[pdeuchler]

This smells fishy to me.

ProductHunt had no hope of ever becoming an actual business with realized monetization, it was a glorified marketing tool built by SV insiders to sell the ventures of their friends, colleagues, and investors. Slimy, but I guess not illegal.

I start to draw the line though, when PH raises millions of dollars on XX million valuations (that anyone could easily see they had no chance of ever meeting), seemingly funnels most of that money into things that simply make promoting other startups more effective, but don't create value or revenue, and then gets bought by another startup who shares multiple investors for (supposedly) something around their ridiculous valuation.

I guess it's probably not outright fraud, but somehow we ended up in a scenario where we have investors shelling out (in some cases paying themselves!!) a (rumored) total of ~28 million dollars for a community website with no real revenue, no actual product, not even any technology that they could theoretically pivot on... it's just a glorified phpBB theme with a relatively small community of fans who just happen to all be in on the take as well. And I'm sure all investors involved get to mark it as a "win" on the books and pad their stats.

Next time Silicon Valley tries to portray itself as a meritocracy I guess we can just point to this...

[birken]

1) An investor isn't marking a 1x as a win. Locking up their LP's money for many years to return 1x isn't making anybody happy.

2) AngelList isn't giving PH investors/employees $28M cash, or $20M cash, or whatever the figure is reported as. They are very likely giving them mostly stock, stock in a private company with an unknown valuation. Probably only enough cash to cover the taxes (10-20%). The 20M figure is pulled out of thin air based on whatever AL thinks their valuation is. How much stock do you think they'd have to give out to hire 20 people? How much stock are they giving out to acquire a company with 20 employees?

3) People said Google had no hope of ever making money, they were just a search engine and those don't make any money. Sitting on the sidelines and saying every investment is stupid is really easy when 95% of them fail.

[pdeuchler]

1) Being pedantic real quick, it's a ~2x win. And yeah, it's not the 100x most VCs dream about, but it's still a heck of a lot better than an embarrassing 0x loss after your founder shouts his billion dollar aspirations from the rooftops. The important thing here isn't that VC's are making money, it's that they're using an elitist social circle to absolve losses. "Too connected to fail", if you will.

2) How does this make it any better? What you're essentially saying here is instead of investors paying themselves cash they're just shuffling shares of stock from one investment vehicle to another... if this is true then in some cases investors are actually increasing their share in AngelList simply by, in your own words ("1x isn't making anybody happy"), making a failed investment. That doesn't seem above board to me.

3) If you're honestly trying to compare late 90's era Google with ProductHunt then I think that proves my point more than anything I can say myself

[birken]

Do you think the behavior of these companies could possibly be explained by doing what they think is in their own selfish best interest instead of somehow using "elitist social circles" to "absolve losses"? And who is absolving the losses anyways? Wouldn't some of the people in the "elitist social circles" be investors in AL but not PH and be upset that these "losses" were being inflicted upon them? Why wouldn't they use their elite social clout to stop it?

Anecdote time: I've personally seen a few startups that were failing attempt to sell themselves to the startup I was somewhat senior in. I interviewed and chatted with founders of the startups that were trying to get acquired. My meetings were not interfered with by the VCs or the angels or anybody else. They are far far too busy to care about every minute detail of what goes on at their portfolio companies. Had we ever gone through with one of the acquisitions (which we never did when I was there), my guess is the board would have tried very hard to convince us not to do it, as an acquisition has a much higher chance of going wrong than going well and can be a huge distraction.

[pj_mukh]

It's only in hindsight that 90's era Google is an "obvious win". It was "just another Search engine with a bunch of Stanford buddies for investors" in the 90's and probably would've been called so on HN.

Its seems to me that convincing a bunch of people to part with their money for your idea and then relentlessly trying to execute on it (as PH's founder seems to have done) is very meritorious.

Some investments are clearly made to friends, but you aren't convincing any investor to NOT invest in their friends who they think are great, personally. Now if only there was a process to democratise this discovery more....

