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..."

Comments

This just proves

[Anonymous Coward]

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...

Re:This just proves

[elrous0]

5) Don't worry about a business plan. You can think about questions like "How do we make money?" later. Right now, just focus on more important priorities like establishing a cool company culture and getting a huge pool table for the breakroom.

6) Open floor plans. Cause that's supposed to help, somehow.

7) "Millennial Brand Recognition," or some shit.

Re:Ideas, products, and sales do matter!

[goose-incarnated]

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.

VCs don't bet on ideas, they bet on people.

All the 'out-of-the-park' VC successes were based on existing ideas with a new implementation. This is why so many of them have to pivot - the best people realise when the idea is no good. A founder who is fully committed to the idea is a bad idea (pun intended), because if the idea later proves to be infeasible you want someone to ruthlessly kill that effort and focus energy and resources into something that will succeed.