Watch Out for Your Eyeballs!

"market"


Watch Out for Your Eyeballs!


I'm going to paraphrase a conversation I had recently with a Venture Capitalist whose focus is on the tech industry:

Me: "Eyeballs, that's what founders are telling me. How will this company monetize them?"
VC: "Don't know, they haven't figured that out yet."
Me: "Right. Then how do you come up with your current valuation?"
VC: "That's industry standard."
Me: "Industry standard?"
VC: "Yeah, it's based on what other companies are getting funded at presently."
Me: "Companies are being funded on eyeballs at the moment. So it's based on eyeballs?"
VC: "Yeah. Well, they're not there yet. It's projections of eyeballs."
Me: "Right, projections of eyeballs which they don't yet know how they'll monetize?"
VC: "I don't think they need to monetize them."
Me: "Really? How does the company make money for shareholders?"
VC: "Exit will be a trade sale."
Me: "Right. Who's going to buy them?"

[...]

This goes deeper than stupid ideas turned into stupid companies, run by stupid people selling equity to other stupid people, with the anticipation that even stupider companies, run by even stupider people, will buy out this stupid company. Following me?