
Giphy Closes $55M Series C at a $300M Post-Money Valuation - iamben
http://techcrunch.com/2016/02/16/giphy-closes-55-million-series-c-at-a-300-million-post-money-valuation/
======
omnisci
It was a "Jump to Conclusions" mat. You see, it would be this mat that you
would put on the floor... and would have different CONCLUSIONS written on it
that you could JUMP TO. I'm going to pitch this company and see if I can raise
a $5M seed round, I mean, at this point, why not!

------
api
I have a conspiracy theory.

The world actually ended in the year 2000. Jesus returned, struck down the
antichrist, and all that, and the series was over. But the problem is that the
series' producers signed a contract for ten seasons and they blew the big
finale in season _eight_.

What do you do then? Why, you screw around. You write cheesy concept plots and
play with breaking the fourth wall and do tie-ins with other franchises and
all kinds of stuff. God's got his whole team of writers scouring the annals of
post-shark-jumping shows looking for crazy plot lines to hold the viewership
long enough to run out the clock.

Let's see... I got it! Let's make Donald Trump president of the USA!

Stuff like that, or dancing cat spam on Slack being worth more than what it
would cost to put humans back on the Moon.

------
aresant
"The most obvious revenue stream could come from ‘ad words’, where a Giphy
search could turn up sponsored content based on what the user was looking
for."

This is clearly an over-zealous editorialization by TC.

Google's AdWords program is the revenue generation monster it is because of
the extremely high-intent of Google Searches.

Google's top categories (by cost per click) of search are weighted around
insurance, mortgage, loans, attorneys, credit cards, etc.(1)

That's not going to happen at Giphy.

Way more plausible would be some sort of .gif pre-roll akin to Youtube ads,
content sponsorship ("What's she wearing?" etc.

(1) [http://www.wordstream.com/articles/most-expensive-
keywords](http://www.wordstream.com/articles/most-expensive-keywords)

------
minimaxir
A Series C where the post-money valuation is only 6x? The stock must be
diluted as hell.

The Series B was $21M raised at $80M valuation
([https://www.crunchbase.com/organization/giphy](https://www.crunchbase.com/organization/giphy)).
I would not want to hold equity at this startup.

------
Keats
I am speechless. If this is worth 300M$, I guess this script is worth at least
1/10 of that: [https://github.com/github/hubot-
scripts/blob/master/src/scri...](https://github.com/github/hubot-
scripts/blob/master/src/scripts/gif-me.coffee)

300M$ valuation with no income at all and the source of revenue being ad
based, it sounds like something straigth from the Silicon Valley tv show

------
lechevalierd3on
You are all missing the point, giphy empower matches on Tinder who never talk
to each other to now converse without using words.

It has to be worth something.

~~~
minimaxir
I am legitimately unsure if this is sarcasm or not. Well done.

------
brunoceleste
Giphy really needs to improve their search engine IMHO!

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55555
Um, I would bet good money that monetization will not be successful. This is a
real moonshot.

------
kevinwong
Instead of embedding ads into GIFs, I think that Giphy can leverage its image
tagging data to help brand owners track social media brand mentions. For
example, Giphy could theoretically help Disney track usage and context of
Mickey Mouse gifs, providing Disney insight into current public perception of
their characters, allowing Disney to react if necessary.

------
ChuckMcM
I can't believe they typed this with a straight face:

 _" So imagine if you wanted to send out “/giphy hungry” to your teammates and
a McDonald’s GIF appeared, or if you sent out “/giphy monday morning” and a
Starbucks GIF appeared."_

In general, I have observed that technology people specifically tend to be a
bit ad-phobic. And in their team channel they try to engage the their comrades
and Giphy turns them into the channel that just dropped an advertisement into
their chat stream? What if Victoria's Secret buys the keyword valentine? Who
is at fault if someone says "/giphy Happy Valentines Day!" and Giphy turns
that into a NSFW ad for lingerie which goes out to everyone?

I'll accept that perhaps I'm missing the point, and there is some value here
that isn't visible to me, but for right now it really seems like a stretch to
value this company as $300 million.

