GIF Site Giphy Is Valued at $600M
wsj.com
wsj.com
The cycle goes like this:
- people want a bullshit-free service to upload images to, so that they can link to them, and there's no option available
- somebody starts such a simple, bullshit-free service
- as time goes by, the service realizes hosting costs money and they can't operate on a loss forever
- they start adding bullshit to try and bring in some revenue
- site turns into the same bloated crap it replaced
- somebody starts a new bullshit-free site, and users migrate
For instance, imgur is at the last stage of this cycle now. If giphy is taking serious investor money, it spells an accelerated period of crappifying the service - investors need to get their return somehow.
"I got fed up with all the other image hosts out there so I made my own. It doesn't force you to compress your images, and it has neat things like crop, resize, rotate, and compression from 10-100. It's my gift to you. Let's not see anymore imageshack/photobucket around here ;)
I'll be listening if anyone has some suggestions.
EDIT: The server was moved off of shared hosting after about 4 hours of release. It's now on a dedicated server with a 100mb port."
I often think about this post and imgur as an example of how an exceedingly simple utility of the Internet can easily acquiesce, and succumb, to the advertising and marketing forces that be[2].
[1] - https://www.reddit.com/r/reddit.com/comments/7zlyd/my_gift_t...
yet expensive to run.
I wonder how it started? Did it had some unobtrusive ads or donation since the beginning?
It would also be interesting to know how much it costs to run imgur.com (at day one and now). I imagine that the bill that came after first month or a quarter would have been so large that no indie dev could let that have it out of his own pocket, I even doubt that ad or donation revenue would have covered that either.
Creating 'a simple image hosting service' is rather easy, but oh boy it's expensive, otherwise there would be gazillion 'simple image hosting services' or imageshack, photobucket and similar wouldn't have become bullshit in the first place.
Having the government do everything has been tried in history and its leads to failure (communism). There's a reason that the PC and internet and mobile revolutions happened via capitalism and private business. Or why wikpedia is a foundation or the wayback machine or whatever. I understand Bernie Sanders is popular here and there's a strange 'have the government do everything, duh' mentality popular with millennials now, but historically it doesn't pan out. The government's role should be something that's carefully considered. Its not remotely a fix-all.
Having the government do some things has been tried in history and in many cases has worked out quite well. The roads, schools and fire department are quite good where I live for example. Though not perfect of course.
I'm not suggesting that this particular service is a good thing for the government to take on. Just want to mention that it's not "all-or-nothing" choice.
You realize that Internet was first funded by the government, right?
I backed up the db already; I'll scrap this site and replace it with a static one soon.
But Giphy faces challenges in building a business.
It hasn’t figured out a way to bring in revenue, and it
doesn’t own many of the GIFs or have exclusive distribution
partnerships.
Halo effect?
My current workplace offers neither. People shout what I'll describe as "verbal memes" to no one in particular. There is music blaring (dubstep currently), over which I have no control without risking social ostracization. Group chat is used poorly (what do you an all-day all-hands meeting with no agenda?).
We have work-related chats, which are 95% serious with the occasional joke - same as we'd make at our desks - and we have offtopic and specific-topic rooms (literally, #offtopic and #videogames and #music, etc.)
I find background music can help or hinder depending on what I'm trying to do but it needs to be under my control. Out of consideration for others that means headphones.
And I hate open plan offices - don't even get me started. Place I'm working at the moment is awful for noise and overcrowding.
Funny thing is I find it hard to work in a completely silent environment unless I'm on my own - if the atmosphere is crypt-like with other people around I find it quite oppressive.
Strangely, though, I do like spending time in coffee shops.
Maybe companies should just do away with offices altogether (walled, cubicles, and open), and turn the company building into a giant coffee shop with free drinks and pastries, nice decor, etc. Provide some meeting rooms so teams can meet in person, but otherwise just let everyone find a little alcove in the coffee shop to work in.
If you don't want to enjoy the time your coworkers -- fine. But getting annoyed by people who do is silly.
Are GIFs a necessary component of this?
Me? I just insert the URL of the image I actually want.
So far, four out of five slacks no longer have giphy integration, and my work Hipchat rooms (on- and off-topic) don't have it either. The other slack rarely uses it, because of the 90%-garbage rule, so I'm content to not harp on it too much.
Stand up against giphy garbage.
http://tarzain.com/2016-09-22/building-a-deep-learning-power...
rightgif works a lot better, but isn't as nicely integrated (not their fault -- 3rd party integrations don't get the same abilities as built-in giphy; come on slack...).
