
Sequoia Leads $4.7 Million Investment in Humble Bundle (YC W11) - matthew-wegner
http://finance.fortune.cnn.com/2011/04/22/sequoia-capital-backs-online-gaming-bundler/
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sahillavingia
This was the one YC W11 company that didn't present at Demo Day because of a
no-shop clause.

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d0m
Can you explain more?

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sahillavingia
What do you want me to explain?

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bostonvaulter2
What is a no-shop clause?

I didn't even realize that the Humble Bundle was a YC company.

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sahillavingia
No-shop means you accept a term sheet that includes a clause that stops you
from talking to other potential investors.

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swalkergibson
I realize this is straying off topic, but why would an entrepreneur hamstring
him/herself by agreeing to such a clause? It appears to me that such a clause
benefits the VC in a big way, but puts a significant amount of undue pressure
on the entrepreneur. How am I supposed to know if I am getting the best deal
if I am barred from taking the offer into the marketplace?

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andrewparker
Yes, it is a pro-investor clause. You would agree to it in the situation where
you feel you are satisfied with the term sheet (and who its from) and are
ready to commit.

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matthew-wegner
Worth mentioning there's no official confirmation yet, but this is the filing
in question:
[http://www.sec.gov/Archives/edgar/data/1518293/0001518293110...](http://www.sec.gov/Archives/edgar/data/1518293/000151829311000001/xslFormDX01/primary_doc.xml)

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rhygar
I'm puzzled. What are they going to use all that capital for? The business
already seems quite successful and profitable.

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rottencupcakes
Even rounding up to $5M in sales with the 3 humble bundles, a 5% commission
comes out to $250,000. Factor in hosting costs and salaries, and that's not
really enough money to build out a business.

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InclinedPlane
They plan to grow the company (and revenues), of course. Valve runs a somewhat
similar business with their Steam content delivery and promotion system. A lot
of indie games are on Steam and "Steam sales" are somewhat similar to the
humble bundle mechanism. There's certainly a lot more money in the indie games
market than the humble bundle has brought in.

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bobds
I've actually received an email from Humble Bundle telling me I could add the
games I bought to my Steam account.

Steam is an actual platform that does stuff. Humble Bundle is pretty much a
website with some download links. I do like what Humble is doing though.

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InclinedPlane
Indeed. But part of making an investment is knowing what's possible to change.
People who invested in Microsoft in the days of DOS knew that there was more
ahead for the company. Same goes for people who invested in Amazon when they
only sold books. That applies here as well. Investing in a company merely so
you can rake off the cream that's already flowing is for businesses that are
old and have plateaued.

My point about Valve and Steam is that there is a lot of potential in that
market segment, and certainly Valve hasn't exhausted all of it. Indeed, one
could imagine the Humble Bundle working _with_ Valve to get included in Steam
sales.

Humble Bundle has a brand people recognize, like, and trust. A hell of a lot
of industry connections. And an established track record. I don't know the
depth of the gaming industry well enough to know exactly how wise this
investment move is, but it seems like it could be fairly reasonable to me.

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dasil003
I love the humble bundles, I bought all 3, but after taking VC money shouldn't
they drop the "humble"?

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mvalle
That's what I thought. It's not very humble anymore is it?

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gobongo
Indeed! This company seems to be gettin' a bit too big for its britches!
Somebody oughta knock 'er down a peg or two!

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eoghan
"The big question, of course, is how Humble Bundle itself plans to make money.
Buyers can 'tip' the company when making purchases, but clearly that isn't the
business model."

Why not? It seems pretty smart to me. The average purchase price is $5.

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sk_0919
Honest question - can someone explain the value proposition for investors and
potential business models for humble bundle?

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hristov
Basically, the value proposition seems to be something like Groupon. Humble
Bundle will become a place known to offer low priced games. People will go
there in order to find low priced games. The fact that so many people go there
will attract game developers to offer their games there at a huge discount
hoping to get their name out and get some traction. I am not sure it will work
but I am pretty sure this is their plan.

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patio11
Do you think "low-priced" is a necessary part of the offering? I'd be strongly
tempted to emphasize the other parts (aesthetic, Rage Against The Machine,
etc), deemphasize "pay however little you think is fair", and walk up the
number of sales in the $40+ bucket.

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maguay
I saw this on Twitter earlier, and quite seriously thought it was a joke at
first. Seems incredible they would raise funding too; I would figure they
could grow just on revenue.

I'm starting to think you could get investment for almost anything right
now...

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guiseppecalzone
Awesome, nice work guys!

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polvi
Congrats guys!

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pitdesi
The slider defaults to tip Humble Bundle 15%... seems fair. We implemented
something similar at Kiva where the users could optionally donate 10% but it
was defaulted in... 85ish% of people made the donation.

Who pays for payment processing? The slider indicates that 100% of the money
goes either to the developer, charity, or Humble Bundle.

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lyime
They use Paypal, Google Checkout or Amazon. 100% of the money after the fees
have been taken out.

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pitdesi
It's misleading because if you put in $100 and say "all to developer" it says
that $100 will go to developers. Not a big deal, it's just easier to present
the data this way even though it isn't strictly true.

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AndrewMoffat
Unrelated to the story, but interesting:

 _According to a counter on its website, Humble Bundle has generated over
$730,000 in sales on 147,000 bundles ($4.96 per bundle). Linux users pay the
most at $11.72 per bundle, Mac users are in the middle at $6.31 and Windows
users bring up the rear at $3.95._

Linux users clearly want games. I dropped $10 myself for the Frozenbyte
bundle.

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bostonvaulter2
Yeah, I dropped $11.37 for it as a Linux gamer.

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alanfalcon
Why not $13.37?

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bostonvaulter2
Haha, you're right. I was actually mis-remembering. I did spend $13.37.

