On Tuesday, I explained why chasing the "free" start-up model was killing many business ideas. How can you build a company when your business model consists of "get acquired, before we run out of funding?"
Today, we see exactly why the "get acquired" model is so attractive to start-ups. According to VentureBeat, Glam, an online publisher aimed at women, turned down an acquisition offer worth, wait for it, $1.3 billion!
I heard today that Glam received an acquisition offer of $1.3 billion in the past few days, but is unlikely to take the offer, according a source close to the company. Glam’s investors are unlikely to do so because they see a bigger opportunity for Glam to build a large business for high-end display advertising, the source said.
Here’s the kicker, just this February Glam raised $85 million in capital, bringing its total funding to over $100 million. Glam has yet to make a profit!!!
Sure, it’s selling ads, building optimized sites, and as of today, planning a new video ad network, but it’s reportedly yet to make a profit.
Is it any wonder that start-ups–and VC firms–are enamored with the build it first, find a business model later never strategy?