

On Winning the Dot-Com Lottery - tonystubblebine
http://www.iconocla.st/index.cgi/2009/Nov/05#on-winning-the-dot-com-lottery

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_delirium
I agree with #2 and #5, but I've seen plenty of examples that violate all the
others. The first millionaire I came two degrees of separation from (friend of
a friend) got rich in the first dot-com bubble by essentially selling a list
of links to Yahoo. He had compiled a small website of about 5 static HTML
pages, that was just a list of links to "resources in [niche]". It got popular
and got a lot of traffic, so Yahoo bought it for multiple millions of dollars.
He was not a genius, not hugely passionate about it, and not particularly well
networked; I mean, it was just a list of links on a website that he
occasionally updated.

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ivankirigin
I'm always surprised when I hear people comment about facebook needing to a
find a way to be profitable. It is like they are on cruise control and haven't
bothered to check their assumptions.

It even applies to twitter. Twitter is likely making less than facebook, but
is still likely profitable from search deals. Jokes about revenue don't really
cut it.

~~~
staunch
Neither Facebook nor Twitter make the kind of money that's eventually expected
of them. No one really knows if they ever will. No one doubts they can make
the kind of money MySpace does, but can they ever make the kind of money
Google does?

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ivankirigin
Talk about a moving goal post. You don't need to make nearly as much as that
to IPO.

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nostrademons
Also, _Google_ didn't make the kind of money that Google does when it IPO'd.
Companies' revenue numbers don't stay static forever. (Or if they do, the
company is likely dying.)

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_delirium
Not the current $6b+ yearly profits, sure, but they were still hugely
profitable. Google IPOd towards the end of 2004, a year in which they made
$400m profit on $3.2b in revenue:
<http://investor.google.com/fin_data2004.html>

(But I agree that you don't need $400m profit to IPO.)

~~~
sachinag
As a former investment banker who has worked on numerous IPOs and follow-on
offerings, there is only one thing you need to have a successful IPO:

Institutional buyers who want to buy the stock at a price acceptable to the
company.

Back in 1999, they'd buy anything with .com in the name; nowadays, they want
to see a pretty clear path to sustainable profitability. That doesn't mean you
actually have to _be_ wildly profitable; just that you're of a sufficient size
and have implemented a clear business model. Facebook, LinkedIn, Zynga, and
countless others could IPO tomorrow if they wanted. Twitter's issue isn't
profitability; it's size. $25 million in revenue just isn't big enough to get
out just yet.

If you're looking for precedents, the best one (due to its recency and
characteristics) is OpenTable's recent follow-on offering. The prospectus is
worth a read:
[http://edgar.sec.gov/Archives/edgar/data/1125914/00010474690...](http://edgar.sec.gov/Archives/edgar/data/1125914/000104746909008486/a2194679z424b4.htm)
Here's their IPO prospectus from earlier in 2009:
[http://edgar.sec.gov/Archives/edgar/data/1125914/00010474690...](http://edgar.sec.gov/Archives/edgar/data/1125914/000104746909005875/a2193211z424b1.htm)

