The Sunday Brew #11
In this week's brew, on the spotlight are the buzzfeed IPO fail and a thought on cost of creating future
Your weekly brew made up of top stories, key events and some great insights; slow roated & served hot!
In this week’s brew:
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What happened to BuzzFeed?
With advent of social media, the way we consume content changed fundamentaly. To provide news in the format that online readers were preferring a slew of digital news media platform started appearing. In that space, Buzzfeed was one of the pioneer, which set the tone of how news articles would be written in the future on internet. The company rose in value rapidly and in 2014 August raised $50 Mil from Andreessen Horowitz at almost a unicorn valuation. It raised it Series G, the last private round, in 2016 of $200 million which valued them at $1.7B. The talks of an IPO was already rife. In 2020, buzzfeed acquired HuffPost and moved towards a SPAC process towards their IPO.
In the end of 2021, as BZFD debuted on NASDAQ with SPAC merger, it just went downhill from there, losing about 85% in value over next 6 months. Today BuzzFeed is trading at $0.82 with a market cap of $114 million down from the peak of $1.7B in 2016.
What happened? While the interent loves to use popular addage #GoWokeGoBroke for the fate that hit BuzzFeed. The truth is, this kind of value loss after IPO is not something unique to BuzzFeed. It is similar across all new age tech IPOs. While each IPO also has its own different reasons, the common factor for all of them is the difference in investment sensibility & thesis of the public market investor and the private tech investors.
A very small segment of retail investor see the value which these new age tech companies create and remain vary of investing in those. Thus, new participation remains much lower and at the same time large number of early investors see IPO as an exit opportunity and sell large quantities. There is a correction waiting on both side, the way private investors value these companies and the way public market investor understand function of new age companies.
The Marginal Cost of Creating Future
The most important driver of human growth story have been ability to harness, store and use energy. As we lowered the cost of energy, the production & consumption sky rocketed and new technology evolved. The human life changed fundamentaly in 20th century.
In last 3-4 decaded, same can be said about computational technology and internet. It has transformed the lives of people in 21st century, and the countries which could commercialize them have grown their economy rapidly.
In the current world, Cost of Energy & Cost of Compute have become two major factor which decide the pace of growth. Both, over long term have declined rapidly. Here, in his tweet,
suggests that the marginal cost for both will go down to zero over next decade, which opens great opportunity of providing AI based smart solutions at much larger scale for public utility and services.Invitation to Contribute to The Percolator
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