I hate tech bubbles.
No, that’s not the secret. Everyone knows that. The secret I am referring to is a company named, literally, Secret. And the existence of this company, as well as the easy $6 million its co-founders pocketed when they shuttered the place, is absolutely symptomatic of this bubble-of-bubbles we are living in (the third one of the past fifteen years, incredibly).
I didn’t even know Secret existed, because I’m too old to spend my time worrying about every new little app that comes along that lets teenagers engage in cyber-bullying and exchange dick pics. It’s just not my cup of tea. But I happened to stumble across this article yesterday, which was headlined:
Now a startup shutting down isn’t any bigger news than someone finishing a satisfying lunch somewhere, but the “Ferrari” mention intrigued me, so I read further.
Turns out a chap named David Byttow (whose profile picture looks exactly like the sort of person who would do such a thing) started the company way, way, way back in October 2013. He was able to get $35 million – – that’s $35,000,000 – – in funding for his app. The elevator pitch for this thing was: “Share anonymously with friends, co-workers and people nearby. Find out what your friends are really thinking and feeling.”
I dunno, but when I want to know what my friends are thinking and feeling………I ask them. But, then again, I didn’t raise $35 million, so who am I to judge?
The media had some pretty ugly things to say about Secret, but in the Silicon Valley, which is where I live, stupid apps getting tens of millions in funding with no prospect of profits is commonplace. What got my attention was that, as the app’s popularity was cratering, the co-founders managed to raise more cash and – – astonishly – – pocket $6 million from selling a portion of their own holdings to these new investors.
During this time (when, in retrospect, it is obvious that the app was a flash in the pan, and users had lost interest), the message from the company was that it might “pivot”, which is Silicon-Valley-speak for a product that has failed and, before it is carted off to its grave, will pretend to be something else. Color.com, about which I wrote endlessly on Slope, “pivoted” several times before its $41 million was considered a lost cause.
So Byttow’s syrupy post about closing the firm “with a heavy heart” doesn’t really delve into the fact that, in exchange for 18 months of work that resulted in a completely failed endeavor, he and his buddy scored $6 million (out of which he bought himself a Ferrari), on top of whatever handsome salaries they felt they deserved.
So am I bitter about this? Well, no. Bitter isn’t the right word. I’d say I’m simply…….pissed off. Because my own high-tech start-up, Prophet, is something I worked thirteen years to build, and when I finally sold it (for all of $8 million), it was a growing, profitable firm with happy employees, fantastic products, and a very satisfied buyer. Its products are in use to this day, ten years hence. Prophet, you see, wasn’t an overly-funded clown-show where we blew through the cash and just decided we were all fuck-ups and might as well close the place down swiftly. Oh, and pocket the cash.
The quantity of these dim-witted, overly-funded outfits that are going to enter bankruptcy is going to explode over the next few years (Clinkle is bound to be a likely contender…….) In the meantime, keep our anti-nausea medication handy.