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How Tilt Went From Hot $375 Million Startup To Fire Sale (fastcompany.com)
tedlistens writes: Not long ago, social payments company Tilt seemed to have it all -- a hot idea; cool, young founders with Y Combinator pedigrees; and $67 million in funding -- not to mention a $375 million valuation. But Tilt was more successful at cultivating its user growth and fun, frat-tastic office culture than at nailing down a viable business model. When Tilt finally ran out of cash, the party ended with the company's sale at fire-sale prices to fellow Y Combinator alums Airbnb in an aqui-hire deal. Where did it all go wrong? Here's an excerpt from the report: "Tilt was based on the premise that 'something like PayPal and Facebook would collide,' Tilt founder and CEO James Beshara says. The company aspired to be a social network for money -- instead of sharing photos and videos, users exchanged digital cash for birthday ragers and beer runs. During Tilt's early years, the pitch was simple, and carefully calibrated for Silicon Valley boardrooms: 'Let's prove that we can dominate the globe.' [...] By early 2013, millions in venture dollars were pouring into Tilt's coffers. Investors were lured by the same strong social metrics (viral coefficient, for example, a measure of user growth) that had marked Facebook as a winner. But the hopes embedded in Tilt's $375 million valuation came crashing down to earth last year. Beshara hadn't built a business; instead, he had manufactured a classic Silicon Valley mirage. While investors were throwing millions of dollars at the promise of a glittering business involving 'social' and 'money,' their Mark Zuckerberg-in-the-making was basking in the sunny glow of Bay Area praise and enjoying the ride with his bros. Revenue was not a top priority -- a remarkable oversight for any company, and a particularly galling one for a payments company. Eventually, with cash running low, Tilt went looking for a buyer..."
Can't you just feel the impending crash? Valuations are high, VCs throwing money at tech youngsters with a plan.
I can't wait for the fire sale once the suckers have all cleared out.
that there is a shortage of skilled intelligent STEM workers!
1) Expand universities to recruit even more naive wide-eyed dreamers into STEM. Generate debt to transfer public money into private coffers via tuition.
2) Lobby for more H1B visas.
3) Make fun of over 40 engineers and claim that they're too old to understand what you're doing.
4) Don't forget to shove a broom up your ass so you can wipe the floor on the way out when the bailiffs come to execute the eviction notice on your startup...
(Or I guess I'm not hooked in as much as a I thought I was.)
And someone gave them $67M? Ha ha.
Venture capitalists are greedy parasites. They are arrogant, yet stupid as a bag of rocks. However they got their money, I am pleased to hear whenever they lose their "investment" in a craptastic venture. Yes, I have had an encounter with one of those morons.
A dingo ate my sig...
you lose!
stupid!
pinball wizard
the bally table king
Tilt? Never heard of it, literally.
Oh, I'm sure it was huge, but it made less of an impact than a BB hitting a battleship. I'm not exactly a stranger to the internet, but I never heard of it before this obituary.
Just cruising through this digital world at 33 1/3 rpm...
"Revenue was not a top priority"
Well there's your problem.
Just cruising through this digital world at 33 1/3 rpm...
I've never heard of it.
If you search slashdot there is nothing mentioned except for this article.
While we're at it, is venmo still a thing?
The market has completely lost its mind with it's insane valuations of companies that make pretty much nothing, contribute nothing to society and well, don't even make a profit.
This crap is just nuts .
If you have preferred stock, you never really lose your money. Employees that took non-preferred options or RSUs instead of demanding a higher salary are the ones who get nothing.
Social payments sounds a lot like WeChat Wallet / Alipay. Except those also combine the useful features of Apple Pay. Actually, Alipay makes Apple Pay look old.
He needs the money
Can Uber and Lyft be far behind? They're cab dispatchers without the cabs. That's it. It is impossible to be worth $28 billion just by shaking down cabbies for a couple of years.
Tilt, I don't care about. I just loooooove stories of VCs losing money on their stupid bets. YES!!!!!!
I can't wait for Snapchat to be worth nothing and seeing all that idiot money go up in smoke!!
