DAG Ventures leads $15m more for Podshow

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1. Erik Blakkestad
   

   September 29th, 2006 at 11:59 am

   Hopefully DAG will understand when the lion’s share of their 15 mil is spent on lawyers battling Apple to retain the “Pod” in the name “Podshow”.

   This “pod” and “podcast” copyright nonsense by Apple is going to get real ugly very soon.

2. Andrew
   

   September 29th, 2006 at 12:13 pm

   Good Job Mr. Curry…

3. Erik
   

   September 29th, 2006 at 12:14 pm

   When I look at PodShow I wonder what they spent the first $8.75 million on.

   I’ll bet they’ve got really sweet offices.

4. overcast
   

   September 29th, 2006 at 12:16 pm

   @Erik - Herman Miller Aeron’s for the secretaries, duh.

5. Allen
   

   September 29th, 2006 at 12:30 pm

   Aeron’s for the homeless outside the office!

6. Frederic
   

   September 29th, 2006 at 12:31 pm

   @Erik - let’s not forget the Curry Condo, a regular supply of ‘holy herb’ for Mr. Curry and Virgin Upper Class flights.

   That aside, though, what are they going to do with $15 million? According to what Curry said a while back, they were hiring new people and didn’t have to worry about it because their revenue allowed them to do so. I am somewhat intrigued by their push into the home and mobile market, though. Isn’t podcasting mobile anyway? And can’t it be played by every mp3 capable mobile device by default as well? And can’t I listen to their content at home already?

7. mesattack
   

   September 29th, 2006 at 1:34 pm

   Honestly, I’ve been involved in five startups now - three of which were my own deal - and I can’t imagine why they need $23 million bucks. Right now we are building Repliqa on a $300K initial round + two million committed from local investors. Repliqa is incredibly complex and I couldn’t spend $23 million on it if I tried. VCs amaze me…

8. Drama 2.0
   

   September 29th, 2006 at 2:21 pm

   It looks like they’re on the right track with some of their deals, but $23+ million in funding seems unjustifiable. This doesn’t look like a business that requires that much capital and their current valuation must be insane. They may have “plans” to become a media company, but 1,000 shows that most Internet users have never heard of is not anything to write home about. At the end of the day, they look more like a platform provider than a media company. There’s nothing incredibly special about their technology (that I can see) and it would not be difficult to duplicate. Podcasting platforms are basically commodities and the barrier to entry is very low in this market (other funded startups like Odeo are trying to do similar things).

   You would hope that with the advertisers and partners they’ve signed up, they’d have decent revenues that could at least partially fund their plans. Unless, of course, they’ve discounted these deals so significantly just to get big names involved in an effort to lure in investors and a possible acquirer. It makes a lot of sense to bend over backwards to get a big deal or two in the beginning, but if they aren’t generating significant revenues after getting 35-40 global brands to advertise and deals with Sirius Satellite Radio, AOL and BT, then there’s a problem here. Seems that might be the case if they’ve gone through $8.85 million and are now taking another $15. After all, if you discount your value to too many companies, the perceived value of your service in the industry drops and you’re left with no other companies to get major deals with. And with growing competition, expect pricing pressures that could cut into margins considerably.

   “I have a hard time believing that the fund would invest in Podshow, and that Podshow would take the money, without some good information regarding the company’s plan to become a substantial media player.”

   This is a little naive Marshall:

   - Every startup a VC funds has big plans. Traditional VCs don’t fund things that they don’t believe have huge market opportunities. But plans are just that: plans. Most startups that project hundreds of millions or billions of dollars in revenue never achieve this. PodShow may see itself as the next generation media company, but so does everybody else in the space. In Bubble 1.0, VCs bet billions on companies that didn’t go anywhere. So inferring that they must be onto something because some VC is willing to throw money at them is not a predictor of success. In fact, some analysis shows that the startups receiving the most funding are the most likely to flop. Overcapitalization often leads to organizational bloat, overspending/lack of cost controls, etc.

   - Valuations are based primarily on where a business is at the current time, not on speculation on where it could be in a few years. Obviously, we don’t know a lot about PodShow’s business (revenue numbers are unknown), but unless the VCs control most of the company, the valuation here looks out of whack. Valuation is everything to a business. VCs are looking for a certain return, and if you (as a founder) take on too much money, you may destroy your exit strategy. Taking massive funding and pushing your valuation too high can mean the difference between cashing out early for $50 million (making the founders very happy) or getting stuck in a situation where your exit opportunity is at a lower valuation than your investors bought into. If they control the company (in terms of voting power, or buy-sell agreements), you may not be able to sell, even though it would make you very happy.

   As an example of this, I think a lot of Facebook’s woes lately are driven by the fact that they pushed their valuation so high that they now need to make moves to justify it. Hopefully for their sake, Yahoo will be dumb enough to buy them, but look at it this way: Facebook reportedly took on ~$25 million at at $500 million valuation instead of accepting Viacom’s $750 million offer. It’s rumored that Mark Zuckerberg owned 50% before that round was raised and he now reportedly owns around 30%. If these numbers are accurate and Yahoo buys them for $900 million, his decision cost him $75 million, and clearly his initial investors would have been a lot better off taking the Viacom offer too.

   So my take on PodShow is that there could be something here, but a lot of questions remain. Why is this much money required? Where is it going? Where did the first $8.85 million go? How big is the “podcasting market” really going to be? Are companies like this really needed? What is their competitive advantage?

9. lemon obrien
   

   September 29th, 2006 at 3:39 pm

   VCs love any company with the word “pod” in it; it encapsulates their whole idea of humanity…and ties in with media/apple/cool factor.

   yeah…podNAAAtion…

   btw, why didn’t they just buy the teenage girl’s podcast site…way better.

10. Klaus
    

    September 29th, 2006 at 5:19 pm

    Podshow is a weak player, the site is quite lame and nonfunctional.

    Adam Curry is a good marketing tool but that is not enough.

    It also seems that Podshow using shady business practices and ripping off 1a podcasters.

    Main problem with Curry’s “adcast” is that he is mixing advertising and content - that is against any rule and even illegal in some countries.

11. will
    

    September 29th, 2006 at 6:10 pm

    Is DAG’s strategy to invest in all of KP’s companies in the later stages? (sometime regardless of quality? )

12. Christian Burns
    

    September 30th, 2006 at 12:18 am

    The other day Adam said that around 30 podcasters for podshow are in the “quite your dayjob” catagory.

    So my question is, how many more peope will be in that catagory after this 15m is spent? It had better be more than 60.

13. matthew
    

    September 30th, 2006 at 9:56 am

    Now might be the right to ask Adam (for the second time) if he has any interest in my domain, podcastadvertising.com.

    Drama, that was an interesting post. I would say, however, that podcasting has created a ton of buzz, and in relative terms raising 23 million in a 24-month period pales next to that raised by other Internet-related properties.

    Having said that, Podshow must have set most of that aside in a huge war chest. That or they’re spending it carelessly, because podshow.com doesn’t have that million-dollar-site look.

14. f*company
    

    October 1st, 2006 at 4:58 pm

    Don’t VC’s do their due diligence any more? All you have to do is read fuckedcompang.com (if it still exists) to know what a crook Bloom is. It is just incredible that no one from the VCs called anyone at the company that bought Bloom’s last company (for there is no way they would have invested based on feedback from anyone at that company, left to clean up the Think New Ideas books).

15. PJ
    

    October 1st, 2006 at 6:38 pm

    Drive up the price of podcast keywords! Haha.