

Are we in a bubble? This company got over 8 million in funding - marketer
http://www.redux.com/
Source: 
http://www.crunchbase.com/company/redux
======
KevBurnsJr
_I interviewed with Redux_ in July and from what I gathered, they had a pretty
good team together.

It's a python shop running either on a custom DB or on Berkeley DB. Their core
business asset is the collaborative filtering mechanism that drives the
Redux.com site.

I got the impression that the site itself is very much a proof-of-concept
application of the underlying technology. They have a BHAG to become the
default collaborative filtering mechanism for the internet. If they are
successful, I consider it very likely that they will do so by licensing this
technology to other companies.

It should also be noted that, as a company, they did not start out in the
direction that they're going now. They've gone through several products and
switched directions multiple times, eventually settling upon what they're
developing now as a result of that process.

If I remember correctly, they are 11 employees, 8 of which are engineers and
the CEO is a definite techy.

Smells like win to me.

~~~
marketer
Netflix can do collaborative filtering successfully because they have years of
data. Amazon can also make recommendations because they know everyone's buying
habits. Sounds like Redux is trying to abstract this to social media? It reeks
of "technology in search of a problem".

~~~
aneesh
Exactly. The collaborative filtering technology & algorithms is the easy part.
The hard part is getting mountains of good data to apply it to. And by good, I
mean monetizeable.

 _That's_ what Amazon and Netflix have done. They should solve the data
problem first, and being yet another "interactive social media mashup web 2.0
social networking thingy" may not be the best way to get lots of data. The
companies that have done this best have monetizeable data - Amazon can
actually SELL you the book it recommends.

As for being a collaborative filtering platform: "1. If your idea starts with
'We’re building a platform to ...' and you don’t have a billion dollars in
capital, find a new idea. Now." (<http://diffle-
history.blogspot.com/2008/06/postmortem.html>)

~~~
attack
No. Vastly more input data does generally allow for better output by these
algorithms. BUT this in no way means that todays recommendation algorithms are
good AT ALL.

In fact, they completely suck. And in reply to GP, netflix's recommendations
suck very much too, to be frank.

Why don't companies care? Simply because it's hard to figure out how to make a
lot of money even with very good recommendations.

~~~
wheels
For the record, more than 20% of Amazon's sales are a result of
recommendations -- so just in the one case of Amazon, their recommendation
system accounts for $3.4 billion in sales a year ... which incidentally is 22
times Facebook's revenue last year. Recommendations do suck, and VCs are
throwing money at the problem because there's a market there that actually
makes money.

------
tptacek
"Welcome to Redux, our humble endeavor to change the world. Admittedly that
does sound a bit cliché, and truth be told, we don't actually think that the
world is such a bad place as it is, yet there are a few areas that we have
chosen to improve. Namely, allowing you to discover entertainment, people, and
products that actually mean something to you."

OW MY BRAIN.

~~~
spencerfry
I think I just died a little bit inside by reading that.

~~~
thaumaturgy
Didn't you read the warning labels that came with your internets?

WARNING: Exposure to large numbers of other people may cause cynicism.

~~~
kajecounterhack
"Are we in a bubble? This Company got $8 million in funding"

I dont think this tells us anything about bubbles, this just tells us there
are stupid investors out there. Really stupid investors.

~~~
tarkin2
...and that's one of the hallmarks of bubbles.

------
dmix
These start-ups aren't being acquired and almost no one is IPOing, which means
the only ones who will take a hit for any of these weak businesses will be the
investors.

There may still be a VC bubble and its about time the kool-aid wore off, but
from what I've seen the experianced and high quality VC's are not investing in
these types of companies.

*correction, I just read the Crunchbase profile, and there are some good names behind this company. Hopefully the team is strong.

------
tarkin2
The whole US economy was in a bubble. Because of profitable investments in the
housing market, made on faulty assumptions, and cash the mortgage owners had,
there was a huge amount of cash circulating. It was profitable to invest in
startups because investors knew that consumers were spending a sizable chunk
of their cash on frivolities; the startup had a higher likelihood of income.
Moreover, an increase in domestic demand means a buoyancy in the stock market;
investors knew they could in future sell on these shares at a profit. Simply,
investing in startups was a great idea.

Now banks issue fewer mortgages, after their faulty reasoning came back to
haunt them, and current mortgage owners can't pay back their mortgages. Not
only this, but, because banks have had to write off large swathes of their bad
debts, they're less willing to lend money full stop. This hits domestic demand
badly. Relates to startups, the profitability of startups has taken a hit at
their prima facie and stock market value: a decrease in domestic demand means
customers purchase fewer frivolities, and a decrease in demand always badly
hits the stock market.

Not only are startups less profitable, but VC have less cash. VCs that
invested heavily in the stock market, and particularly the housing market, now
have much less cash than they had 4 months ago. Perhaps whoever's bought redux
has seen some über filtering mechanism that will change the internet. But my
point is that whoever's bought them has very likely far less cash to splash
out on potentially rewarding, but less so because of a decrease in domestic
demand, filtering mechanisms.

