Need A Quick 18 Million? Start A Social Network
Mashable just reported that NextDoor, a San Fran startup building a location based social network, raised $18.6 million this week in funding.
What is a “location based social network”, you ask?
Well, NextDoor is basically Facebook for neighborhoods. You create a group for your neighborhood, and only your neighbors can join.
Is a social network for neighbors a good idea? Maybe. I live in an apartment complex where I couldn’t care less who my neighbors are, but that’s me.
The real question is, “Is a social network for neighbors worth $18 million?” My answer to that would be a resounding “No”.
Let Me Tell You Why…
As a point of reference I’m going to compare NextDoor to my own private social network for bloggers, Triberr.
- NextDoor was founded in 2010 and so far has 3,600 neighborhoods, or private groups. Triberr was founded in 2011 and has over 25,000 tribes, or private groups.
- NextDoor has a 32 member staff. Triberr has a 3 member staff, all part-time.
- NextDoor’s most active members are 80 year olds who use the site for neighborhood watchs. Triberr’s most active members are bloggers with massive audiences.
- NextDoor has not made any money, and doesn’t plan on making money until the site hits critical mass which they’ll then advertise local services to members. Triberr started monetizing in month 1, revenues have grown steadily, and this month we’ve doubled last months revenue… without using ads.
After comparing the two sites, I think there are two possible conclusions…
- Triberr is worth WAY more than $18 million
- We’re living in 1999
Something is seriously wrong with the world when an idea is valued at $18 million without a clear path of how they are going to make any money.
I’m an avid Shark Tank viewer, and NextDoor would get destroyed if they tried raising even $1 million with no traction and no sales. Not to mention that employing 32 people with an office space has got to be costing them almost $200,000 a month.
Frankly it’s all a little hard to believe that valuations like this are possible. Clearly we’re in a bubble that will continue to grow until we re-live the .com bust.
The thing about bubbles is that there are winners and losers. If you’re able to raise money and exit at the height of the bubble, you’ve just earned an easy pass for life.
If that’s what success looks like, then NextDoor is clearly winning, and if they can do it, why not you?