I've switched my team's integration to gif keyboard which has a search and approve workflow so that someone has to say "I want that one" to have something NSFW show up.
This creates two problems: 1. Copyright infringements 2. Hosting costs.
EDIT: I opened their main page and scrolled down a little bit. It downloaded 70MB.
Huge company valuations with little to no profitability. Sounds familiar?
Selling inventory is only valuable if you can sell the targeting to go with it. It's arguable if Giphy has the former, but it sure as fuck doesn't have the latter.
If this was not the case, the only businesses would be the size of lemonade stands. Cardboard ones at that, that can be profitable on their first day.
I get that vanity titles are a way to help startups hire good talent, but once you reach a nontrivial team size, this seems rather odd -- who are all these people directing exactly? It would make me very hesitant if interviewing a candidate who worked at Giphy, since their titles appear meaningless.
For some organizations, though, Director isn't really a "Director" but more of a rank like "Senior." By this I mean there would be Assistant Director of Blah blah Development that didn't actually direct a group of people, but were was a more senior-ish developer earning the Director part of their name. It is odd, but it wouldn't be the first place I've seen that.
1. Director generally implies a manager of managers. If your title is "Director" and you're actually a team lead, it makes your company look like it doesn't know what it's doing. Specifically, the leadership.
2. If your resume goes from "Director" to "Developer" people are going to wonder what you did. It will cause people to take a second look at your resume in a negative way.
3. So at the end of that job, you've got someone who isn't qualified for a job with that title anywhere else and who will need to actively harm their career to take the jobs they are qualified for.
I'm sure I've forgotten several, but they've built a $600M GIF search engine so what do I know.
https://www.bloomberg.com/news/articles/2015-03-17/the-fuzzy...
Or there is a deal on the way with google/facebook/whatever for their user/gif database and/or search engine? Maybe they have some insane R&D going on that I am not aware of?
When I see startups without any proper business model on how to make money evaluated for insane prices ..ahem twtr ahem.. and burning mountain loads of money - it makes my blood boil.
People said the same thing of snapchat, facebook, and twitter early on.
DB is running close to defaulting on its debts.
It's too big to fail though and the tax payers will save it.
If you think the market is pricing DB incorrectly, and also the market is pricing Snapchat incorrectly... are these really counterexamples of each other then?
MySpace vs. Lehman Brothers
Bebo vs. Lehman Brothers
Friendster vs. Lehman Brothers etc
So companies put together a pitch with current revenue streams, how to grow those, and R&D for new revenue streams, and how to do so while keeping expenses low. Those numbers are usually multiplied by some factor to determine a ballpark.
Exit strategies are also considered. The goal is usually either to get acquired or go public. Marketability of a company once properly positioned, current market climate, and past exits of similar companies are also often considered. For example, Google bought YouTube for $1.65B less than two years after launch while it was still pretty rough around the edges. Gifs are already often used as lightweight, embedded video alternatives on Reddit and blogs, so it's not inconceivable that Giphy tries to make a case for being worth a similar amount if they can position themselves as a new de facto media platform for light clips like YouTube is for full videos.
Any site like Giphy that can position themselves
as the leader in a segment of the web like gif
searching/aggregation
As to how the $72MM (and the 12%) is calculated, that's a negotiation between parties, and there is no universally accepted "formula" for calculating this. Private equity and VC companies take risks based on their evaluation of the company prospects. If there were a magic formula, then investing in companies (and finding funding) would not be at all interesting or competitive.
Aside from any any numbers about user adoption, growth rate, or potential advertising angles, the other significant thing that an investor may be looking for is the chances of a downstream acquisition by a player looking to expand its reach. Giphy would be a natural target for large search companies, or social media companies (who might be interested in a closer relationship with an effective content source), or various chat companies (like Slack or Facebook or even Apple).
Whether an acquiring company will be willing to pay enough money for a company like this to be worth the investment, rather than building similar functionality in-house, is part of the judgment of the investors, which they can base on qualitative evaluations of the technical or sales abilities of the employees or the difficulty of the problem space.
At least a 2x liquidation preference is standard for most VC investments (Y Combinator is an exception to this, I think). In simplified form, this means that regardless of what happens, the investors will get 2x of what they invested before anyone else in the company sees a cent. This means that even if giphy fails, the investors will always get a 2x return on their investment unless the company falls so far that it's no longer worth $24 million when it's sold off somehow.
EDIT: After being informed in responses to this, it appears that 1x preferences are now the standard. I apologize for any misinformation.