~~~
derFunk
I'm using /giphy on Slack, and it's not even working well. 75% of the gifs I
get presented for my keywords are not what I expected, at all. So basically
I'm often disappointed and delete the message again to not annoy my
colleagues.

------
BinaryIdiot
Whoa, $55M series c for a company with zero plans to monetize something that's
very difficult to monetize? I must be missing something here. They must have
incredible growth or something but even then what's the end goal? Ad words
won't succeed on images (Google tried this twice; once with text and once with
images[1]) so why do they think they will? Didn't imgur have a similar issue
when people would just link to the image thus working around their ad
placement anyway? imgur had to resort to pro subscriptions and creating their
own social network of sorts where they could place sponsored content to make
money[2] but where would either of those fit into Giphy?

I feel like I'm either missing something incredibly obvious that's going to
make Giphy rich or...these investors are just throwing money away. I'm not
sure which but it at least feels like it must be the former.

[1] [http://www.cnet.com/news/google-adding-display-ads-to-
image-...](http://www.cnet.com/news/google-adding-display-ads-to-image-
search/)

[2] [http://www.businessinsider.com/this-is-how-imgur-plans-to-
ma...](http://www.businessinsider.com/this-is-how-imgur-plans-to-make-
money-2014-3)

~~~
minimaxir
Speaking of Imgur and ads, a couple years ago I noted that Imgur was covertly
redirecting direct links to images on social media sites to the ad-filled
versions: [http://minimaxir.com/2014/02/moved-
temporarily/](http://minimaxir.com/2014/02/moved-temporarily/)

Apparently per recent comments on that article, they've extended that behavior
to _all_ websites, although I have not verified that yet.

Granted, there's no way Giphy could pull that off with their current
integrations. But maybe I'm not sufficiently creative.

------
azinman2
Wow. Now at the C level without monetizing gifs?

Something tells me this won't last...

------
legohead
How is this even possible? Giphy is a running joke in Slack chat about how
terrible it is.

And all these articles about unicorns and "watch out startups", and VCs decide
to invest in GIPHY? I'm so confused.

------
akavi
Huh.

I guess I just hope the founders took some money out in this round.

------
Grue3
Here's one way to monetize.

Ads inside GIFs.

It's genius, really. Most GIFs are looping and are often watched several
times. What if the service to which you upload a GIF injected an extra frame,
lasting, say 40ms, that displays a subliminal advertisement. It would go by so
fast that most people wouldn't notice. But then later they would get
unexplainable cravings of the product that was advertised.

People are already tuning out the obvious ads, so subliminal ads are much more
effective. Better yet, adblocking software won't be able to block such
subliminal ads without blocking the entire GIF.

~~~
minimaxir
Content _tampering_ is a surefire way to get users to leave to another
service. Of which there are many.

~~~
bduerst
There's also no way to control the negative content too.

Imagine someone creates a pro-ISIS beheading gif and Coca-Cola paid to slap an
icon in the corner.

------
brotherjerky
It's a fun product, but won't they run into copyright issues if it gets big?
Seems like all the content is owned by others, and I'm not sure it counts as
fair use.

~~~
minimaxir
Hence why part of the raise is likely reserved for potential legal fees.

------
haberdasher
"The company acts a lot like Google, letting users upload and tag GIFs to make
them searchable on the web and through Giphy’s native mobile apps."

"Shockingly enough, Giphy is not yet monetizing. That said, the $300 million
valuation makes sense when you think of all the various and likely quite
lucrative paths that Giphy could take toward revenue generation."

So many _gems_ in this!

~~~
koolba
You missed this equally sparkling gem (emphasis mine):

"The most obvious revenue stream could come from ‘ad words’, where a Giphy
search could turn up sponsored content based on what the user was looking for.
_If it worked for Google, there’s no reason why it wouldn’t work for Giphy_ ,
and founder and CEO Alex Chung hinted on the phone that this would likely be
the main source of revenue for Giphy when it decides to flip the switch."

