Solomo scenery no longer: Start-up companies ushered in the winter

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The Wall Street Journal wrote today that the concept of Solomo had been hit, but private start-ups, which had not yet listed, were mired in development as most of the industry's most famous companies went public and collapsed in the capital markets. While market bubbles have given them ample capital and high valuations, their prospects have become blurred as the situation has plunged.

John Doerr, a famous venture capitalist, coined the term "Solomo" in 2010 to describe the three technological trends that doerr the Internet boom-social (Social), localized (local) and mobile.

But now, the world's biggest social networking site, Facebook, social-gaming giants Zynga and group buying giants Groupon, are on the market, and "Solomo" has cooled, and many of the private start-ups still hoping to get ahead have fallen into the cold of the industry.

Many of the companies that were scheduled to list after Facebook's IPO this May have withdrawn their plans. Other companies are deliberately distancing themselves from Zynga and Groupon to avoid the same dilemma. Others have seen a slowdown in user growth, hoping to regain their former style.

Some startups shut down outright. Color is a social picture-sharing application that, although it had won 41 million of dollars in venture capital before the product was officially released, was quickly dashed. After December 31, the company's application will be completely closed.

"The Solomo market has cooled. For some time, people no longer think that it is a big deal to start a company. But now, some people are starting to get back to their original ideas. "The venture capital company Battery Ventures partner Blaine Omarie (Brian O ' Malley) said.

Mobile

Viddy CEO Brettes Oblein (Brett O ' Brien) has been riding a roller coaster since March. The company, which is based in Venice, Calif., was set up last year to achieve steady user growth with a free iphone video editing and sharing application. Viddy at that time the user is about 10 people, the development is downwind.

Later this March, Viddy will use the Open Atlas platform with Facebook to get people to automatically share Viddy activities in the Facebook News feed stream, pushing up Viddy's exposure.

According to AppData, active users who use the app through Facebook have soared-from 60,000 in January to 890,000 in late March. By the end of May, the figure had even reached 31.1 million.

Meanwhile, Facebook's announcement in April of a $1 billion purchase of Instgram also prompted investors to look for "Tomorrow's Star" in the mobile arena. Despite a penny, Viddy is still flooded with a flood of investment offers. In May, Viddy announced 30 million dollars in financing. According to people familiar with the matter, the company's valuation reached 370 million U.S. dollars.

"All this has made the field a focus of attention, and I don't think anyone would have expected it," says 46-year-old O ' Brien. While this poses problems and challenges, it also creates opportunities. ”

The problem is that the influx of users has caused many of the first attempts at Viddy to be unusable or run too slow. Some users express their dissatisfaction by email and online postings.

"In order to deal with these problems, we have dispersed our energies. "said O ' Brien.

Viddy users from Facebook are starting to get less. AppData's data showed that by July this year, the number of active subscribers using Viddy on Facebook had fallen to 10.9 million, and November was down to 650,000.

"This round of hype helped Viddy, but it also hurt them. Omarie, a Viddy director, said. The start-up company has enough money to spend several years now, and they've perfected the back-office technology, with current registered users reaching 40 million, about 10 times times the start of the year. "But this round of speculation or change the pattern, Viddy also lost some attention to some things." "he said.

For Oblene, the primary task now is to improve the basic function of the application. Viddy is recruiting new staff, currently on a scale of 30 people. The company unveiled an app for Google's Android operating system this month and plans to upgrade apps next year.

O ' Brien says he will not be "distracted" by the ups and downs of the industry, and Viddy has "learned a lot".

"This round of industry hype just gone." "Fortunately, we have not been affected by the noise for the last 6 months," he said. ”

Localization

For LivingSocial, 2012 is a shrinking year.

The rise of the group buying spree attracted many consumers to buy coupons for local businesses online, making the Washington, D.C. group buying site last year a hot hit with rival Groupon.

Founded in 2007 by CEO Tim Oshonis (Tim O ' Shaughnessy), LivingSocial, who financed about $580 million last year, gained 5 billion to 6 billion U.S. dollars in December 2011 's latest round of $176 million in financing. LivingSocial uses the money to consolidate and expand its brand, including TV commercials.

