Have you noticed all the startups raising massive sums of money recently? Perhaps you’ve scratched your head wondering how a company like Buzzfeed, known for its website full of animated gifs, listicles and quizzes, just raised $50 million dollars, valuing the company at a reported $850 million. Snapchat, the messaging app known for helping teenagers sext one another, reportedly received a $10 billion valuation from its investors. Has the world gone mad?
Some industry watchers see the recent boom in seemingly trivial apps and websites as foretelling tech bubble 2.0. However, there’s much more to the story.
Our knee-jerk reaction to classify innovation as either important or frivolous is exactly why many are left aghast when previously dismissed companies reveal shocking valuations in ridiculous investment rounds.
Vitamins and Painkillers
Most people, including many professional investors, tend to put new products into one of two categories: vitamins or painkillers.