Product Hunt Raises $6M from A16Z(techcrunch.com)
techcrunch.com
Product Hunt Raises $6M from A16Z
http://techcrunch.com/2014/09/13/producthunt-raises-6-million-from-a16z/
32 comments
As a non-Silicon Valley non-American this is unbelievable to me. It would take a lifetime and you still wouldn't get this kind of investment money in Europe for a site like ProductHunt.
After having a product - Traction (book) - hit #2 on PH a few weeks ago, I can say that PH drove more and higher quality traffic than several other well-known blogs we were mentioned on.
PH is great and Ryan is awesome - really excited to see where PH goes after the raise!
PH is great and Ryan is awesome - really excited to see where PH goes after the raise!
Congrats on raising money, I'm not sure what Product Hunt will do with $6 million and how it will get a return on that investment, but I guess while a gold rush is on you sell pickaxes right?
I'm sure what they are doing is valuable and they certainly have an interesting audience, I just don't have the imagination to understand what they plan on doing with it.
I'm sure what they are doing is valuable and they certainly have an interesting audience, I just don't have the imagination to understand what they plan on doing with it.
"but I guess while a gold rush is on you sell pickaxes right?"
Translation: anything that doesn't seem useful or profitable can be analogous to selling pickaxes during the gold rush
Translation: anything that doesn't seem useful or profitable can be analogous to selling pickaxes during the gold rush
No, I meant it. There are quite a lot of VC's and angel investors throwing money around (gold rush), so instead of being the companies trying to get investment (digging for gold), product hunt is connecting investors to products (selling pickaxes), though I guess they must be successful enough to be invested in, so that sort of spoils the metaphor I guess.
Well I think it's well known that Ryan plans on splitting it into many different communities "subreddit" style, I believe he even discussed the move with a co-founder of Reddit on his podcast. $6 million is a lot of money though, so you'd think there was something more.
I have not looked at PH for months. too US/siliconvalley centric. hopefully the cash means they can deal with this problem now
It is definitely US centric. It is also very Apple-centric. Many times I see a blurb "New app X that does Y" which sounds interesting only to click on it and because they use url shortener/redirect find out it is either a direct link to the ios store or that it is an ios app. It would be nice if they would indicate that something was only for one platform or at least directly link to the page so you could see that it was a link to apple or google or whatever before clicking on it.
It makes sense when a community starts with a group of people from smaller community and later on expands to other areas and communities. It has been what, 6 months since PH's launch? Its a great MVP refactored out of Show HNs!
it is definitely a great product. what I like about Show HN is that it utilises reputation systems but lets everyone submit creating less of a filter bubble experience. Anyway, as you said, its only 6 months old. i just get the feeling though that people living in the valley can't actually see or understand the filter bubble I'm talking about.
Wow, congratulations Ryan. It was probably quite easy (relatively) for PH to raise, since top tier investors have been sourcing potential deal flow from PH for months. Also, it does not hurt that they are a YC company, increasing their social proof.
That TechCrunch article is very defensive.
This funding seems nuts to me.
Product Hunt has an audience of tech enthusiasts and is at least marginally useful to every VC and Angel investor out there. This by itself is sufficient to easily justify the valuation.
In addition Product Hunt is also focused on email, which is a relatively easy to monetize medium. The job board, podcast, and the data they're collecting has additional potential.
Once you take into account that investment money is plentiful and valuations are a back-of-the-envelope practice anyway then backing this YC startup is a financial no-brainer.
In addition Product Hunt is also focused on email, which is a relatively easy to monetize medium. The job board, podcast, and the data they're collecting has additional potential.
Once you take into account that investment money is plentiful and valuations are a back-of-the-envelope practice anyway then backing this YC startup is a financial no-brainer.
This is precisely why it seems nuts to me. Haven't they learned anything over the past 10 years, that products that are limited to a tech audience largely based in SF Bay Area, and ESPECIALLY a product that appeals to VCs and angels, is extremely, extremely niche-y?
So, duh, they're obviously gonna try to expand it to consumer verticals. Where it winds up being Pinterest with a Reddit/YC upvote/downvote UI. Not worth $7M total in funding imho.