P.S: I was referring to AngelList in the end there.

[antiviral]

20-20 hindsight works both ways; it's easy to see both obvious failures and successes once we know the results with certainty.

For Google, I don't think it was certain at all that they would succeed and there was a real chance they could have failed. Their first business model was selling their search engine to enterprises via hardware boxes, which grew very haltingly.

In fact it wasn't until Google came across Overture's idea of selling advertising tied to web search results that they found the success they now have, and which they appropriated despite Overture's patent because they were so desperate to find a working business model.

Overture(later acquired by Yahoo) sued Google, and Google had to pay in stock worth hundreds of millions in 2004 (tens of billions now had Yahoo kept them).

So how does this relate to ProductHunt? Google had a real product, knew who their users were and put their experience first. ProductHunt has polluted their site with junk and allowed their voting process to be distorted, making it practically useless to anyone who came there to find great products.

See here: http://www.nytimes.com/2004/08/10/business/technology-google...

[skinnymuch]

Nice hindsight review of Google. Often overlooked.

[rl3]

I recall a podcast interview Ryan Hoover gave some time ago, where he said (if I'm recalling this correctly) that he wouldn't consider offers to sell under $100M, and his goal was 1B or greater.

At the time it sounded perfectly reasonable, though he since took the company in a direction that lead to today. The writing on the wall has been evident since at least a year ago.

>ProductHunt had no hope of ever becoming an actual business with realized monetization, ...

While I largely agree there, I think that Product Hunt could have made itself an otherwise incredibly valuable acquisition target. Had Product Hunt chosen a different path around late 2014, it's very possible it could have met or exceeded that 1B figure.

If I had to give a postmortem, I'd say the primary cause of death was an over-emphasis on the site's existing pattern of serendipitous discovery, compounded by community mismanagement, and attempts to monetize via turning PH into a store and/or referral engine.

The community mismanagement aspect in particular was unfortunate, since Ryan was one of the most voracious and effective community builders I've ever seen. Some of the bad press PH received was perhaps unfair and overblown. The original intent of ruthless product curation seems to have went somewhat awry—resulting in a self-promoting insider network of sorts. Unlike the bad press though, I don't think that it was the result of malicious intent.

Of course, armchair analysis in hindsight is easy. None of us were actually on the ground in his shoes, so there's probably a lot we don't know. At the end of the day, a 20M exit isn't the worst thing in the world.

[AndrewKemendo]

I recall a podcast interview Ryan Hoover gave some time ago, where he said (if I'm recalling this correctly) that he wouldn't consider offers to sell under $100M, and his goal was 1B or greater.

Even if you don't believe this, unquestionably you have to say it in order to get venture money.

[CaveTech]

I'm really curious to know what strategy you believe could've landed them at 1 billion.

[fudged71]

If they had been building the backend to syndicate angel deals for the startups that were being featured.

[jaoued]

I think you underestimate the global reach PH has achieved within such a short time across the five continents. Most startups everywhere - including mine - building their product has a key milestone - almost as a habit- to get it on PH and shout loud about that this is a significant milestone for their users and customers to know about.

I am grateful to PH and the team lead by Ryan because they helped MyAppConverter raise our profile despite we are not based in SV. I will always remember one day one early user who found us, used our product and put it directly on PH. Soon after that, we got a huge spike in our sign-up and platform usage and gave us global coverage.

So thank you PH, Ryan Hoover & team and best of luck with the next chapter.

[conductr]

I also feel that PH itself has no chance of generating meaningful revenue. That's not to say they don't add value to the users/products that get featured. I feel like if they try to monetize it, what they built will be lost.

I see HN is a combo of PH and very early Digg; with added bonus of better community discussion. What if HN started charging users $20/mo and/or $100 to post. Would it generate meaningful revenue? Would it remain "the same" enough to continue generating that revenue in the future? I don't think so.