I watched one of Y Combinator's Startup School videos. The presenter was talking about how ideas aren't that important and how so many startups pivot. To his credit, he said that the idea is a bit more important than many people think, but I was still taken aback somewhat. Your idea is your product, and you need a product that customers are willing to pay for. Sales are incredibly important, but they aren't going to happen without a product that someone will pay for. It seems like attracting investors often takes precedence over attracting customers and generating sales. There are certainly other factors that can make a business fail, but lack of sales is certain to do so. It seems like sales and a product that attracts customers aren't taken seriously enough in many startups. Sometimes a lack of investment is better because it puts the focus where it matters, which is a product that customers want and that has good margins.
I'm reading "Chaos Monkeys: Obscene Fortune and Random Failure in Silicon Valley" by Antonio Garcia Martinez. The author and his two engineers leave the startup they worked at to create a startup at Y Combinator to create a better version of the Digg toolbar (remember toolbars?) for Google advertisers in 2010. I'm at the part where the author sends his engineers to Twitter while he goes to Facebook in a three-way deal. Fun times.
I doubt this book will replace Startup: A Silicon Valley Adventure by Jerry Kaplan as my favorite Silicon Valley startup book.
And after reading more than half the article, I still had no idea what the company actually did. Guess that I am not one of those thinkfluencers who could see their vision. *shrug*
That's pretty much all you need to know; it has failure written all over it.
Fuck your buzzwords, Y-shittymaker
> Why the heck would anyone value Ford or GM more than Tesla. Ford and GM's unrealistically optimistic dream would be "be in the exact same place we are now 20 years from now."
Ford and GM are making $10 billion profit each year, and have been for a long, long time. They've been making money for over a hundred years. The question for Ford and GM is whether they'll make $9.5 billion next year or $10.5 billion. So yeah it would be just terrible for them to "be in the exact same place we are now 20 years from now." I sure hate to be making $10 billion every year.
Tesla, on the other hand, has lost money every year. Tesla MIGHT start making money at some point. Eighty years from now, Tesla might be making $10 billion / year. Also Tesla might go the way of Myspace. We'll find out in a few decades.
Nowhere! It did not go wrong at all.
The founders had tremendous fun for other peoples money and got a job afterwards. I cant see how that is "going wrong". Unless, of course, it was your money they were partying for, but if it was you kind of deserved it IMO.
"Revenue was not a top priority -- a remarkable oversight for any company, and a particularly galling one for a payments company. Eventually, with cash running low, Tilt went looking for a buyer..."
Well - this is what happens when you just throw $65m at someone but don't provide them with a set of targets, metrics, viability tests, check-ups, performance reviews, performance-linked investment etc.
Of course revenue's not a priority if some idiot finances you to the tune of decades of operating income without ever needing to do anything specific to get that money.
And once the valuation hits 5 times that, which is ludicrous if they don't actually have money or technology at that moment, only "potential", they have even less incentive. Short of a clause or two, they could just sell up and disappear, having made millions doing nothing.
To be honest: Never heard of them, don't care.
A startup company that was, in reality, a douche imparting the IMAGE of what he thought a company should be. I'm shocked. It's not like every god damn startup company does the same fucking thing, shitting and pissing away millions of dollars of investors funds to build fancy offices, take part in "start up mixers" and "incubators" travel the globe talking about how to run a startup.
Without actually making a company or a product.
*TADUM* *CRASH* *THUD*
Thank you, thank you, I'm here all week.
Tip your waiter and try the fish.
We suffer more in our imagination than in reality. - Seneca
Never heard of either of these.
You have to be joking! Next thing you're going to expect is they worry about profitability!
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
Never heard of either of these.
Much prefer anti-social payments where to pay, you hit someone on the head with a sock full of coins.
Is there an App for that?
Office, Submarine
Who's that?
It's fun and easy to mock these cases in hindsight. What a bubble! Fake company! No revenue! Etc. And, I'm with you in the mocking. But what gets lost is that before the crash, really smart people bet on this company. I'm not talking about investors. A friend left his home city and great director-level job to take a higher level position in a new city at this company. He is a smart guy. He was excited. He truly believed he was making the clearly right decision.
My point is that if all we do is laugh, we don't recognize that we could have been my friend. We should be learning from this, not mocking it as a stupidity we could never run into ourselves.
I still have no idea what Tilt did besides burn cash.
Tilt went Tilt.
Tilts Up.
Tilt went off-table.
The exit strategy was to go Tilt.