A Startup Once Valued at $22 Billion is Now Worth Nothing (techcrunch.com) 47
An anonymous reader shares a report: Byju Raveendran, the founder of the embattled edtech group Byju's, acknowledged on Thursday afternoon that he made mistakes, mistimed the market, overestimated growth potential and that his startup, once valued at $22 billion, is now effectively worth "zero."
Speaking to a group of journalists, Raveendran said the company's aggressive acquisition of more than two dozen startups to expand into new markets proved fatal when financing dried up in 2022. Byju's was planning to go public in early 2022 with several investment bankers giving the firm valuation as high as $50 billion, TechCrunch reported earlier.
He alleged that many of his more than 100 investors had urged him to pursue aggressive expansion into as many as 40 markets. But, he added, those very investors got cold feet when global markets tumbled following Russia's invasion of Ukraine, sending the venture capital market into a downward spiral.
Speaking to a group of journalists, Raveendran said the company's aggressive acquisition of more than two dozen startups to expand into new markets proved fatal when financing dried up in 2022. Byju's was planning to go public in early 2022 with several investment bankers giving the firm valuation as high as $50 billion, TechCrunch reported earlier.
He alleged that many of his more than 100 investors had urged him to pursue aggressive expansion into as many as 40 markets. But, he added, those very investors got cold feet when global markets tumbled following Russia's invasion of Ukraine, sending the venture capital market into a downward spiral.
...but OFF a computer. (Score:4, Insightful)
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Re:...but OFF a computer. (Score:4, Funny)
You were on a roll, even though it is worth nothing.
Sure, sure (Score:4, Interesting)
How many of those aquisitions were owned by friends?
Aquisitions are the perfect way to pilfer an overfunded startup.
Just normal capitalism (Score:3, Insightful)
I've purchased a few stocks that just plain died over the years. It happens. Fortunately, I've had enough successful stocks to offset the duds.
Diversify Diversify Diversify.
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yes I own couple dozen... I still know at least a third of those have value by the three fundamentals of hope, hype and hooey. It's the american way.
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Richest man in the world for 7 minutes (Score:1)
Valuation is not value (Score:5, Insightful)
A Startup Once Valued at $22 Billion is Now Worth Nothing
Just like all the others, but this one's valuation now matches its true worth.
Re:Valuation is not value (Score:5, Insightful)
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I wish I had 22 bils to piss away.
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It would only get you half a Twitter.
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Today it will get your three or four twitters.
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Indeed.
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Startup Does What Most Startups Do, News At Eleven!
Nothing to lose (Score:2)
Here is what to do (Score:3)
More importantly (Score:3)
Are the suits ok? Did they all receive million dollar severance packages?
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Thank god some one is finally asking the right questions. Will upper management still be able to afford that third boat!?
Cascade effect. (Score:5, Insightful)
First thing I'd probably mention would be a snide comment of "... and nothing of value was lost".
However, startups brought interesting stuff to market. Right now, we don't have the Dockers, the Kubernetes, the Veeams... all we have are companies slurped by capital/equity groups that add nothing but fees. Nothing new is hitting the market, and the DevOps dudes MacBooks are not seeing any new stickers that can be attached to them. It is considered a mark of excellence when one's MacBook Pro is top heavy due to the sheer weight of the layers of stickers (/s).
This is a bad thing. Nothing new is going on. This means you are not going to see any growth in the market, other than companies touting lip service.
Even worse is the fact that everything is cloud based. With stuff hosted locally, when economic times are tough, you can cut support contracts, even play fast and loose with licenses. With cloud and subscriptions, companies can't do that, and if they can't afford their cloud bills, they are dead, dead, dead, as all their operations are offsite, and there is no way to run those locally.
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I'm a big fan of using the Cloud for our infrastructure, because then you do not need to deal with any of the hardware maintenance and you can pay for just what you need.
The problem is that most companies forget that they do not pay for what they need, they get billed for what they use, which can end up being 2x, 3x, or even 10x what they need. A lot of companies, especially startups, do not want to spend any engineering in 'early optimization', or things that you would not need to optimize in a datacenter.
Re:Cascade effect. (Score:5, Interesting)
Well yeah, but actually no.
You act like shrinking you infrastructure to what you need as opposed to what you use was easy. I mean in private cloud, that act would save a lot of cash too and yet people usually don't have the knowhow to do it.
