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Comment by sharkweek | Hacker News Reader

For the curious, pulled their deal history from PitchBook:

Secret raised their B last July at a post valuation just over 130M (http://i.imgur.com/jNXw5PZ.png). They had some major investors backing them up, and then the hype train just... stopped.

I remember so many people being so high on it when it launched, with several friends all raving about how fun/addicting it was, then just poof it disappeared from conversation.

Hearing that the founders got some cash off the table (article from last summer - http://www.businessinsider.com/secret-founders-pocket-6-mill...). While I always thought that seems like a good thing, I can't help but let my mind wander a bit as I know if I were given a nice chunk of change like that so early, it might be kind of hard to keep focus.

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>http://i.imgur.com/jNXw5PZ.png

Here was the intended use of the $25M: "The funding will be used to implement two new features, a Facebook login and the ability to follow posts on a certain topic". This is what is wrong with Silicon Valley today. An afternoon project for a single developer gets $25M from investors. Please, someone give me just $10M....I've already implemented Facebook login for my apps.

That's hilarious! In Web 1.0, people raised $7 million to buy a domain name. Needing $12.5 million to implement a Facebook login ($25/2 projects) is even more ridiculous.

Box paid 7 figures for the Box.com domain name, so I wouldn't say that raising money to buy domains is dead yet.

Box bought box.com roughly 6 years after they launched, they were already wildly successful (as box.net).

Has box had a profitable quarter yet?

It doesn't look like it.

https://www.google.com/finance?q=NYSE%3ABOX&fstype=ii&ei=IQp...

has Amazon?

Amazon's first profitable quarter was in 2001: http://news.cnet.com/2100-1017-819688.html

Oh yea? I'll do it for $9M.

I'm certain that if you can build a product that generates a huge buzz and gets millions of people to sign up that you will have absolutely no trouble raising that kind of money.

So go for it!

Ahh, but we're not talking about building the whole product and generating buzz, etc. We're talking about the stated purpose for raising $25M: "The funding will be used to implement two new features, a Facebook login and the ability to follow posts on a certain topic".

$25M.

For TWO features.

Hell, ignore my previous offer. I'd have given them a 92% discount and done that for a cool $2MM.

Pace yourself. Be a little less eager to drop your price when you bargain. Try $24.5M first, then $24M. It's still a discount compared to the competitors.

You're already asking for a price so low you might end up barely scraping $100,000 an hour.

That's not the actual purpose for the money.

The purpose of the money was to grow the company. For a business < 1 year old it's impossible to predict what they'll need, so they just fill in the blank with some random sentence that no one cares about.

Excellent business practice!

It is actually.

I am beyond certain that investors did not fork over $25M for the two features outlined. There's simply no way that's all they were spending the money for.

Yep. They probably had to buy several cases of coconut water, made some very expensive visits to the Apple store, and the founders maybe bought a Mercedes or two.

I am not familiar with Pitchbook. Where does that information come from?

Huh. I implemented iOS and Android Facebook login for https://recent.io/ in a few days last month. (The login code itself wasn't that time-consuming but UX, debugging, etc. took longer.)

or maybe the source is wrong, or it was a throwaway line about what's next, or...

it's very easy to believe the worst of others. but it's beneath you.

I remember so many people being so high on it when it launched, with several friends all raving about how fun/addicting it was, then just poof it disappeared from conversation.

Pure speculation, but I think trolls/frauds took it over. I say this as a Secret troll myself. I knew the odds of the data (linked to my FB account) becoming public was too high to post real secrets, so I used to just experiment with what got people liking or leaving comments instead. Which was amusing.. until I could tell a lot of people had started doing the same. So I stopped using it.

Did it always have the FB login? Could that have been what killed it?

I could be wrong, but when I signed up (not early but around the time it first hit the headlines) I thought it was the only way to sign up, or at least the only useful way (since you needed friends and friends-of-friends to see secrets from).

Investors (and the team) were looking at the wrong numbers. In apps, it's basically all down to having meteoric growth week over week. It can't be based on spikes as this was.

Taking money off the table in a B makes sense for the founders, and I can't blame them for leveraging their situation.

Ultimately this falls on the investors for biting on hype, and not having a deeper understanding of the product (and it's potential)or the founders (and their potential).

edited for clarity.

Totally makes sense - but I also completely get why the investors would bite on hype - missing the next billion dollar company is way worse than incorrectly picking a few duds.

A $35m dud, though. That's not small fry.

True, but there are 27 investors on that table, not too bad spread out

Well they are returning some capital, so perhaps the damage isn't quite that bad.

Exactly right, this is a very important message here that should be taken away by future (and current) entrepreneurs.

I don't know, at a 130m valuation, a 100x exit was no longer possible, and even a 10x didn't even seem that likely.

130m x 100 is only 1/4th of uber, not really impossible anymore.

Uber hasn't exited, so that argument has no basis. Can maybe compare to whatsapp... and that's probably what investors did.

It's high risk for the investors. For every Uber, there are many that don't pan out. It's the nature of the game, and why they make lots of investments.

Noobie question: what happens with the off the table cash?

I'm guessing it remains firmly off the table.

Crunchbase says they have 11-25 employees... how did they burn through all of that money? Is it possible they are pivoting or returning money to investors?

They haven't. The article says they're returning the money.

From the article it doesn't sound like they ran out of money, sounds like the growth has stalled and key talent has left. I bet the money goes back to investors, it doesn't sound like the team is still in place to pivot.

Very likely returning money to investors.

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