I have wanted to write this one ooooooh soooooo many times. Today is that day.
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Pretend you’re a sports fan. Don’t worry, this has nothing to do with sports and it’s not a veiled pitch to use my new sports AI app.
Your team just picked what’s-his-name in the draft. Or, if your team plays in the W-league, what’s-her-name. Immediately, you, along with millions of other fans, groan. “Oh, no. Not ____. What was our GM thinking?”
If you’re a sports fan, you see this after almost every draft, trade, or signing. Even if it’s not your team, in the wake of a bonehead move, you know in your bones that the person paid mucho dineros and armed with analytics up the wazoo made a stupid, stupid deal.
That’s the moment you text your friend, “Did you see we drafted _____? WTF!?!?” And, then, as you press send, this enters your mind, “I could soooooo do such a better job than this dullard.”
Here are a few reminders of real sports deals to get you groaning. If you’re not a sports fan, → skip ahead.
Russell Wilson is coming off down years in Seattle. The Broncos decide he’s due to rebound. So, they give up their QB of the future, Drew Lock, other players, two firsts, two seconds, and another pick. Show of hands, who, at the time, thought this was a good move? Nobody. Except the GM. Groan.
That was dumb. Really dumb deals get GMs fired. In 2019, Bill O’Brien, with superstar wide receiver, DeAndre Hopkins coached the Houston Texas to playoffs. That got O’Brien promoted to GM. He traded Hopkins to Arizona for a running back and a second-round pick. If you’re not a dye-hard football fan, compare that to the deal above. In short, abysmally awful. Hopkins starred for Arizona, Texas started the 2020 season 0-4, and O’Brien was looking for work. From the first instant, everyone knew this deal was a dud.
→ skip to here.
What does this have to do with business? Quite a bit, actually.
We assume that people in corporate development roles know everything.
They went to Hahvahd. They’re wicked smaht. They have teams of analysts assessing boats full of tea leaves in Bahston Hahbah to predict the futah.
They are the people who prepare the memos, that justify the transactions, that start the due dilly, that put legal docs in motion, that get deals done. The kinds of deals you read about in the paper. The ones that start, “Company X bought Company Y.” The corp dev team wrote the gushing quote for the CEO that went into the press release and the one the talking heads on business shows bandy about that goes something like, “We are thrilled that Company Y was still available to be acquired. It always returns 110%. We were certain it would be snapped up by one of our competitors by now. We believe that its technology and customer base will synergize our hypercube in new and terrifically awesome ways.”
And, all too often, you’re scratching your head and groaning.
I had one of those moments a few minutes ago.
Axel Springer, a publishing company with lots of corp devs, just invested in what I’m going to call YARN. That’s my shorthand for Yet Another Read News app. Why? WHY????
The brilliant and wildly successful venture firm, a16z flushed their money backing a YARN called Post founded by a guy who co-founded Waze. It went from zero and zero without ever leaving the drydock of a beta version. Groan-worthy from the get-go.
The two guys who started Instagram poured a tiny amount of their money down the drain building Artif*cked (sp?). Their YARN got more stories on Tech Crunch than users. I railed about the uselessness of this app many, many times and complained about why media would spend so much time covering a derivative business with no obvious benefit. Soooooo groany, it’s actually cringy.
What — exactly — does Axel Springer think Particle will do that the aforementioned failures won’t do? They must think it’s something. They put up some of the $10.9M that Particle raised in Series A.
Maybe it’s that Spare Parts — as I think I’m going to call it — is going to use AI to find stories. Which, incidentally, is exactly what Artifact did. Groan.
Maybe it’s the brilliance of the business model that attracted Axel Springer and, get this, Reuters, to join the party. Nope. Spare Parts literally, “hasn’t settled on one yet.” Groan.
Maybe it’s for the many, many users that Spare Parts has amassed? Nu-uh. It has no users. It’s on Test Flight working out the bugs. Groan-ee-groan-groan.
Somewhere in an executive office overlooking the best the Berlin skyline has to offer, a senior executive at Axel Springer signed off on taking some of the money they got licensing old content to OpenAI and rolled it into this steaming turd of a future dumpster fire.
Congratulations team Springer, your team just picked Spare Parts in the draft. Your fans are frantically texting each other, “Oh, no. What was our GM thinking?”
And, in this case, you’re probably also thinking this, “Sure, unCharles. But this is a small deal — in relative terms. Nobody doing big deals would be this, um, indulgent. Is that the right word? Yeah, indulgent.”
And, seconds later along comes some French company (checks notes) called Voodoo Games and they write a giant-ass novelty cheque for €500M to buy (checks notes) BeReal.
BeReal took off during COVID amidst the we don’t want to be social on social media backlash as kombucha-sipping youngens rebelled against — honestly, I have no idea anymore. Wall Street? Madison Avenue? Tiananmen Square? The Louvre? Take your picks. In just a few weeks, the number of users on the once-a-day life sharing app shot up from nothing to sixty million. Since then, it’s “plateaued.” Which apparently is a fancy French word for, “declined.” Today, BeReal has: (i) 40 million users — twenty-five million of whom show up and fifteen million to windowdress metrics; and (ii) not enough cash to finish the year.
Now, you’d think, “Hey, let’s put up a fence around this tar pit so a bunch of prehistoric alpha predators don’t accidentally walk in, get stuck, and die.” Clearly, it’s too late for that.
Talking to Business Insider, Voodoo CEO, Alexandre Yazdi said, “500 million euro valuation is a good price because we believe we can grow really into a major iconic social network.” Box checked. Arm felt good. Felt he could help the club. Then he added these points, “Within the next two years, Yazdi expects BeReal to be around 100 million daily active users.” He has no plan for that 4x growth. But, “Today, we are going to focus on the short-term, so on advertising.” Yep. I feel confident that this is not going to turn out terribly. Groan.
Would you have done these deals? If you answered, “No,” then, yes, you are smart than many, many corp devs.