The $1 Billion Club Gets Crowded

Another such example was Instagram which was recently bought by Facebook. This mobile photo sharing app started with no revenue but only within 18 months of its launch the number of users increased up to 30 million. Today’s billion dollar club members differ from their ancestors because they do not spend less cash then what they generate. Drew Houston, CEO of Dropbox said that their company will be profitable even if their users don’t pay any fees for storing files.

Zynga which was a social games maker was estimated to be $14 billion in private market transactions and now it has a market capitalization is $6 billion. Accel Partners a venture capital firm took a risk of investing on Facebook in 2005 with $12.7 million now holds a stake which is worth $7.7 billion. So if other startups turn out to be like Facebook then the venture capitalists may produce some big returns.

Quora which is a question and answer site that was started by two of Facebook’s earliest employees, was able to increase the invested amount of $86 million to $400 million currently. The problem of having so many billion dollar club members is that it increases the startup prices everywhere. David York, CEO of Top Tier Capital Partners says, “We all worry about this as some of (these bets) are working so it's hard to completely throw the baby out with the bath water. It's on the one hand, on the other hand.”

Libin, CEO of Evernote says, “As CEO of Evernote, I don't care whether there's a bubble or not, what we want is to make sure we're isolated from market forces and bubble dynamics and that we've got the resources to get through it.” His company was able to increase its user base from 6 million to 30 million.