Why Do Investors Keep Funding Insolvent Start-ups?

After taking a look at a post on The Verge about Snap Inc's latest round of losses for Q1 2017, it got me thinking about just how similar the investment environment is compared to the dot-com burst in the early 2000s. The resemblance is something to be concerned about.

For those who didn't or don't wish to read the source article, Snap Inc, owner of the popular social media app Snapchat, essentially doubled its losses for the first quarter of the year. During Q1 2016, they burned through $104 million in cash. This year, they burned through $208 million.

Snapchat had a $3 billion IPO last year, and their expenses continue to grow in spite of having great growth in revenue. Remember: Their expenses doubled in a year's time. Anyone with common sense knows that this isn't sustainable and the firm will never be able to turn a profit. Snapchat doesn't even know when they will, if ever, be able to turn a profit. They also are having trouble reaching their own audience for the purposes of advertising or otherwise revenue-generation in general.

Snapchat's pitch to investors: We have lost money, expect to lose more, and may never achieve profitability

🤔https://t.co/HouOJvIFwh

— Ben Popper (@benpopper) February 2, 2017

I use Snapchat as a great example of the general trend, but they're not the only ones. Silicon Valley is known for the number of start-up businesses that it has, and equally for the absurd amount of venture capital that flows into the region. For me, all of this looks like another repeat of the dot-com burst in the early 00s. Too much speculation in any industry creates a bubble that's bound to burst eventually. It's happened with internet firms, it's happened with the housing market, and it's happened with the stock market. Based on recent trends, I believe that the stock market and real estate are going to crash again as well.

The default solution for these firms seems to be putting all bets on advertising as the way to generate revenue like it's the 2nd coming of Jesus or something, but smarter people should know better. Snapchat's userbase is composed mostly of teenagers, and of course, millennials. Young people, in general, have upset the ad market due to the ushering in of aggressive advertisement and content blocking software, such as the uber-popular uBlock Origin browser extension. This, combined with the massive amount of supply for advertisements in general, has substantially lowered the value of them. Millennials and teenagers despise advertisements, and placing too many into an app is a good way to make them consider other options. Good luck with getting them to pay for social media; I know I wouldn't pay.

What about native advertising, though? While there has been an increase in the use of "native" advertising, especially on YouTube, it requires more effort and is more difficult to perform effectively compared to standard, run-of-the-mill banner ads. Native ads also have the same opportunity of putting off an audience as standard ads but at an increased cost.

At the end of the day, I wouldn't invest in a firm like Snapchat. Personally, I believe the risk just isn't worth any potential reward, no matter how far it is into the long-run. They would need to create a feasible way to generate revenue before I'd consider themselves stable. I hope that they don't turn hostile against their userbase like other start-ups do, most notably (again, in my opinion) Disqus. When the investors at Disqus started calling their money back, they created a much more centralized version of their comment system that removed a lot of customization options for publishers/brands, all while introducing ads via the "discovery box" and almost forcing ads on every site that uses Disqus, including Techman's World.

Disqus releases a new design update; still very much a broken product

Today when I loaded up Techman's World to reply to some comments, I noticed the new embed interface that Disqus put out. Below is some marketing images they put out:

And..

While most of the points they note on their blog post detailing this update seem positive (like making the star feature more better explained), the Disqus guys have once again left out a crucial feature: CSS support.

Why I am no longer a "fan" of Disqus

Props to Gary Rumain was talking with me the other day and it inspired me to write this article. Something I needed to talk about anyways but his conversation with me got the ball rolling.

I'm not sure if everyone has been paying attention to the comments I've been posting on this site recently when I am not posting actual articles to the website, but in case you haven't caught on yet: I'm not so happy about Disqus anymore. However, I'll say that I still use Disqus on this site and still continue to comment using Disqus. However, whatever was "there" about Disqus and me is gone. Of course there are reasons for this...I'm going to explain a little.

A day in Disqus history: Fare well to the classic Disqus (and personal farewell from me) (Updated)

Today marks a very remarkable and sad day in Disqus history, as well as my personal history with Disqus (which will be explained later). Before I get onto my personal feelings about the classic Disqus going away, I shall cover the news of what has happened today first.

Today, all websites with the Disqus commenting system installed that have not switched to the latest version of Disqus (called "Disqus 2012" back in the day when it was in beta; now just called the "new Disqus") has been automatically upgraded to the new Disqus. Techman's World and I myself has been using Disqus 2012 ever since it was released to the public (at least for websites to use; during the private beta only select commenters such as myself got to use it).

Classic Disqus being discontinued October 15, 2013 for good

Although a little late to announcing this, if you have a website that you are associated with still using the classic Disqus (basically, any version of Disqus that you do not see here) you should have gotten an email explaining that Disqus will permanently discontinue the classic Disqus, putting an end to the dated product.

All forums on October 15 will be automatically upgrade. Right now I do not know if specific partnerships are exempt from this, but based on a conversation that I had with one of the Disqus developers, it does not appear so. However, like said I can't confirm this 100%.

Disqus adopts a new status page, adds graphs and other information

If you are someone who was previously subscribed to Disqus status alerts, you would have gotten an email a few days ago about the new status page they have now. If you haven't seen it, head over to it and take a look, or look at the screenshot below.

