatically true.

In the case of Color Labs and Sequoia, there is a rumored rationale at work here.  It was said that the Color app demonstrates the “implied social network”.  By making the assumption that a bunch of people using the same photo-taking and sharing app within close proximity of each other, they should automatically be treated as “friends” or at least the same social network.  The result is a digital photo album based on the aggregated people and photos taken at an event.

So what?  That might seem underwhelming as a first product for a $41MM investment.  Yet, the premise is intriguing.  If you look at the big social networks (e.g. Facebook, Twitter, LinkedIn), it feels like there is too much work involved with creating and managing your social profiles.  The beauty in life is randomness … the serendipity that makes you accidental friends with people you meet through interesting circumstances.  Often, that moment lasts for a very short time.  And sometimes, it is a catalyst that extends that moment for a very long time.

Regardless, the beauty in that moment is still there.  I believe there is something important to be explored and discovered here.

Riff on Internet Startups

Alas, I am reduced to this.  I haven’t written anything in months while I have pursued my elusive dream of startup fame and fortune…  Still working on it… And so I am writing this blog post to get some thoughts out of my head and perhaps find some clarity amid the fog of ideas.

The year is 2011.  Look back 10 years and think about what was happening then.  Our first grand Internet bubble had burst and startup companies were dying everywhere.  Hundreds of millions of dollars of venture capital investments suddenly disappeared.  A few companies were able to survive, but they had to cut costs drastically.  That meant continuous layoffs and very little hiring.

If you were an entrepreneur or part of a startup back then, you were well and truly fucked.  Nobody wanted to invest in anything.  They called this period the “nuclear winter” for startups and venture capital.  I think Marc Andreesen coined that term.  I remember a funny Internet meme at the time.  It was the quote “Please God, give me just one more bubble”.  The brilliant Paul Kedrosky turned it into a bumper sticker which you can find here on CafePress.

Well my friends, ten years later, we have our new Internet bubble.  Let’s not debate whether this is or is not a real bubble.  It won’t be the same as the last one for all the reasons that have already been said. Let’s just say that this is an extremely favorable time for getting funding for startups.  Some say this bubble will last through 2013.  If you waited ten years for this bubble and now it is here, what are you going to do about it.

You might say to yourself, “I sure as fuck will not miss this one”.  That’s what I’m saying.  And yet, you should carefully plan your approach to taking investor money and launching your business.  If you look back at the great Internet companies today, most were founded after the first bubble had burst or were quietly getting started (i.e., Google, Twitter, Foursquare, Facebook).

Do you want to be one of the startups that got funded, launched big and then flamed out?  Maybe that’s better than nothing.  My feeling is that there will be plenty of flameouts and I wonder if any of the founders will walk away with any money or their reputations intact.

It seems to me that it would be better to create something of value and look for the fastest and best exit strategy.  Take the cash off the table while you can and save it up for the post-bubble.  After the bubble, talent will be cheap, new opportunities will arise, and it will be a very good time to have some dry powder in your guns.