~~~
IgorPartola
"Daryl: Look, this is a marketing campaign. You got nine days. Let's say you
do get the money. What are you going to do with it?"

"Ryan: The first lesson of Silicon Valley, actually, is that you only think
about the user, the experience. You actually don't think about the money.
Ever."

~ The Office, Season 7 Episode 9

------
reubensutton
Why has Google never tried to monetise Google Images results in the same way?

My instinct is that they have considered it but that image search lacks the
same intent that makes AdWords clicks so valuable to Google.

~~~
BinaryIdiot
Google tried to. Twice. They tried with text ads and image ads. Neither works
as far as I could tell. [http://www.cnet.com/news/google-adding-display-ads-
to-image-...](http://www.cnet.com/news/google-adding-display-ads-to-image-
search/)

------
firask
I feel too bad right now for I had the exact same product ready and developed
with a hell of a traction 4 years ago (for I have not seen the value in it
back then), yet I dropped it for another idea that failed a 2 years later.

~~~
WalterSear
You didn't know the right kind of morons to ask for funding from.

------
realworldview
omg this is post-modern farce. who gets involved in this?!

~~~
dennisgorelik
\--- [https://www.crunchbase.com/organization/giphy/funding-
rounds](https://www.crunchbase.com/organization/giphy/funding-rounds)

Lightspeed Venture Partners

Betaworks \---

------
stevedomin
What do they do that requires so much money? (honest question)

~~~
StevePerkins
Apparently it's really expensive to make Slack virtually unusable.

~~~
api
You win the Internet!

Seriously. There's an LA Tech Slack that I really _wished_ was something other
than an endless cascade of gif spam. I left it because I got sick of the red
notification buttons making me head over to look for something about... I
dunno... tech... and instead there's a dancing nut sack.

/giphy facepalm

------
AndrewKemendo
So this was a ~20% raise, which is typical.

For Lightspeed et al. to return the vaunted 10x ($550M) that means Giphy would
have to have a liquidity event at a valuation of 2.7BN.

Either that or they need to get revenue to some ungodly figure.

What am I missing here? Why are these funds betting this is a unicorn when
according to everyone "VC funding is frozen."

~~~
trjordan
VC funding isn't frozen. VC funding has cut multiples on high-growth companies
to a fraction of their previous numbers. Giphy hasn't monetized, so the normal
conversation about revenue multiples that's killing everybody else doesn't
apply yet.

The likely thesis is that there WILL be monetization around gifs and gif
sharing, and Giphy WILL be the company that dominates that. It's probably not
hard to size that market as pulling in $1bil / year, so if Giphy points out
they're the furthest along and the competition won't catch up, it's not an
unreasonable bet.

Another way to think about it is to find things you don't believe in. For
Giphy, that might look like:

\- You don't think "gifs and people sharing gifs" is a trend that will last.

\- You don't think it's possible to monetize gifs and sharing gifs, or at
least the first company will screw it up so bad it tanks their business.

\- You don't think Giphy is the clear market leader, or you think what they've
done is easily replicated (incl. brand).

~~~
api
> "Giphy hasn't monetized, so the normal conversation about revenue multiples
> that's killing everybody else doesn't apply yet."

I keep hearing this kind of thing: that it becomes _harder to raise_ once you
start to have revenue.

Really?

~~~
trjordan
A LOT of sales conversations (VC or otherwise) are about eliminating reasons
to say no. Revenue is a hugely thorny subject, and getting revenue growth to
look uncontentious is hard. You need high growth, low churn, lots of
expansion, a plausible path to find new customers, and specifically for giphy,
a story about why you couldn't monetize the entire market immediately (why do
you need time to ramp up? hiring sales reps, implement the same feature on
different platforms, what?). Lots of details, lots of speed bumps that would
tank an otherwise compelling story.

On the other hand, it's not easy to sell without revenue, but if you find
somebody who's a believer in the space, you've eliminated a TON of questions.
So it's not easier per se, because a lot of investors will turn you down for
not having revenue, but among those who say yes, there's no further questions,
because there's nothing to dig into.

