Yesterday was a bit of a shocker in the larger blogosphere with the announcement that Sequoia has finally gone off its rocker post-YouTube and in a fit of hubris decided that third tier gossip blog (which they feel is a blog network) PopSugar is worthy of a five million dollar venture round. After B5 got two million I think I it may be virtually impossible to stop me from singing “the bubble is back and there is gonna be trouble” all around the wifi cafe. And while Mikey says I would do naked cartwheels to have the opportunity to take Michael Moritz’ money and have him on my board of directors I think I would just be embarrassed.
I am not saying there isn’t a lot of value in the blogosphere, particularly in the more women friendly zone of gossip, fashion and beauty (DUH!) but I think that five million may be a stretch here. Once you have that kinda dough you are going to feel compelled to spend it and we all know how that effects work ethic, drive, and ambition. Overfunding kills companies just as underfunding does.
Anyway, after popping into MAO’s Blond Jeans party (at which I had a lovely conversation with Roger and Maricio about how the internet is changing the way they do business) I made my way over to David Gailthbrath’s party for Popgloss, the new Wists blog, at Gawker Head Quarters.
The gossip mill of course was grinding there about the direction the blogosphere will be going. Nick apparently had been quite hung up by this particular investment. It was nice to know that I was not the only one feeling a bit weirded out by the announcement thus sending me into a two hour tailspin about how long the bubble will last. David, Phil and I chatted about how this is very likely to send a bunch of copy cat venture capitalists into an investing frenzy in the blogosphere that is only likely to cause bad judgements and failure on a massive scale. It increases everyone’s valuations which ultimately will do more harm than good. There are plenty of things that can, and do, go wrong online and throwing money at these things isn’t going to make that go any better. Now that all of this tech insanity is making it into fashion media land I am interested and just a little bit worried.
Julie,
You make an interesting point about once you have, you spend. I’d like to offer up a slightly different observation/opinion. The lesson many firms learn in the hype cycle past was exactly that; dump dough, spend like crazy, and take the wacko IPO or cash offer from the other guy who is doing a wacky IPO.
Today, that is an accident waiting for a place to happen. Putting capital on the balance sheet to allow the company to think strategically, to upgrade an internet line, etc, is what the capital is for but the prime directive to B5 and most of my investments is capital is there so you can live to fight another day.
All this hype cycle stuff is going to blow up, completely and totally bet on it. What I’m after is a nice steady well run company that can pick through the wreckage and be around on the other side.
Your network and personal blog is well done. As a co-founder, I am sure you put in founder level hours and command founder level pay (ouch).
I wish you every success as your hard work is shines though.
best,
>R
Well, a couple million payoff would do most people good, and I think you’d like it Julie, come one, you know you’d like a couple million. But I do get what you saying about the bubble bursting, not all these blogospheres are worth millions, and giving them money is only buying you someones ferrari enzo in yellow, and bottle popping nights in clubs. I think before you just dump money you need to really get what these people say they gonna wanna take this here bloggy thing in a couple years, casue we know in a couple of years the new thing will be gobs, and and blogs will be old, so you gotta have a plan beyond just updating fast, you gotta want people to do more than just visit and read your site you gotta want them to connect with it.