A totally unscientific analysis of the latest buzz-worthy startups joining the billion-dollar valuation club, ranked from least to most justified.
Snapchat
The Associated Press
What it's worth: At least $3 billion, based on a reported offer at that price from Facebook that it rejected.
Why it's worth that much: Snapchat is perhaps the tech world's hottest app — in part because it is popular with teenagers and 20-somethings. That's an audience that's attractive for advertisers, as well as companies like Facebook.
Justification Rating: 3. There is a lot of "potential" ways for Snapchat to make money, but as of right now it still doesn't have any revenue. Further, its founders are in the middle of a lawsuit with one of its alleged cofounders, the company's database was hacked over the holiday break, and it is still shaking off a stigma that management is in over their collective heads. This year is basically a make or break period for Snapchat.
Nest Labs
What it's worth: $2 billion
Why it's worth that much: Nest Labs is defining new smart product categories for home-owners starting with a learning thermostat and a smoke and carbon monoxide detector. Its continued ability to raise large amounts of money speaks to the confidence its investors have in the business.
Justification rating: 4. Nest may be able to change homeowner behavior, unlocking new product categories that didn't exist, and turning them into whole businesses. But, still, producing hardware is a difficult feat — and one slip-up can lead to major problems for the company as a whole.
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