Is it time to get out of the pool?

Autumn 2015

@suedecker scrapped together some data to explain how The Pool is Getting Crowded! for players in the online advertising space.

It was an idea worth exploring across other key sectors of the internet economy so we expanded the dataset by analysing the financial history of 70 IPO's over the past 25 years across SaaS (41%), ECommerce (36%) and Media/Advertising (23%). Here's what the "big data" revealed

As Sue identified, even if you account for survivour bias, it is taking longer for new entrants in the advertising space to become profitable. But, somewhat surprisingly, at least at first glance, the opposite appears to be true for eCommerce and SaaS.

The answer to the riddle can be found by mapping the number of profitable IPO's to emerge over the 25 year cycle. One you have done this it becomes clear the early adopters appear to have the edge.

Particularly if you acknowledge the high number of the unprofitable IPO's & those that were once profitable but are now struggling to make it work.

If you compare the number of IPO's in the sample from the Dot Com era that never turned a profit (admittedly somewhat skewed by survivour bias) with those of the post Dot Com era, the game of profitability has become tougher across all 3 online sectors. SaaS in particular continues to be something of an online "Bermuda Triangle" for investors.

One again the "big data" raises the question: When it comes to making the next big connection in the networked economy, is it time to get out of the pool?

The key to unlocking the mystery is mobile. Much like the newspaper industry, the online tech sector was disrupted in 2007 with the arrival of the smartphone.

What the big data reveals about that story can be found here.