Comments:"Why Don’t Startups Get Their Users To Invest In Them? | Terence Eden has a Blog"
URL:http://shkspr.mobi/blog/2013/05/why-dont-startups-get-their-users-to/
So, Yahoo! is to buy tumblr for $1.1 BEEEEEELLION.
I don't understand money. Well, specifically, I don't understand how companies are funded, classify shares, or any of that finance stuff. But, there's something which has been bothering me about the recent sale of some social media properties.
According to some estimates, tumblr has 170 million users.
$1.1 billion / 170 million users is.... double checks workings $6.47 per user.
Err... what? Even if those number are off by 50% - Yahoo have paid the equivalent of just $13 per user.
Now, I realise that $6 - $13 is a lot for some people, especially young people and those without disposable income. But it's not exactly an extravagant amount, is it? If a social network's worth is in selling advertising to users - you would expect said users to have enough income to be worthwhile advertising to.
Take, for example, Facebook. When they sold their shares they raised something like $16 billion and had roughly 901 million users.
Does sums. That's about $18 per user.
These are not huge sums for an individual.
The thing is, it's pretty hard for an ordinary person to buy a share of a company. You usually need to be able to buy a large quantity of shares, pay for a trading account, try not to get ripped off with various fees, and deal with taxes.
The Internet is making this slightly better - but market trading for small people still needs a hell of a lot of disruption. At the moment, I can't simply hand over the $26 I made in babysitting money and own a single share of Facebook.
I appreciate that selling your company isn't just about the money... but it seems that if you do want to raise cash, getting your users to invest may not be the worst idea in the world.
Sure, the transition from "user" to "part owner" may be uncomfortable - but it's not impossible. Look how Co-ops, Building Societies, and other partnerships manage it. Invested users could vote on major decisions, and feel a sense of pride and community in what they were achieving - not to mention the potential for receiving dividends or other forms or returns on their investment.
Take, for example, App.net. Users pay for their accounts on the microblogging service - developers like me pay slightly more. But we're still just sharecroppers tending someone else's plantation. This isn't a criticism of Dalton Caldwell and his team - but just being a customer isn't enough to convince me that the service won't suddenly shut down or follow some dark path.
I want to be an investor - a very small one - in the services I use. I don't want my attention to be sold to the highest bidder on the stock market.
Like I say, I don't really understand how corporate financing works. I'm sure there are lots of problems with my idea. Not least that Goldman Sachs wouldn't make quite as much money.
I sincerely think that Internet-scale companies should look to those with the most emotional investment to provide them with financial investment. Or they will end up selling not just their customers' eyeballs - but also their trust, loyalty, and love.