Former Fed Chair Alan Greenspan famously used the term “irrational exuberance” to describe what he saw in the buoyant financial markets. That phrase rings true about certain Silicon Valley ventures, where potential payoffs (and a fear about missing the next big thing) sometimes hamper due diligence. Even the mighty get fooled. Take Google. Google Ventures was one of the earliest investors in the ridiculously hot social networking app called Secret.
Google Ventures managing partner Bill Maris told the New York Times that the co-founders of the app went out and raised $25 million more only months after Google invested. The second round, which Maris considered ill-advised, wrecked Secret’s valuation. “It was like a bank heist,” Maris said. (Maris later recanted this phrase, but was unable to change the facts.) Secret–which was going to revolutionize social networking–shut down last week.
Secret has been removed from the App Store and we’re taking steps to permanently delete all content and data imminently.
— David Byttow (@davidbyttow) April 29, 2015