- SupaBase is worth 1 billion dollars (apparently).
- Magic is worth 100 EUROs (apparently, it's what I paid for the IP to get out of my VC deal).
- SupaBase has 500,000 downloads.
- Magic has 10,500,000 downloads.
- SupaBase has 63,000 likes on their GitHub profile. Notice, .Net Core has 14,000. .Net Core is Microsoft's flagship product, and 27% of all software developers in the world are using .Net in one way or another. Somehow SupaBase managed to get a "community" that's 4.5 larger than 27% of all the software developers in the world ...
- Magic has 950 stars on its GitHub profile.
My only theory is that it's an elaborate investment scam, somehow artificially inflating their "community". However, I wish I knew "the secret" here. What is their "value proposition"? I mean, they built a thin React GUI app, on top of PostgREST and PostgreSQL, added a JWT authentication endpoint on top of it, and that's it - And somehow they're worth a billion dollars? It's the type of stuff even a mediumly skilled senior software developer could replace in "a weekend" ...
Even DigitalOcean have "wizards" accomplishing the same starting out at $6 per month ...
Top comments (4)
It's an interesting question, I think you are partially right, but also that valuations are often based on potential future profits (just look at Tesla making a loss but valued more then Ford). So it seems someone thinks it has a high chance of future profit. And this is were you are right, just like art critics can make junk valuable by simply valuing high, so can venture capitalists.
"Bigger fools theory" - Yes, I suspect it plays a role. However, when it comes to art, there doesn't need to exist any underlying value, as long as the artist is dead, at which point there's a finite supply, constantly driving prices up - At which point you can sell a signed copy of "red line on white canvas" for 150 million dollars, simply because of a finite supply.
With startups, at some point, somebody will be left holding the bag on the other hand, since it's based upon future earnings. If you've got no (real) product though, where's your future earnings ...?
And when you're caught with your pants down, and somebody does "the math" on your community, realising it's mathematically impossible for a tiny 1 billion dollar startup to have a larger community than the largest NoSQL database in the world (MongoDB), twice as large in fact, and this NoSQL vendor have been gathering their community for the last 15 years, and you've got 500,000 downloads, being outperformed by a single human being open source software project, the end kind of writes itself ...
People have gone to jail for less ...
Besides, future earning on what? Any schmuck with a browser and an IDE can download GraphQL, PostgREST, PostgreSQL and create a React frontend tying it together ...
What are they going to sell? Their domain? Their Twitter account? Stars on GitHub ...?
And that's the stock market play, some one over pays for something, everyone thinks they must know something so they copy. The price goes up and they sell and make a killing. And like you said someone ends up losing, happens all the time.
You can't compare plays like that with normal business valuations, just like you can't compare the cost of your messy bedroom and Tracey Emins messy bedroom (look it up that was apparently art).
Yes, but once they do an IPO, and/or sell the company, it becomes a federal crime to inflate your community of users. Some years ago, some girl went to jail for more than a decade because of it. She was offering students help to navigate grants, and sold it to one of the big four (can't remember which, I think it was JP Morgan) - She got convicted to 10 years or something from it.
The paradox is that technically the VC firm becomes complicit once they IPO or exit too, so they're stuck with their bad investment and can never cash it in, at which point their only option becomes to sue the founder and CEO, hoping to get some of their money back.
This is not one of those cases that will just "magically disappear" and the VC firm will cover their loss. In the mean time SupaBase gets all the attention, destroying real companies ability to get attention and an honest evaluation of their product.
Kind of similar to another case you've probably heard about; Theranos ...