Creating value in Silicon Valley? Here’s an inside look at small startups and what happens to them over time.
On occasion, we spotlight an up and coming Internet business. This one we’re mentioning today is in the online gaming area. Silicon Valley is a highly incestuous place (think about 6 degrees of separation). It doesn’t take long before someone you know either socially or professionally will eventually percolate into the consciousness of high-techdom and when that happens, it is always quite exciting.
On Silicon Valley Startup: Kongregate
This time around, a former colleague from a past life who has been blogging, has launched a startup called Kongregate. So WooHoo! for Jim Greer, his company has been featured on Techcrunch. How cool is that?
Game designers may be interested in using Kongregate.com. It will allow game creators to upload their games onto the Kongregate site which will afford the creators a split of the revenue earned through advertising and premium play. Apparently Jim Greer envisions his new company to be the YouTube for games. It will be a place to share games and a new playground for users out looking for another hangout (as if Second Life isn’t enough).
The business model appears sound and VC funding may be around the corner. Indeed, how cool is that? Coming from a gaming family, we look forward to playing in this new venue. This ought to be good.
Best of luck to your new company Jim!
The question here of course, is: what can the future hold for such a company? It gets funded, grows bigger, catches the eye of a larger company, and perhaps gets bought. Or if they get big enough, they go public. Either way, the founders and employees make out like banshees. In many occasions though, I’ve also seen companies settle into a nice groove by becoming reasonably profitable on their own. They earn enough revenue to keep themselves afloat and then some. All of these can be considered very successful business scenarios. So is this how a billion dollars gets generated?
So let’s talk about acquisitions for a moment. Here’s a typical example of a business sale:
Google Buys JotSpot For Mystery Amount
So Google has bought the Excite.com guy’s company (remember them?), JotSpot (Google now), which creates collaboration (wiki) software for documentation, project management and internet/extranet development.
With regards to the acquisition, when companies are purchased, it’s a lot to do with “buying” the services of the people at the helm. Google wants Joe Kraus on their team; the guy has a price so they reach a deal. Many times, the technology is secondary; in this case, who knows — but if you’re a guy with a reputation for heading erstwhile successful or highly visible ventures, there will be demand for you. Strong demand. So it’s all a matter of determining how many million (or billion) will be thrown your way before you acquiesce and join the team. Not that it would take much convincing.
A lot of people here in the San Francisco Bay Area got wealthy (and continue to) by building venture backed companies from the ground up and selling them off. Sure, it’s one way to get rich, but it’s a crap shoot. In fact, getting acquired or going public is much like winning the lottery. For most of us, our way to wealth will be slow but sure (hopefully).
So this is just a little taste of what goes on in Silicon Valley. You just gotta love how high tech business works.
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Good luck to Kongregate on its start up!
That sounds like a good plan! The game designers get the publicity and exposure that they seek – as well as a bit of cash – while the Kongregate owners get a slice of the advertising revenue. I’m just a little bit worried about the bandwith cost, but the ad revenue should take care of that.
Good luck, Jim – always get to see another interesting and original start-up on the Net. I hope to have a chance to blog about your success one day!
Re the Google and Jotspot arrangement — to be honest, I was very surprised when I first read about the acquisition. Initially, it made no sense at all – however, as Peat pointed out at his blog (peat.wordpress.com/), by acquiring JotSpot, Google bought the last element they need to eventually roll out a business suite.