And guess what. Consumers don't do deal flow. VCs and angels NEED a river of announcements all day long, and a way to gauge interest from others (that's the lemming DNA talking).
So, duh, they're obviously gonna try to expand it to consumer verticals. Where it winds up being Pinterest with a Reddit/YC upvote/downvote UI. Not worth $7M total in funding imho.
And guess what. Consumers don't do deal flow. VCs and angels NEED a river of announcements all day long, and a way to gauge interest from others (that's the lemming DNA talking).
As a general rule, making something that people with money care about is a good business strategy. It's niche-y, sure. Another word for that is "focused".
Even if they end up pivoting in a consumer/pinterest direction (my guess is they won't) they can do very well. Reddit is valued at $500 million and pinterest at 10 times that, after all.
I think that people tend to get really hung up on the dollar amounts involved here. Millions of dollars for something that's little more than a proof of concept seems like a lot. But it's not that much money in the big picture. Businesses and gov't squander millions of dollars on pilot projects all the time (but behind closed doors). As long as a couple of those projects make it big the economics of it still work out.
Even if they end up pivoting in a consumer/pinterest direction (my guess is they won't) they can do very well. Reddit is valued at $500 million and pinterest at 10 times that, after all.
I think that people tend to get really hung up on the dollar amounts involved here. Millions of dollars for something that's little more than a proof of concept seems like a lot. But it's not that much money in the big picture. Businesses and gov't squander millions of dollars on pilot projects all the time (but behind closed doors). As long as a couple of those projects make it big the economics of it still work out.
Yup. It's like all the funded meals-for-startups startups.
$6m is not a lot of money. It's big for the average series A for YC, and $6m is a 4 year runway for a 30 person team if they don't blow it on a fancy office. High quality traffic + a job board. The $22m valuation seems high though when you think about what they think that company will be worth.
> $6m is not a lot of money
It's a shit load of money that tons of companies would kill for.
You are living in a fantasy land.
It's a shit load of money that tons of companies would kill for.
You are living in a fantasy land.
I'm not sure where $6M would carry a team of 30 for 4 years, but it certainly isn't in any of the tech hubs. Total cost for an employee around SF is between $150-180k (office, taxes, benefits, etc). For the sake of being generous, let's say we're in Seattle and it's 120k:
120,000 * 30 * 4 = $14.4M
Even at 60k total cost you break 6M in 4 years:
60,000 * 30 * 4 = $7.2M
> It's big for the average series A for YC
That's not true, it would be huge for a Seed, but that's a fairly middle of the road series A. Big would be in the 10M+ range.
120,000 * 30 * 4 = $14.4M
Even at 60k total cost you break 6M in 4 years:
60,000 * 30 * 4 = $7.2M
> It's big for the average series A for YC
That's not true, it would be huge for a Seed, but that's a fairly middle of the road series A. Big would be in the 10M+ range.
30 people for 4 years seems far more than PH should need for even for even ambitious expansion plans.
When you consider the highly concentrated audience of product development users of the site, the valuation makes sense.
When you consider the highly concentrated audience of product development users of the site, the valuation makes sense.
Repeat traffic demographics is destiny.
How did you calculate that?
Who really needs Product Hunt?
1) Moms: Well, since they make "all" the buying decisions for the family.
2) Small businesses: Sadly enough, your local dentist, or local mechanic, still need to know what are the latest, shiny tools for their trade.
Software engineers and product makers, I just do not see their monetary value, other than testers for PH.
1) Moms: Well, since they make "all" the buying decisions for the family.
2) Small businesses: Sadly enough, your local dentist, or local mechanic, still need to know what are the latest, shiny tools for their trade.
Software engineers and product makers, I just do not see their monetary value, other than testers for PH.
Congrats PH team.. The PH Philly Meetup was a great time, and I love the direction you guys are moving in. Looking forward to seeing the next evolution!
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This is marginally less silly than Snapchat being "worth" as much as SpaceX.
Congrats to Ryan and the team!
I know there must be more to the plan (in addition to divide and conquer), can't wait to see what's in the works.
I know there must be more to the plan (in addition to divide and conquer), can't wait to see what's in the works.
Congrats!
Amazing!