That said, I think AL may have some strategery at work. They want to bring early stage companies into their AL network. These often start as just products, so it kind of makes sense, although I don't know if it makes XX million sense

[Alex3917]

> funnels most of that money into things that simply make promoting other startups more effective, but don't create value

Making it easier for startups to promote themselves is a huge source of value. It's just hard to capture that value, because the newest and most interesting startups don't have any money, and the companies that do have a lot of money aren't new or interesting so no one wants to hear about them.

There's nothing shady or fraudulent. The problem is just that early stage companies in this space are walking a tightrope with basically zero optionality. E.g. normally you want to build a product with ten or twenty different paths to success without having to make any core changes to the technology. This space doesn't really lend itself to that.

There is a huge pot of gold at the end of the journey for anyone who can get there, but it's just really tricky because a lot of the things you'd ideally like to have in a startup just aren't there. (E.g. lots of optionality, low cost of leadgen, costs that substantially decrease over time, etc.)

PH is actually doing pretty well, I think it's too early to say if the PH/AngelList combo will eventually win the space, but I think they have as good a chance as anyone.

[shubhamjain]

> that anyone could easily see they had no chance of ever meeting

sigh. I hope one day people would stop being so cocksure around an industry that has always proven otherwise. I mean, yes, SV does have a slew of absurd valuations based on non-existent business models but doesn't the past success of some of these ventures imply that it can actually work? And all those obvious facts are just "hindsight bias" at work?

[pdeuchler]

Was there a possibility of them having a profitable revenue stream? Sure. Was there a probability? Definitely not, and people (myself included) have been saying this about PH ever since its inclusion in YC. These same people have been around the internet block so to speak, and personally I've seen dozens of much larger, much more valuable, and much more active communities die off because even after bombarding their users with ads, trying affiliate sales (PH's most recent revenue model), and charging subscriptions it is incredibly hard to monetize an internet community that is not predicated on money changing hands.

It's not a business, it's a social club. So why was $28mm pumped into it?

[jamesfzhang]

You have no idea what the probability is. It's not 100%, but it's also not 0%. You also have no idea what Instagram's probability (and hence, expected value) was at the time of their acquisition. Having such a short-sighted, negative outlook isn't healthy.

[jamesfzhang]

This is such a negative, short-sighted outlook. A company doesn't need an immediate monetization strategy that's open to the public for it to have value that's attractive to an acquiring company.

Edit: Furthermore, PH definitely does have potential to have a large scale revenue stream. Any "destination" site that millions of people visit daily with intent to try/buy new products has major potential.

[danenania]

Definitely. Anyone who's tried to market a new product should see the value that PH offers. There are issues with execution, fairness, and a cliquey community, but it can still get you real customers--lots of them--who have a sympathetic early adopter mindset. Finding these sorts of people in the early stages is crucial for anything new, and there aren't that many places you can go to find them. Show HN is decent, but interested and supportive folks are often drowned out by the same smug negativity on display in this thread.

Where such a rare and valuable resource is being offered, there are certainly paths to monetization available. And since PH is a discovery platform as much as it is a community, advertising doesn't necessarily conflict with the core value proposition if it's done smartly.

[leoalmighty]

Daft Punk's lead singer is telling you to get back to work.

[2drew3]

>relatively small community

Lmk when you create a website with this much traffic. http://www.alexa.com/siteinfo/producthunt.com

[minimaxir]

"Relatively small" is correct when Hacker News and Reddit are the competitors.

[nadermx]

Well, I would say it is relatively small, I made this https://www.similarweb.com/website/yout.com which in theory is bigger than https://www.similarweb.com/website/producthunt.com

[mbesto]

1. There is no proof Alexa data is reliable.

2. Traffic isn't fungible. Reddit is one of the most viewed websites in the world (top 10?) and roughly yet makes as much money in a year as Facebook does in an hour.

[gberger]

The number of daily visitors is behind a paywall.

