December 6, 2015

Startup valuation hype cycle

There is a lot of discussion in the startup community these days about if we are on the top of a hype or close to seeing a bubble burst. From my point of view, running a bootstrapped startup, it is not feeling like VCs are throwing seed money at you. At least not in Norway. But valuations for the "Unicorns", which are truly not common to see just like their fairytale counterparts - even if we forget it when we use them as samples and idols, are surely high.

Anyway, I wanted to share a super fun tongue-in-cheek "press release" from Basecamp. The entire thing reads well and if you are like me, it will give you many giggles, but this is my favorite part:

In order to increase the value of the company, Basecamp has decided to stop generating revenue. “When it comes to valuation, making money is a real obstacle. Our profitability has been a real drag on our valuation,” said Mr. Fried. “Once you have profits, it’s impossible to just make stuff up. That’s why we’re switching to a ‘freeconomics’ model. We’ll give away everything for free and let the market speculate about how much money we could make if we wanted to make money. That way, the sky’s the limit!”

Sounds like a brilliant plan! 


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