In other words, cash in and leave before people find out there actually isn't money in it or cram the service full of advertising and watch the users flock to the next upcoming thing as your service tanks like a flaming dumpster rolling down a San Francisco hill.
I am pessimistic on gif search as a business. I am one (not super) talented developer and I made a replacement in a month.
Classification is done by hand, and the idea anyway is to use feedback (either slack reactions or voting on the site) to figure out what the best tag for an image is.
ML classification is pretty tough when it comes to dank may-mays.
If your goal is to create something even lewder than giphy, then yes.
OK, for me GIFs are from a bygone era of the web, for example: http://www.11points.com/Web-Tech/11_Best_Old_School_Animated...
This is similar to bell bottom jeans coming into fashion again, and then having a retail store advertise them as an 'Emerging fashion trend' (more like recycling fashion trend)
"gif" has stopped meaning a .gif and now just means a short, looping, animated video.
File it alongside "disk" (solid state disk, save to disk etc), film (to mean movie) and various other weird language evolutions. These things used to grate on me, but then I chose to embrace the cultural history embedded in our language.
I look forward to the year 2060 Buzfeed - "Top 37 words that used to mean something else", "You'll never guess why we call videos 'gifs'" etc etc ;)
Valuation doesn't mean anything I know. But how can they raise so much money on a product like this? What's the monetization available behind this apart from selling user data.
Selling user data itself is not nearly as valuable for Giphy as for other sites. No one stays on Giphy for long, or shares anything interesting about themselves apart from what Giphy can get from cookies. They say 100 million people see Giphy gifs a day, so probably about 10 million actually "use" Giphy. Even with FB's $13.74 valuation per user with better analytics and a validated business model, that only comes to $137M.
On a completely unrelated note: "Giphy, which is pronounced with a hard 'g'..." Thank god they know how to pronounce it unlike these (what I suppose could be called) "people" who pronounce it with a soft g. ;)
[1]: https://gfycat.com/
the irony here is thats all they have
but thats enough to pivot to the business of equity sales
Giphy was founded in 2013 and raised several million in early 2014, at which point they probably could afford paying a CDN or for their own infrastructure.
If your goal is to minimize bandwidth costs, you can throw together your own agressively caching CDNs on bargain basement hosts, though, and use a more expensive CDN or something like S3 as fallback (DNS with short TTL; it has all kinds of problems, but it's better than bankrupting yourself on high bandwidth until you have sufficient traffic to justify more elaborate cost reduction schemes).
Once you reach sufficient scale: multihomed dedicated servers + peering wherever you have enough traffic. Or negotiated with various CDN providers while letting them know you've done the maths on your own dedicated setup.
These people all need to have their heads examined.
Giphy, which is pronounced with a hard “g”...
But private market startup valuations are about as useful as public market stock prices, i.e. not useful without more context and information.
Even if numbers are technically accurate no journalist would ever write 'Apple's stock price 3 years ago was around $700 vs closer to $100 today...so the company must be hurting.'
I'm surprised startup valuations reporting has continued for so long without more disclaimers or information in the articles about what a number really means.
(side note: I'm also surprised movie weekend box office earnings are as big an interest as they seem, so what the heck do I know).
If people are going to leak valuation numbers, is it right to publish this # without knowing or asking a bit more what term sheets look like?
For those who might know, how hard would it be to get more accurate info tracking the common equity value for startups?
That's exactly why this is so insane.
Until such time as browsers and animation-hosting sites refrain from autoplay defaults, and worse: failure to provide any mechanism for overriding this at the device, user, or application level, that shall be my SOP.
Wirecutter opened up their box and there was revenue and a business plan inside. That's nice I guess but now their box is worthless.
If true, doesn't it imply VCs hand over millions without knowing details of a company and founders can benefit from delaying going public..Oh, well whaddya know
At least with Beanie Babies, you knew exactly what you were getting. A Beanie Baby couldn't pivot.
Anyone have a guess at a business model to monetize on that sort of traffic?
Sounds like something Yahoo would have bought circa 2013.
> Search engines like Alphabet’s Google generate the vast majority of their revenue from advertising. “Almost all the content flowing through Giphy, there’s some branded element to it already,” Mr. Leibsohn said.
1k impressions for a dollar with 10% of gifs completing on 1B gifs per day would give $100k. Are those figures wildly out?
Not really a business, just advertising.
Do these clowns really believe the shit that comes out of their mouths? Giphy will never make anyone a dime; gotta wonder how they duped people into another seed round.