The Dow closed today above 12,000 for the first time since June 2008.
I believe that we will look back at this decade as the beginning of an economic revolution as important as the scientific revolution in the 16th century and the industrial revolution in the 18th century. We’re standing at the beginning of the entrepreneurial revolution.
You see, it’s only in the last few years that we’ve come to appreciate that past start-ups were constrained by:
- long technology development cycles
- closed clubs of venture capital
- geographical constraints (success clustered in regions such as Silicon Valley, New York and Boston)
- high advertising costs
- excessive failure rates (less expertise on how to build start-ups)
- slow adoption of new technology by large companies
But search and social have changed all that…
When in the U.S.’s history has the President actually addressed America saying that we are a “nation of Facebook and Google?”
Google just announced that it will be hiring over 6000 new positions this year. Apple is now the second largest market cap company in the U.S. after Exxon/Mobile with a valuation over $300 billion. LinkedIn just filed for its upcoming IPO and the Global IPO market is on track for its biggest January in years, if not ever! By the end of January 88 companies are expected to go public worldwide.
When I last wrote about Facebook, its valuation had just hit $40 billion. In a few short weeks they have announced successfully securing another $1.5 billion in funding (a record breaker for pre-IPO) putting their valuation north of $50 billion and subsequently, Facebook now plans to file its IPO paperwork by April 2012. And by the way, $1 billion of the funds raised comes from Goldman Sachs’ wealthy individual clients – an insider’s only deal (as an angel investor, you can eventually work your way into those types of circles or at least set your sights there…). Facebook also surpassed Google as the most visited site in 2010 and should be able to hold that position from here on out.
But in even bigger news: “Pardon me, but you wouldn’t happen to have any Group-pon?” Groupon recently raised $950 million in a series E round, giving it a valuation of $15 billion. Its founders seem to be living by the creed of striking while the iron is hot – off the heels of the $6 billion Google offer. This is incredible for such a young company. Groupon’s sprint to the public markets matches the speed of its own evolution. In less than three years, the daily discount site has gone from a start-up to one of the Web’s fastest-growing companies, with more than 50 million users worldwide and annual revenue of more than $1 billion. Its staff, now 3,100, has expanded so quickly that the company, which is based in Chicago, had to relocate its meetings to a nearby church.
More than $573 million of Groupon’s take was used for liquidity, which means that only $377 million was new equity. I bet you all wished you were angels in that deal! Many of the Groupon shareholders were upset that Google’s $6 billion buyout was turned down, but this $573 million that got paid out to existing shareholders softened the blow. The new $15 billion valuation helped too…
Living Social, a Groupon competitor, received $175 million investment from Amazon and two weeks ago launched a one day deal for Amazon gift certificates. For 24 hours, it sold $20 Amazon gift cards for half that price, and customers eagerly chomped at the deal. In the end, 1,378,938 million cards — the equivalent of 7,600 an hour or 80 per second — were sold in the U.S., and the resulting frenzy made headlines as the biggest Living Social sale to date and what the company argues was possibly the biggest flash sale ever.
All this frenzy points to the new golden era that is now upon us: crowd-leveraged-networks, a.k.a. social media. When you can organize millions of users under one connected umbrella you have the power to instantly drive revenue based on what the crowd dictates, validates and demands. In essence, the Living Social deal turned crowd-leveraged-buying away from just local restaurants and business coupons to any type of deal that has mass appeal. Books, electronics, media like movies and music, household items and even automotives could all start to make their way into this social buying space. The crowd doesn’t even need to commit until enough participants have agreed to the deal. If enough commit, then the sellers can find a way to make the margins work for them – the social Wal-Mart.
I am an executive and the founder of a 
Download David Gosse's vCard
Follow David Gosse On Twitter