Secret raises $8.6 million Series A

Secret raises $8.6 million Series A(recode.net)

47 points by patrickod 12 years ago | 44 comments

goatforce5 12 years ago |

It's a beautifully designed app with tons of attention of detail to tiny little things.

How the hell you monetize it to turn $8.6m in to an even bigger pile of cash is beyond me though.

I guess that's why i'm not an entrepreneur.

enjo 12 years ago | |

It used to be that investors said "I want a part of the next Compaq". Then it was "the next Google".

What this shows is that investors now want to be a part of the next Instagram or WhatsApp. They are literally throwing away the notion of profitability or monetization. Now the model is to get as popular as possible as quickly as possible. If you win that lottery Facebook or Google will sink BILLIONS of dollars into you.

My bet is these investors are looking at an app that has existed for less than two months and think they are getting in early on the next one of those. I'd love to know what the valuation was (north of $17M at least).

thisisrobv 12 years ago | | |

"They are literally throwing away the notion of profitability or monetization."

To be fair Google had no idea how they were going to monetize search for a significant amount of time.

I'd say the pivot is from usefulness / utility to entertainment / novelty.

qq66 12 years ago | | |

You realize that WhatsApp has hundreds of millions of dollars of revenue?

melvinmt 12 years ago | | |

The valuation is $50M.

pbreit 12 years ago | |

"I guess that's why i'm not an entrepreneur."

Yep. Attention is the most valuable commodity these days and Secret has certainly managed to obtain it. Ad-based monetization would be pretty easy...if they even want to try monetizing before getting much bigger.

anon808 12 years ago | | |

Attention?, I think you mean 'eyeballs'.

bagels 12 years ago | |

You monetize it by doing another cash out round, or getting acquired 1-3 years from now.

mrbogle 12 years ago | |

I'm with you. I read this article hoping for an explanation of what they might do with the money. I suppose it might be a case of 'raise more than you need' because they are hot right now.

I'm a fan of secret, but where is it going? What is the bigger play? Surely there must be one for > $8 million.

fsk 12 years ago |

The formula is:

1. Create a new app that's a slight variation of something popular that already exists.

2. Hype it like crazy.

3. Find someone clueless to buy, either a large corporation or have an IPO.

4. Repeat with the next idea.

It's basically the same model for hyping celebrities. Is Lady Gaga popular because she's a great singer, or because the media hypes her all the time? Similarly, is Secret popular because it's good, or because it's being promoted all the time?

grinich 12 years ago | |

Lady Gaga (aka Stefani Germanotta) is actually an incredible musician. She studied at the prestigious NYU Tisch School of the Arts, and was one of the few students given early admission at the age of 17.

It's an ignorant jab to discredit anything popular as being without merit. Loads of people said Facebook was a just silly toy for college kids.

https://www.youtube.com/watch?v=NM51qOpwcIM

fsk 12 years ago | | |

Credentials and Education != talent and ability

I'm judging Lady Gaga based on brief fragments of recent songs I heard. Of course she may be pulling a "Jay Leno", using talent to produce the mediocre garbage that the mainstream media likes to promote.

Also, I DON'T use Facebook and Twitter. I never saw the point. Also, you're an IDIOT to build a web presence on Facebook, because then Facebook controls your ability to interact with your audience. Better to have your own site where your audience follows you directly and you control it 100%.

jamiequint 12 years ago | |

re: Lady Gaga, hype had something to do with it but she is also a phenomenal musician. Here's a video from before she was famous: https://www.youtube.com/watch?v=NM51qOpwcIM

msoad 12 years ago | |

Let me know when you learned how to "Hype it like crazy".

Thanks

elwell 12 years ago | |

No, this is why Lady Gaga is popular: http://www.nydailynews.com/entertainment/music-arts/lady-gag...

ulfw 12 years ago |

Hype = Money seems to be the take-away lesson to be learned.

grinich 12 years ago | |

Has that ever not been true?

ulfw 12 years ago | | |

Sadly yes. I just wonder how far to spin it. So rather than hiring good product people, designers and engineers - just build a company out of PR people and hype the shit out of something totally average?

abat 12 years ago | |

Growth = Money, hype is one way to get growth

onedev 12 years ago |

Anyone who's used the app can back me up when I say this:

It is one of the most beautifully designed apps I've ever seen. Every interaction adds to the functionality. The balance of beautiful and functional is amazing. Sure, many of the interactions may have been done before in other apps, but it's the whole package that blows me away.

The whole "LOL THEY AINT GON MAKE THE $$$$" is a tired argument. The more interesting conversation to be had centers around the design.

aaronapple 12 years ago | |

Don't particularly understand why that's a tired argument - I think that's a wise piece of the puzzle for any investor to consider. It's so interesting to hear investors criticize a savvy pitch like crazy then hand over a bucket of money to something like Secret.

anon808 12 years ago | |

It's not an argument, it's a prediction. I welcome them to prove it wrong.

Unfortunately when you take money from someone else, the conversation changes to how much money you're going to make from that initial money.

ryanmerket 12 years ago | | |

Secret is basically a news feed. I'm pretty sure news feeds have proven to be heavily monetizable.

pazimzadeh 12 years ago | |

Eh, the close button is hard to reach at the top and the gesture that is "back" in other apps is "like."

sirkneeland 12 years ago | |

I can't wait to use it as soon as they make an Android version. They certainly have the budget to now...

cemregr 12 years ago |

It's hard to make anything that people want to open and use every day, that's why I commend the folks behind secret.

zbruhnke 12 years ago |

Their Monetization strategy? Thats simple ... Blackmail

I kid, I kid, but oh the things they could do lol

jkestner 12 years ago | |

They only had to blackmail a couple of investors.

dan301 12 years ago | |

Their monetization strategy is a secret!

angrydev 12 years ago |

Here's the company's blog post on how the service works:

https://medium.com/secret-den/12ab82fda29f

singularityyy 12 years ago |

I wonder where the future of 'social' is going. If history is any guide, Facebook will soon be out of the 'cool' factor and younger, nimbler startups with take over. It's not clear to me though what kind of experience these will provide, i.e., what features will attract the next generation and form that critical mass. I do like the social app ecosystem to be fragmented though, it makes for good options and interesting new ideas to be tested.

jonathanjaeger 12 years ago | |

I think Facebook is already out of the 'cool' factor and has been for a long-time. It has become, as Zuckerberg also likes to point out, a utility. Cool things and fads die out (a la MySpace).

richard_cubano 12 years ago |

Bubble Alert.

jmathai 12 years ago |

I think investments like these which appear to be the most illogical are the most interesting for venture capital. The more people who thinks that investment seems solid the less likely it is to unearth something entirely new (perhaps a whole market).

I agree that hype is a large part of this investment. But remember that hype is about 1000x as difficult to create than a product.

wensing 12 years ago | |

Hype is harder to create than a product? For what set of products?

unclebucknasty 12 years ago |

Secret may be hugely profitable someday.

Still, as for today, I wonder how we'll know when we've jumped the shark?

jtfrench 12 years ago |

Another win for #firstWorldProblem apps. Hell, you could argue that Secret doesn't even solve any problems, and probably creates more.

But damn, that stylish hipster UI and all these cool Silicon Valley cats talking about how they hate Dave Morin....who doesn't want to ride that gravy train?

jgalt212 12 years ago |

If you can somehow validate these posted secrets as True of False, then it's worth every penny.