[sanketdasgupta]

could anybody point out the reason behind the spike during october?

[stale2002]

OK, but if this is "slimy" and "almost fraud" then who is the person being screwed over?

The investors??

I feel like if you are going to call something almost fraud you have to point to a group of people being actually damaged.

[daveed]

If it had no discernable value, why would AngelList shell out to buy PH? That's nontrivial money to them, and they certainly aren't doing this as a favor to PH's investors.

[goeric]

Startups are hard. I don't know Ryan personally, but he really started PH as barebones as possible and grew it to millions of uniques. Without being on the inside, you have no idea the pressure or stresses he was under. Why are people so critical when they see a startup exit for less than a billion dollars? I am sure it's a huge learning experience for him and I congratulate him and wish him the best.

[taytus]

I love entrepreneurs, I just love the people overcoming all the obstacles and following their dreams and passion and just hustling and hustling until they succeed. They are plenty of stories like this. PH was far from a meritocracy. It was basically a forum with SV insiders and people trying to "get in" in that ecosystem. But it was totally rigged, so that's the opposite of a tool who supposed to democratize access to exposure. I don't believe people are hating on this, most of us just are just shaking our heads.

[danenania]

I understand this criticism and would love to see a more accessible version of PH find success, but exposure is in its very essence extremely non-democratic. Very few have the time or desire to check out even a tiny fraction of the thousands of new products that are created every day. People rely on filters, and those filters are always going to require some sort of barrier to access that leaves out many, many more than it features.

[Gammarays]

I think you're underestimating the level of traffic this "glorified phpBB theme with a relatively small community of fans" receives. Their Alexa rank sits at 3327 which alone means they're receiving tremendous traffic. Not to mention the whole concept of the site is to connect product enthusiasts with products they might end up purchasing. There's actually a fairly significant amount of upside if they can turn PH into a sales platform and take a commission.

[rei999]

I feel that product hunt can easily make money by having sponsored postings. However, that may upset part of the community.

[rokhayakebe]

If PH delivered 100M clicks then clearly they have a business model.

[L_Rahman]

That this is the top comment on this post gives me a lot of faith in this community.

The general tone here can at times feel like an uncritical adoration of the valley ecosystem. I'm glad that some of us react differently.

[sgrove]

Rather than insight, the post you're replying to shows a lack of imagination.

Just off the top of my head, I ask myself how much revenue TechCrunch pulls in, and what it originally started as - and I can see a path for PH to become a 'real' (as in meaningful, sustainable revenue) company. Just because it isn't full of whizbang tech doesn't mean it can't make plenty of money and be valuable to other properties.

And that's just with 20 seconds of thought put into it. I'm sure there are many other angles as well.

[CPLX]

TechCrunch was WAY more popular that ProductHunt ever will be, was in a different and more frothy media landscape, had a very real and lucrative sub-business called the TC Disrupt conference (which I hear accounted for something like 75% of TechCrunch profits at the time) and still was acquired for only about $25-40MM, depending on who you ask.

Which makes this PH acquisition even more of a head scratcher.

[JohnnyConatus]

Care to share how? I don't have a dog in the fight but the onus is on you since you're saying there is path to significant monetization.

[subpixel]

Possibility and strategy are totally different animals. The fact is it is really hard to monetize a directory of things when you are not a party to the transaction.

The not-sexy model of charging businesses for exposure and leads works (see http://www.capterra.com/) but is probably not nearly rich enough to satisfy Product Hunt's VCs.

[csolorio]

Hmm...only number I could find is $2.4mm in revenue back in 2007

[steveplace]

>uncritical adoration

Really? Hacker News comments are uncritical adoration?

I'd weight the cynicism and perma-contrarianism a tad bit higher.

In fact, I believe the success of a startup is inversely proportional to the amount of hate it gets in HN comments.

Theranos excluded from the sample, of course.

