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back to article Silicon Valley's social tech formula doesn't add up

In technology, as in other industries, only a few companies make it to the top. The rest get bought by the successful few, or go out of business. Unfortunately, the formula for tech seems to be a bit askew at the moment, with heavyweights Zynga and Groupon both on the ropes. If these supposedly successful companies can't buy the …

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Paris Hilton

Meh

I'm not impressed with these 'social' companies at all. I think they're more like Tamagotchi or Macarena, not really a long term enterprise.

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You're only bitter...

... because you missed the opportunity to get in on the ground floor before webhamster.com made its IPO :-P

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FAIL

Really? That's wild!!

So what you appear to be saying is kids these days are lazy and expect to be given everything for just about doing the minimum required for the job. That's a shocker. I can't imagine where they learned that life lesson, after all everyone knows that kids are taught by their parents and teachers that they don't get shiny rewards if they simply do what's expected of them. So what on earth went wrong?

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Holmes

Son, why you not banker yet?

Call me when you are banker!

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LDS
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Thumb Down

Is an IPO just a way to sell your debts to simpletons?

IPO shouldn't be a way to sell debts to simpletons. There's again too much hype about tech companies, too many of them built upon one single simple idea that may not last long. The better that can happen them is being bought by some stronger ones with a diversified and sustainable business. But the bigger the hype made some, the less they could be acquired. And bubbles don't last long.

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we don't measure ourselves in conventional ways

Translation:- " they just made it up as they went along"

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Happy

It occurs to me...

...that there's a potentially lucrative business in selling friends.

SIGN UP NOW and gain 1000 friends!!!! Only 1.99 !!!!

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Linux

Zynga

I am surprised Zynga is successful at all. I have not clue what people see in their products.IMO they are like PC games from the 80's

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Happy

but a lot of games from the 80s/90s were fun!

A lot of the facebook style games need imagination, rather than fast paced fancy graphics, and people seem to love that.

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Anonymous Coward

Has anyone else noticed that the apparent stagnation of Zynga matches the period in which they rolled their web games to requiring Flash as the interface instead of HTML?

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Nice article

Nice article, so startups back to doing it the old way without the shortcut of getting brought-up before they have even managed 5 years accounts.

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Anonymous Coward

"before they have even managed 5 years accounts."

But they can't afford to wait five years, they're "working on Internet time", they have "first mover advantage" and [...zzz...]

The more Big Money that moves around, and the more often it moves, the bigger the bonuses for the moneychangers and spivs moving it.

It doesn't matter to them if any given deal turns out (as most startups do) to be a loser, their bonuses will have been banked and spent by then, and some other suckers will be along before too long to fund the next set of bonuses/IPOs, and one of them might be the next Google (omg).

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Reasoning from a flawed premise

um... Who told you Groupon was a successful company with a viable business model? ...apart from Groupon, that is.

They're technically insolvent thanks to the founders syphoning away the working capital, they're gaining pariah status amongst their customers, and they're big expansion (into China) has been a resounding failure. Definitely a new way of measuring success...

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Internet counting has always been wierd

You see, when 10 people claim to have 9 friends each, some would count this as 90 people. In actual fact the 10 people just have each other as friends, for a total of only 10. Scale this up a bit and you get ridiculous numbers, when the actual facts are MUCH less.

If you aren't careful, the accounting becomes "Equity Funding", which has its very own WikiPedia article, which doesn't go into detail. There was a TV movie in the 70's about the company (in the USA). The mess predates the modern internet, but DID involve computers (tape drives, big iron and the like).

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Paris Hilton

MBA-speak

"we don't measure ourselves in conventional ways"

Neither do I, but that hasn't fooled any of my dates.

Paris, shedding a tear because .... well, she's been disappointed again.

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Bronze badge

It's in, then out - so I quoted you the round-trip distance, of course.

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Boffin

Competing business models

There are two types of business models.

Model one... you build a company that stands on its own and has no desire to be taken over or sold to another company. The founders are in it for the long haul.

Model two... you build a company based on a product that can't maintain itself or has value as a stand alone company. Something that you really can't monetize. So the idea is to puff it up as quick as possible and then sell it off.

Since this is El Reg and not some MBA course, think of it this way... Pub versus Night Club.

A pub is less about flash, than about good bar food and excellent drink w great service. Its a place where you can do down and drink a few with a friend and have a healthy philosophical discussion about life, the universe and ...

A Night Club is all about cache, flash and going some place that is hot and to be seen. The life expectancy of a club is really measured in a couple of years. Here today, allow Andy Dick to enter and its gone immediately. (Its a Family Guy joke...)

The point is that the Night Club is a short lived business and will constantly be forced to reinvent itself. The pub? Its a place that has been around for years and isn't going anywhere anytime soon. Your brick and mortar mentality is a pub mentality. You may not get rich from owning a pub, but it provides a steady flow of income. A night club will make you more money, you then shut it down and re-invent itself or you sell it off to some sucker while its a hot property.

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