I just learned about the recent sale of a game-changing Internet-based business that can conceivably improve mankind and advance the human race.
I am referring, of course, to the indispensable, “Ship Your Enemies Glitter”, a website used for the sole purpose of allowing customers to anonymously mail glitter to people that they hate. The company proudly advertises, “Want to piss off someone you dislike for only $9.99? Let us send them some stupid fucking glitter that is guaranteed to go everywhere.”
Less than two weeks after launching, this inestimable site sold for $85,000 on Flippa, an online marketplace where entrepreneurs can trade in start-ups, domains or business building toolkits.
On the same day that I discovered I now had the ability to covertly ship glitter, I saw an ad on Etsy for a new pill that enables people to shit glitter. Yes, you read that correctly. For just $8, your poop can now sparkle in ways you’ve previously only dreamed about. (Warning: avoid taking this product prior to a proctology appointment).
All of this glitter news comes on the heels of the strongest IPO year since 2000 and venture capital literally pouring into innovative “sharing-economy” business models.
Lending Club (NYSE: LC), the world’s largest peer-to-peer lending platform, recently raised over $1 billion in its public offering – making it the second-biggest U.S. IPO of 2014. The IPO of OnDeck Capital (NYSE: ONDK), an online lending service for small businesses, quickly followed with a $200 million public offering.
Although Lending Club is now valued higher than most established banking institutions, its valuation pales in comparison to that of privately-held Uber. The international ride sharing app just completed another $1.6 billion financing at a valuation of roughly $41.2 billion. Having raised upwards of $4 billion in total, Uber presently holds the title of raising the most venture capital of any U.S. company in recorded history. Now worth more than nearly three quarters of the companies listed on the Fortune 500, Uber has certainly come a long way since raising its 2010 seed round on AngelList, a leading accredited crowdfinance marketplace.
The hasty M&A activity in shimmering dotcoms coupled with billions pouring into emerging tech companies at lofty valuations had me once again questioning, is this another tech bubble or just a glistening moment for startups?
I emphatically dispelled the bubble babble of 2011 when facebook and Twitter were lighting up private company marketplaces, trading at frothy valuations. Back then I questioned why the mere presence of a high number should denote overvaluation. I rationalized that higher price/sales ratios were warranted for companies accelerating at never-before-seen speeds. (Read: https://nextstreetjournal.wordpress.com/2011/04/14/bubble-what-bubble-2/)
It took Microsoft fifteen years to reach $1 billion in sales. Six year old Uber, currently doubling its revenue every six months, is projected to hit an annual revenue run rate of $10 billion by the end of 2015.
Bubbles are inflated with hot air, not supported by anything of substance such as real revenue growth.
I stated in 2011 that we were living in unprecedented times where a company’s customer reach is limitless, its sales cycle is exponentially shortened and its marketing costs are significantly diminished. And in the four years that followed, not only have these fundamentals strengthened, but technology has advanced and access to capital has only improved.
In agreement is renowned venture capitalist, Fred Wilson who, since the 1990s, has been on the forefront of innovation, and has funded some of the most recognized names in new media. He stated in a recent interview that compared to other periods of extended valuations, the underlying business fundamentals of the Internet and Mobile continue to get stronger and stronger. There are more people, more spending, more profits and more business opportunities. There is a lot more substance to the companies being built today. According to Wilson, “The foundation is so strong now that there is no way the whole thing comes crumbling down.”
While we may be experiencing a slight effervescence in the glitter market, the tech bubble remains in check. This is no bubble. This is a revolution.
Speaking of revolutions, let’s discuss it with Wall Street veterans, crowdfinance experts and FinTech leaders at the upcoming Small Cap Alternative Financing Revolution Event in Boca!