Snapchat CEO, Evan Spiegel’s leaked emails to Sony have lots of interesting points and one in particular was the following:
“Facebook mobile platform and mobile revenue growth has been driven by technology companies (many of which are VC funded). VC dollars are being spent on user acquisition despite unknown LTV of users – a recipe for disaster.“
When I think about what is happening with SaaS companies (something near and dear to my heart), I think there are some similarities. Venture-backed SaaS startups are selling to other venture-backed startups. It’s VC money getting recycled among the ecosystem.
If you look at SaaS companies whose only customers seem to be other startups, what will happen to them when the private company financing environment is less favorable and the recycling of VC dollars stops? Leave your thoughts below.