Meantime, Avast Software saw the dark clouds gathering for cloud companies and withdrew its IPO altogether. Avast is a popular security software and its planned pricing was aiming for a valuation of more than $800 million. It produced only revenues of $91 million last year and net income of $27 million.

It seems the cloud companies have to go back to the drawing board for their price valuations. Take a lesson from the pharma companies that have gone public lately. Price low and then you have somewhere to go. The market will perceive your deal as a bargain.

Hyperion Therapeutics ( HPTX) priced its stock at $10 on July 26, below its planned range of $11-$13. The stock is already in positive territory. Supernus Pharmaceuticals ( SUPN) priced at $5 and the stock is up 157%. It was originally looking at a range of $12-$14.

Also, what if we change the way we look at LegalZoom? Instead of thinking of it as tech offering, let's think of it as a consumer service company, like Kayak ( KYAK). On Kayak consumers walk away with something in their hand -- an airline ticket. On LegalZoom they walk away with a document like a will. Kayak is up 29%.

So let's price it like a pharma and call it a consumer service company. That approach might set LegalZoom up for a successful offering.

Unless they get creative, digital companies going public in the post-Facebook era will be fighting against the unforgiving forces of marketplace.

-- Written by Debra Borchardt in New York.

>To contact the writer of this article, click here: Debra Borchardt.

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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