Disqus Profiles updated to show upvotes

About a day or so ago Disqus released a slight, but noticeable change to their new profiles feature in Disqus 2012. In addition to the profiles feature displaying comments, followers, and who the person is following, the new profile will also show how many up-votes (or likes) a user has.

Disqus publicly launches its new private profiles feature

A few weeks back I published some of my new findings about the development's of Disqus' new profile feature. For those that didn't read article or don't feel like reading it, I discovered that one of the Disqus team members that I followed had their profile set to private before anyone else could set their profiles to private. I also did some research into what the effects of the private profile feature did in terms of users who were following that person, their actual profile, etc.

Site update: Improved default avatars

If you haven't noticed quite yet, I recently made a change to the default avatars on Techman's World.

Previously, I made a avatar logo for Techman's World, based on the main site's logo of course. The only problem with it was Disqus doesn't like transparent avatars, and likely won't for the probable future. I contacted them about transparent avatars before but they said they'll get to it eventually. I think they are more concerned with the new Disqus and Disqus mobile at the moment. All transparent parts in the avatar logo was black. It made the avatar looked terrible.

Disqus new private profiles feature is coming soon

On the Disqus blog post about the new profile views that has recently been added to the embed, many users have complained and begged Disqus for a feature that would allow users to restrict who gets to follow them, block users, and allow them to set their profiles to private entirely.

Do you like the newly released theme for Disqus 2012?

On Monday I made a post about the two latest updates to Disqus - the Disqus 2012 theme update and the new profiles view. This post is going to feature a little subjective views (opinions) on the theme update, and I highly recommend that you drop your input as well, so I can get an idea of how the community thinks.

Disqus introduces new profiles and a slightly modified Disqus 2012 theme

Putting together about a week's worth of developments, Disqus has released two different updates concerning Disqus 2012, which is now used on just about every website.

The latest news about DISQUS

Instead of making two separate posts for the few things I'm about to share, I decided to merge them into one. Should save a bit of time, and a few less clicks. I really have two things to share, but if you didn't already hear about Disqus making a Windows Phone app, you should click here. Other mobile platforms will be added soon enough.

DISQUS releases a Windows Phone app

From their post on Hack Week 2012, Disqus has been working on bringing apps to all major mobile operating systems. That of course includes Android, iOS, and Windows Phone. It has been confirmed and rumored on other websites before the official announcement on the Disqus blog, but I wanted to wait until Disqus makes their official "press release".

Is Disqus heading in the right direction?

For a while now Disqus has been improving and rolling out Disqus 2012, the latest build of their comment/discussion system. For the most part, I think it's great -- except for a few things. Now dubbed "Disqus Classic", the older version of Disqus used on-site JavaScript rendering, instead of an iframe. The newer version of Disqus does use an iframe, and for the most part it is okay. The part that is not okay, is that it's lacking a major feature that is popular to web developers and just the creative type of person -- CSS support.

Recent Disqus update makes it IMPOSSIBLE to switch back to the Classic Disqus after upgrading to Disqus 2012 (Update: Disqus chips in)

For months now, a stable form of the new Disqus, dubbed Disqus 2012 has been out for all websites. I was one of their beta testers, so I've basically been along for the full ride. However I know those who still use the classic Disqus, and if they decide to upgrade now they are in for it if they want to switch back.

 As you can see from the yellow alert box (shown above), changing to Disqus 2012 is now a permanent decision and once you do it, you can't change back. This note is now live on the Disqus 2012 FAQ page, at the very top.

Disqus updates support page, access to live chat bug fixed

At about yesterday's timing (at least that's when I noticed it), Disqus has ushered out a update to their support page that makes it sleeker then the older design. The elements are the same, but they are now in one row if information. The form is much smaller.

However, the main reason why I posted this was because there was a bug in the old support page that allowed normal users to access VIP only support options, such as live chat. You didn't have to know anything outside of how to use a web inspector. When you inspected the form you saw two hidden boxes, one for the chat and one with an actual Disqus phone number. There was no problem with the phone number because the number was never displayed to normal users, probaby by script.

Forum deletions from Disqus are now enabled again

Disqus pushed out a tweet about 28 minutes ago explaining that forum deletions have been re enabled.

If you remember previously users who wanted to delete their sites from Disqus couldn't do so due to some upgrades (from my understanding). You can now delete a site if you desire by going to the admin panel >> settings >> advanced. The delete button is at the bottom of the page and deletions are permanent and cannot be undone.

Also, Disqus has updated Disqus 2012 with new changes.

New Disqus 2012 update brings clearer subscriptions to threads, and more

Today Disqus, the worlds most used discussion system, released an update to Disqus 2012 earlier today that introduces a revamped subscription system for threads and other visual changes.

[Opinion] Disqus, here's how to make Discovery Analytics better

Yesterday I made an article about Ecommerce Affiliate Linking, which made me think about something different today. I talked about Discovery before, the box at the bottom of Disqus 2012 comment embeds that provides links to the publisher's content or sponsored links to other places around the web, with all of them being  (hopefully) relevant.

With the addition of the discovery box, you also get Discovery analytics. These allow you to see the number of referrals from another website to your website though Discovery, how much you have earned from your visitors clicking links to another website from discovery, and the display box on how to make money too if you don't have Promoted Discovery enabled, with in Techman's World's case, we don't.