NEW YORK (
) --The tech sector has been a wasteland for investors crushed by fallen favorites like
Research In Motion
and sapped of life by listless giants
shares seem a little tuckered out after a huge 1,000%, 10-year run.
As argued here, an infusion of
new blood IPOs from fast-growing upstarts
would inject some welcome new life into tech.
The flip side of that argument then, is that there are a few names that would be terrible ideas to invest in.
We're highlighting five absolutely wrong companies that could push an IPO at the wrong time for all the wrong reasons. There's no indication that any of these companies -- while wildly popular right now -- have immediate IPO plans. But if they did, we've taken the time to review the business strategies and point out some publicly traded companies that are already doing a lousy job of it ... Read on.
No. 5: Chatroulette
A service that was the brainstorm of a teenage Russian Web developer, Chatroulette is about as dangerous and daring as it sounds. Imagine a place for anonymous Webcam hookups that last as long as you care to watch and feature things as mundane or bizarre as you can imagine. Sounds pretty hot, right? Well, after an initial rush of curiosity seekers, the site quickly took on characteristics common to Net sites that cater to fairly narrow unbridled interests.
With an estimated 1.5 million users, nearly all male and a third of which reside in the U.S., Chatroulette and its rapid growth phase attracted a flash of media attention and even some private investment interest. But recent efforts to diversify the business seem weak. One push to localize the service by trying to match users within certain regions might only highlight how the creepiness can get a little too close to home. The novelty phase, while strong, may not transform into a more sustainable model for Chatroulette.
And here's the thing -- we already have public company that is the world's largest Web video outlet. It's an endless virtual arena of homemade absurdity and sublime self-promotion. It's Google's YouTube.
Instead of buying the name of a hallowed old brand like
to slap onto TVs manufactured in low-cost regions of Asia, Vizio went with its own name.
Vizio, with the help of contract manufacturing partner
, has become an HDTV giant. The most rapid growth came earlier this decade when Vizio signed agreements to supply TVs to wholesalers like
According to the company's last public disclosure on its Web site, Vizio says it shipped 3.5 million TVs and booked more than $2 billion in sales in 2008. Cheap flat-panel TVs were a strong category as the recession and financial crisis took hold. But by midyear 2009, Vizio's rising share of U.S. HDTV market began to peak as
made a bold play to cut prices and win sales.
Vizio has had a brilliant start, but as TV's long, storied history from
has shown, it's difficult to stay in the game. It's safe to say that Vizio will have a fair share of challenges.
And here's the thing: We already have a public company struggling to hold market share in the cutthroat HDTV market. Investors don't need another
No.3: Demand Media
Ever wonder what a Web site would look like if search trends and advertising departments called the shots? Check out eHow and Cracked, two of Demand Media sites.
Demand Media is what some call a "content farm," an outfit that hires "writers" to create web content on topics that are trending on the Internet.
Defenders say Demand is an alternative media service that might have a working business model. Demand was founded in 2006 by Richard Rosenblatt, whose prior accomplishments include MySpace, accused adware purveyor Intermix and build-your-own e-commerce shop iMall.
uses Demand's Cover it Live service for live blogging, as seen with our coverage of
Sure, there are at least five top reasons why you shouldn't go judging content on other media sites, but there's one huge reason Demand Media doesn't need to go public. We already have
No. 2: Foursquare
Take smartphones, add GPS and a burning need to overshare with others, and you get a bloom of location-based social networking services like
Loopt, MapMe, Dopplr, BuddyMob, Where, Whrrl, Twittelator
This location tracking trend is still emerging, but one outfit stands taller than others in the crowd: Foursquare.
Using GPS to pinpoint where you are, Foursquare automatically broadcasts your whereabouts to friends on Twitter and Facebook. This sounds terrifying, but it's also totally voluntary.
The real value-add here, if you will, is that Foursquare feeds you a list of restaurants, stores and bars in your vicinity. You can imagine the inevitable advertising opportunities here: "Attention shoppers..." store sales alerts, e-coupons a whole new mobile dimension of spam.
But we already have a social networking phenomenon that devolved into an advertising sink hole:
The No. 1 least desirable IPO
Watch our reasoning via video:
Zynga: No.1 Worst IPO Candidate
--Written by Scott Moritz in New York