The SQL statements I've seen. A whole A4 page full of inner and/or outer joins. You know what I mean? Using precisely the amount of hardware you need to get a job done very much varies depending on how efficiently you know ho to do that job.
And let's not forget: Neither Google nor Microsoft nor Amazon have people out of Hogwarts, even if the people they do have wish they were. THAT hardware has to come from somewhere too. Now sure, these companies do not buy enterprise hardware off of HP, Dell or Cisco. At a certain size, you make your own. And you make it in such numbers that you get a LOT of rebate.
Only... that hardware dies too. So the big three also have contracts with their suppliers. They need certain guarantees... and guarantees mean someone else carries the responsibility (and stocking cost). Nobody does any of this for free. Even if their approach was to just buy 1000 servers more and put them in storage, that too costs money. And servers in storage do not bring any ROI.
So yeah, you as a user will pay the total cost of ownership either way and the more entities involved in between, the more shareholders that want a yacht out of it all.
Cloud is only cheaper in a very select few use cases. What it is great for is as an overflow vessel, where you need instant resources for exactly 54 hours and no longer. Everything else, IMO, is wishful thinking.
Re: Cascade effect. (Score:2)
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Yes, in many case you can't just blindly lift an architecture out of a datacenter and into the cloud because while it might have been designed to scale up, scaling down quickly is rarely part of the design and that's where Cloud is more costly.
In our case, we have a few larger RDS instances, and when they start getting slow queries we work towards moving that data to DynamoDB where things can scale more horizontally and more on demand. There rest of our product code is designed to be stateless and scales up
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Unless I misinterpret your post, you seem to be working in a company that creates its own software product.
I would agree that for such a company, the cloud is awesome because you have everything at your fingertips using self-service. It's immediate and you can adapt your software to the paradigm.
I work for a service provider and most of our customers use third part software.
The problem with that is that yes, you can spin up elaborate infrastructures on the cloud with a few clicks but then you still need the
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I try top stick to startups where on-prem is more a burden than anything else ;-)
Sorry to hear you have to work with SAP and Oracle, I've rarely had to work with these products and these were not pleasant experiences.
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One trick we did is that we created AWS accounts per Development teams and made them responsible for their own costs and send daily alert for accounts going over expected budgets. This avoided surprise R&D bills that were hard to root cause.
Cool idea. Let the people who are doing the work be aware of the results of what they do.
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You missed the last paragraph. Cloud makes your business brittle. Get cash poor for just one month and you're dead. The landlord can be put off (grumbling the whole time but still), If you've been good to your employees and can show them where the money is going to come from and why you're sure, they may hang in there (or at least stay while they polish their resume). But the cloud vendor wants their money or no cloud for you. No cloud=no business, that income that was coming in in a nick of time now won't
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You phrased this in a way I couldn't. I worked at a company [1] that didn't pay their cloud provider for three months. Guess what... all their data in that provider was rendered inaccessible, with zero ways to access it until the back bills were paid. They could not get access to any data, they could not start their Active Directory servers so they could log onto their Windows machines, anything in the cloud was just, for intents and purposes... gone.
At least with on-prem stuff, taking the risk that the
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Not really (Score:2)
when global markets tumbled following Russia's invasion of Ukraine, sending the venture capital market into a downward spiral.
Not really. It's more due to the interest rate increases needed to dampen the inflation caused by excessive Covid stimulus payments. Venture capital markets are extremely sensitive to interest rates, or more accurately the imputed market risk that these rates suggest.
Fantasy Valuations (Score:5, Insightful)
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Well, most people on this planet believe in the fantasy story of an invisible sky daddy and blind obedience towards whoever claims to speak for it, so it's not a big jump to latch on to other unfounded fantasies that make them feel good (feeds their greed).
It's simply an ingrained human psychological flaw.
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what any company, or hell, the currency itself, is 'worth' is what people are willing to pay and value it at (mind you, using currency that also is subject to that kind of valuation).
The whole system is 'worth' only what we believe it to be at the time decisions are made about it. Economics has never been otherwise. Thus why it is a social science separate from the physical ones.
The Nobel Prize winners in economic are never experts at numbers, nor science, nor physical invention: they're experts in group ps
Growth above all else is cancer (Score:4, Interesting)
And as we know, cancer will kill its host unless it's stopped.