[jkchu]

such...irony

[dang]

> The general tone here can at times feel like an uncritical adoration of the valley ecosystem

This is a classic perceptual bias. Everyone feels like HN is full of whatever they identify against, because those are the things we notice the most. Since you identify against "the valley ecosystem", HN seems full of uncritical adoration for it. It's a mirror of your own preferences.

There's also the enormous home-team advantage that anything "anti" has in the human brain, which gives rise to all the snark, cynicism, and rage-fests that take over online communities by default.

[L_Rahman]

This is fascinating. I want to turn as many of my biases as possible from unknowns to knowns, so I appreciate you pointing this out.

An exercise I've now decided to undertake is as follows:

Every time I see something that I feel is "uncritical adoration" I will challenge myself to look for evidence for the opposite of that in the same thread. I'll start with HN, but if this works I want to extend that elsewhere.

[dang]

Well, you made my evening by actually getting that particular point and finding it interesting. That is so rare! And it's such an interesting phenomenon.

I stumbled on this because the moderation job involves reading tons of comments I wouldn't otherwise see, and the various descriptions of HN they contain are quite incompatible. But they all fit the pattern described above.

[colbyh]

I'm glad it gives you faith, because for me it does the opposite. It makes me long for the days where people in this community took an open mind and could entertain the idea that they might not know everything about everything.

I think there are some very smart comments here about the toxicity of internet communities over time that, unfortunately, seem to be evidenced in this exact conversation.

[mrtron]

Having opposing viewpoints discuss topics gives me faith.

[rokhayakebe]

A comment that is on top does not mean every one shares the sentiment. I usually upvote comments I strongly disagree with and add my own thoughts with the attempt to rectify the line of thinking. The idea is if something is "very" wrong then all the more reason to upvote and enlighten others.

[Kiro]

I usually see nothing but negativity on here so I can't relate at all. The top comment was exactly what I expected when opening the thread.

[wh-uws]

As incredibly gifted, talented, intellectual, and intelligent as many of the fine people in the community are technically it boggles my mind how naive the average HNer seems to be about social intelligence.

This whole "meritocracy" thing is an incredibly effective marketing tool to get people from all over the world to move to an overpriced, dilapidating part of the world, with poop in the streets everywhere to sacrifice part of their lives to try to make something that matters.

If you fail at your own hopefully you impress some people who didn't enough you get to work with them.

If you don't you wash out.

The meritocracy its true but you have to either

1. have been born a mega genius

2. been raised in a wealthy well connected family

3. be a sociopath who manipulates everyone around you into doing your bidding

4. fake it til you make it and make the right friends along the way

5. Or struggle and toil until you figure out how to do one of the previous

This game is hard and lots of people don't win.

You can be jealous but don't say the system doesn't work when so many multi billion dollar companies have been created this way.

Survival of the fittest.

[st3v3r]

People who like to advocate "meritocracy" continually forget that actual people have to be the ones that decide what the "merit" is that is judged, and who has more merit than others.

[lowglow]

I previously built the community sites Techendo, MakerSpace, and the now defunct SchoolYard. I love building community. I also love tech, and I owe a lot to what this community has done for me. It's been there when I was alone, when I needed help, and when I wanted brilliant, likeminded individuals to collaborate with. I want to help make the tech scene better through creating a stronger community of people who want to inspire and help one another.

I want to create something with a real lifespan that pays forward everything everyone has ever done for me. I want to amplify all that is good and right with tech and the community that dug this loner outcast kid out of a very non tech- friendly area, helped him find something he could love, and gave him hope that he could build something beautiful.

If you want to help, check out what we're working on over at Baqqer[0]. Give me feedback about what you love/hate so we can build a strong community. I'm not interested in selling out, or colluding to drive any one particular message/theme/group. Tech can be better than this, and should strive to that end, and we should all support independent endeavors to make this as fun and fair for everyone.

[0] https://baqqer.com/

[avip]

> I guess it's probably not outright fraud

"Once you eliminate the impossible..."