Tag Archives: Venture capital

Dear Facebook, Wall Street is not your problem. Your ego is.

Facebook is in the news again. And as so often after its IPO, it’s not good news because Wall Street plays strong. But also more than fair.

Facebook’s user base is declining in countries where it reached a penetration rate of 50% or above. Consequently, in sight of growing market saturation, Facebook stock dropped. Again. What’s happening right now is basically what I questioned already in January. It seems I wasn’t that wrong about how Wall Street would behave in sight of a company which has reached market saturation in most of the more lucrative world markets, especially the US. Facebook clearly seems to be clueless about this new situation and it’s a pretty new situation to them. They’ve been investors‘ darling ever since because their story was just too good. Existential criticism is totally new to them.

Today, it’s a different game with different rules. And I am not sure yet if Facebook realized this. The new shareholders are investing for one of two very special reasons – earnings per share or increase in total share value. Facebook’s previous investors poured money into Facebook because of the outlook of a positive IPO itself. That’s two totally different motives.

While Facebook did considerably well raising the IPO hopes, it is very bad at playing the Wall Street game now. And unless Facebook’s strategy shifts towards accepting this new reality and honors the new ownership by increasing (or just starting to create?) real company value and not hopes, I believe Facebook stock will continue to see only one direction – down. Some people at Facebook, those with all the shares at least, cry when they see the current stock performance and some might believe this is just not right. But it is not about right or wrong. It’s about Facebook’s ego which is still just too big. And the good story is partly to blame for that. But sooner or later Facebook needs to face the new reality. It seems to me sort of a self-fulfilling prophecy that Facebook’s valuation will continue to decline as long as their ego is so big and they continue to think that playing to the rules of venture capitalists will get them through. But Wall Street investors like big pension funds and financial institutions think differently. As it seems now, Facebook still hasn’t realized the urge to shift from a venture capitalists’ darling to a company with a management that is serious about company value.

It’s time to wake up, Facebook. You voluntarily chose to play this new game so now you have to do it. Don’t hate the players.

Image (c) by http://www.flickr.com/photos/mknott/

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Not-so-crazy ‘Unreasonable at Sea’ incubates team success

Some days you just stumble upon them, usually on the web. Great things you really like. Game changing projects and disruptive ideas. Supposed-to-be-crazy visionaries. Don’t believe Steve Jobs was the only one, there are far more out there than you think.

One of this crazy ideas seems to be ‘Unreasonable at Sea‘, a mentor-driven accelerator for tech entrepreneurs looking for the next big thing. If you and your start-up gets on board, you sail around the globe to 14 destinations for 100 days together with 20 highly successful mentors. Total costs are estimated to be $120k and are fully covered by the accelerator.

Sounds crazy? Actually not so much.

A study by the Kauffmann Foundation revealed that the management team is one of the most critical success factors for a start-up, right after former business experience. And believe it or not, a great and functional team is all the more important if you wanna change the game. When you sail big disruptive waves, you will face a strong headwind for most of the time and basically see no tailwind. That’s really challenging and only great teams can keep up with that. Seems like ‘Unreasonable at Sea’ understood that pretty well. Being for 100 days on the same boat leaves no room for excuses. After such a journey, you will know where your team stands at, if it has what it takes and, most importantly, if it can stand the headwind. Knowing that is priceless for you and your team.

And for Unreasonable at Sea, it’s not unreasonable at all. They invest a little bit upfront, offer a great experience to promising tech companies and give away some of their wisdom through their mentoring. But what they get is actually worth much more than their initial investment – the certainty to have a great team minimizes their risk for the game-changing ventures they support. And that’s actually really smart.

Image (c) by http://www.flickr.com/photos/wili/

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