This all indicates that we are either at the bubble's apex or we are seeing
its deflation. So, will investment dry up? I'd say not completely, but VC are
going to be a hell of a lot more discerning in future, especially if they've
invested heavily in the housing market, or stock market in general; they have
less money to spend, ergo risk on startups.

------
pjhyett
I'd argue we're not in a bubble, because this company would have been able to
raise 80 million in '99.

------
prospero
Aggregators are the new portals.

~~~
metaprinter
Speaking of which, what's up with popurls? Their traffic is down big the last
two months.

------
ordord00
I am almost certain that this site is merely a demo for their backend. Look at
their board... a former managing partner at In-Q-Tel is on it. My guess is the
US government is a serious potential buyer based on that. But who knows, they
have well connected investors who could also help them land deals with bigger
content creators.

------
invisible
We don't know their business plan. It might be so novel an idea that they can
post huge profit margins, but at the face of the website it's very hard to
grasp what they could do.

~~~
mrtron
Exactly. It is extremely easy to toss a low blow at many companies that are
kicking some serious ass on the revenue side of things.

If what they are doing is simple and you better deserve that 8 million to
pursue the idea - go after it.

------
DarkShikari
Yes, we're in a bubble. More precisely, what's going on is that the majority
of startups, numerically, do _not_ need a lot of money; that is, most of the
good ideas out there are best pursued with a small company with few employees,
since there is little benefit they could gain from loads of extra cash. That,
of course, is the idea behind YC.

But the VCs have loads of money, and they want to be able to use it. And when
you have this situation where there are tons of small startups that need a
little cash, they get overexcited, and throw too much money at them.

And you get stupidity like this.

~~~
netcan
It's actually a little ironic. The Venture industry exists because big
opportunities can be pursued with fraction (maybe 1/10) of their potential
worth.

But now opportunities of the same size can be pursued with a much smaller
fraction (say 1/100). As an investor, you're still willing to pay the 10th.
Economics goes a little fuzzy around the edges.

------
bazookaaa
Wait, what? When I heard about Redux way back when
([http://www.techcrunch.com/2008/01/28/redux-discovers-
friends...](http://www.techcrunch.com/2008/01/28/redux-discovers-friends-so-
you-dont-have-to/)), it was for discovering new friends, which seemed like a
good idea. But now it's this? Why the change [in the wrong direction]?

~~~
trevelyan
The valuation of social networks went down. People out! Charm bracelets in!

------
marketer
Source: <http://www.crunchbase.com/company/redux>

~~~
ojbyrne
It's cool how their unique visitors peaked the month they closed their Series
A, and looks to hit zero within a month.

~~~
KirinDave
That's very typical of early startups who are still ramping up. I wouldn't
read too much into it.

~~~
ojbyrne
Except that they're a year and a half old. Quite the ramp-up. I think most of
the people on this site would agree that a year and a half-old startup with
traffic approaching zero and $8 million raised is looking like a failure.

Just for reference, Youtube went from founding to acquisition in the exact
same amount of time.

~~~
KirinDave
Not every site has to be youtube to be successful. Lots of small sites pay for
themselves, make their owners money, and handle all their traffic. This isn't
bad.

As an example, I've heard my former employer mog.com managed to get a pretty
darn sweet deal and continued funding out of the Sony-Gracenote-acquisition.
We definitely had a slow ramp-up, and several setbacks during development
(before I got there) that made the total dev time for the site startlingly
long.

~~~
ojbyrne
You're right, of course, from your perspective. I tend to be a pessimist, and
like bootstrapping and sweat equity. Changes of directions, big funding
rounds, the assertion that "good names" (a commenter above) mean a lot, those
things I'm not really a fan of.

------
thwarted
Create playlists. Buh. Just use an activity aggregator like friendfeed. I
guess something like this would be useful if the actual content is kind of
vacuous and you want to wrap it in something more interesting. I try to only
show my friends interesting content though.

------
jakewolf
Clicking on their mystery link enough times almost gave me a seizure. Don't
even try it.

~~~
KirinDave
I think it's kind of cute. Not enough sites do whimsical easter eggs anymore.
It's one of those goofy things people do on a saturday afternoon that improve
team morale.

Seriously, I bet "seizure" goes into their nickname for it too. :)

------
s3graham
5M, if you read the sources linked from crunchbase.

Does seem pretty derivative, but might be a useful idea. Perhaps the website
is mostly intended as a demo for their backend, which some bigger-viewer site
could buy them for.

------
swivelmaster
I was having so much trouble finding entertaining things on the internet;
Thank god these guys have come along to solve that problem.

/sarcasm

------
dmose
Anyone else think having 30 include files is a bad thing?

------
Allocator2008
This is truly one of the worst startups I have ever seen.

Everyone in this forum is stupider for having seen it.

I award its founders no points, and may God have mercy on their miserable
souls.

