Comment by jjeaff
8 years ago
No sound business model? Quora has a sound business model. The same model as many VC backed SV companies.
No, it's not to simply sell ads. You build something slick and shiny, then you pump VC money into it and you keep hyping (otherwise known as "pumping") until you can get numbers that look good. You can just spend that sweet, easy VC money to buy users and spend a dollar to make 10 cents because of that "growth" you are buying.
Then, when those numbers you are buying (and also all those fake accounts you are ignoring) start looking really good, you go public, the VCs make out like bandits and all those institutional and private suckers buy those bloated shares, trade places with the VCs and slowly ride the shares back down to zero where they belong.
Do you have an example? You speak as if this is a very common pattern, but I can't think of any good examples. I can think of some that look like they might fit this pattern if they were to IPO, but that's a big if.
Groupon IPO'd at $28 a share. Currently trading at around $4
Zynga IPO: $23. Now around $3
Snap $22 ... ~$16 (LA not SV)
Blue Apron $10 ... ~$2
Box plummeted more than 50% before coming back up closer to the IPO price but has almost never exceeded the IPO price since inception.
And there are a lot more that are newer and still riding the capital injection from the IPO (like twitter).
snap