LivingSocial also began contacting investment banks in the summer of 2011, hoping to raise about 1 billion dollars through IPOs, people familiar with the matter said. One said the company was "ready to go public". After Groupon's November 2011 IPO, everything changed. Because of the sustainability of the group buying model has been questioned, leading to the stock market after the lower.

LivingSocial has now shelved its listing plan and its valuations are slipping. Amazon, which holds a 29% stake in LivingSocial, said in its regulatory filing that the book value of the site had shrunk from nearly 1 billion dollars in June to $324 million in September. Meanwhile, Groupon's share price has fallen nearly 80% since the IPO.

"When our only comparison was with Groupon, the fall in Groupon's valuations was bound to depress livingsocial valuations," he said. "LivingSocial investor, Venture capital company partner Jeremy Liu (Jeremy Liew) said.

LivingSocial no longer put on TV commercials. In October this year, the company lost 565 million dollars in its third-quarter business, and the entire 2011-year operating loss was only 400 million dollars. The most recent losses have been due to a partial takeover of writedowns.

LivingSocial last month announced layoffs of 400 people, representing about 9% of its 4500-person team. The company will also relocate most customer service operations from Headquarters to Arizona, State Tucson City to compress office space.

"Recent adjustments allow us to control our financial fortunes in 2013," he said. LivingSocial spokesman Andrew Wehnstein Andrew Weinstein said. He said Oshonis could not comment. Amazon spokeswoman declined to comment.

LivingSocial is trying to highlight its own features, highlighting the differences with Groupon. For example, the company has introduced food ordering services, as well as cooking classes with the participation of singer Biz Markie. The company said it favoured such unique activities because it could provide added value rather than relying entirely on discounts to win over consumers.

LivingSocial investors are still satisfied with the company's current development. In a memo issued to employees in October this year, Oshonis said the company's September cash flow was the first to be regularized.

"There are two possible scenarios: either the open market gives Groupon a higher valuation, or we continue with the ' Groupon ' strategy." It will take years to complete, but it doesn't matter. "Jeremy Liu said.

Social

Kevin Zhou (Kevin Chou) wants the world to understand that his social-gaming start-up Kabam is not the same thing as Zynga.

"We can prove to the market that we are very different from Zygna. The 32-Year-old CEO said.

Kabam, based in San Francisco, was founded in 2006. When Zynga's growth spurred investors into social gaming, they gained a lot of interest. As the industry boomed, Kabam a $125 million trillion investment in the latest round of financing in May 2011, valued at $525 million trillion.

Now Zynga is losing money and investors are moving away from social-gaming companies. Tim Chang, a venture capital firm Mayfield Fund Partner, says he is no longer investing in game developers, one of the big reasons is that the growth cycle of new platforms such as Facebook and the iphone has passed.

"Investors are now skeptical. "This has created more barriers for companies to explain their differences with Zynga in the IPO Lu Yanzhong," says Tim. ”

Kevin Zhou hopes to make an IPO in two years, saying the 580-person company is significantly different from Zynga because the Kabam development game is more complex, including the strategic Game Arthur Kingdom (Kingdoms of Camelot), while Zynga is the main CityVille "and other casual games.

Unlike Zynga, which lacks mobile gaming and relies too much on Facebook, Kabam currently earns only 30% of its revenue from Facebook, and the remainder comes from other cooperative websites and mobile devices such as the iphone. Kabam's revenue comes from sales of virtual goods, including virtual weaponry and other virtual devices that improve gaming experience.

Kabam is still growing fast and is expected to earn $160 million trillion this year, up 60% from 2011. Zynga's revenues have dropped 11% in the last quarter.

However, as a result of the acquisition of other gaming studios, Kabam's funding has not increased. Their total financing to date is $125 million trillion, but there are only 45 million dollars left.

Kevin Zhou says this is Kabam's overall growth plan. "We have attracted more attention from investment banks over the past 6 months. "he said. He added that the company will develop 15 new games in 2013 and will launch some new businesses, but he won't disclose details.

Reprinted from The Wall Street Journal