Yeah but... (Score:4, Funny)
The Primary Value of a Startup is its Sale Value (Score:3)
There are two problems here--
First: Very, very, very few investors give a damn about the profitability of a startup's final product. They know the vast majority of startups will fail while producing some minor IP that will get sold to an already successful and consistently stable company. "Startups" are, for the most part, a market of companies and the goal is to convince enough people (early investors) that other people (LATE investors) will be willing to buy stock in the company based on meager sales figures, irrational extrapolation, and the marketability of some over-hyped personalities.
The investors kept pushing for the app to expand, expand, EXPAND. "Growth" is the goal (not success or effectiveness or profit) because "growing" companies can be sold.
Second: The app was NEVER going to be profitable because it was simply a tutoring app. And like pretty much ALL electronic efforts to modify or supplant traditional education, it's destined to fail because it ignores some extremely basic corollaries of teaching young people:
1. MOST young people do not what to learn academics. They would rather be socializing, having fun, or otherwise being
2. Digital education is inherently distracting from the education itself
3. Self-managed education is hard and very few people (let alone children) can be trusted to do it effectively
The reason education and tech continue to be mashed together is because most people only remember not liking being in class as a child and immediately think that it was the fault of the teachers when, in fact, most children are bad students who are insufficiently supported by their parents to be GOOD students. The reality is that most of them wouldn't have learned a damn thing if it weren't for the authoritarian teacher at the front of the classroom. There is no shortcut out of that challenge. Teaching 5-25 years olds IS HARD and there is no set algorithm or AI solution that can engage them like a real human. People teaching is the solution.
That's it? (Score:2)
Elon: Challenge accepted
wait.. an educational tech company in INDIA was.. (Score:5, Insightful)
wait.. an educational tech company in INDIA was valued at $50 Billion dollars... INDIA... the place where it literally takes years to get anything done, and requires a bribe at every stage. Where you need to pay piles of cash to someone that knows someone, to arrange for a meeting.. and hope the person actually shows up... and then hope that they can assist at some point with some beurocratic roadblock that requires their stamp of approval. But you need to wait days to see them.. and no.. you don't make an appointment.. you literally need to drive to the office... hope they are in.. and wait... for hopefully seeing said person... and then repeat this for several days... to TALK... not even get the approval... and of course pay everyone at each step...
This is all from experience... it literally took 5 years, and over $150K in bribes to sell a property that ultimately sold for less than $230K... or when it took 3 years, and a stack of cash as tall as a grown man to be able to open a subsidiary and hire 2 staff there so we could have IT operations there. (sub contracting to a 3rd party was not an option. We needed to maintain full control.)
Someone said- a startup can be worth $50billion in that environment? for apps that taught students math, and provided parent control... at 2018.. had only 900,000 paying subscribers... in a market where parents DO NOT have money for this, most kids don't have access to a phone/computer/internet... and the government sees any encroachment on their schooling as a siphon on funds that they could otherwise garner. (this is from experience - a friend used to run a school there for decades, mostly funded by charitable donations and meager tuition (this was a school focused on the under privileged).. the government wanted the school to be handed over to them to be run for $0, and wouldn't let them close it even though the parents haven't paid any tuition in 3 years and rules/laws blocked international charitable donations out of fear of terrorism)
Could someone please do the a math of how much they would need to charge, and have a P&L of to justify that $50 billion hallucination of a valuation.
the TLDR version:
1. stupid valuations based on a pipe dream
2. based in a country that is notoriously tied up in red tape
Sorry.. been kinda burned and traumatized by interactions with trying to get things done in India. Never effin again...
Probably was never worth anything... (Score:3)
"Valuations" are generally an expression of greed, stupidity and hope. They have no substance.
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Was it really though? (Score:2)
And yet, arguably... (Score:2)
It should still be worth more than DJT, which is trading around $29, with a market cap of $6B.
Even the traditional folks finally admitted that the market isn't rational. And sometimes it's just plain stupid.
Investors can't/won't do their job, now what? (Score:2)
When a solution doesn't work anymore you should find a new one, right? "Free" (choice wise), for-profit markets don't work here... Never can, never will.
Is the cost greater than the benefit? Guessing we'll never even try to look deeper.