The Iconic raises another $28 million in funding. It feels like 1999 to me.

by Mike88Jul 14, 2013

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“Those who cannot remember the past are condemned to repeat it” George Santayana.


Feels like 1999 to me, The Iconic announces they have raised another $28 million, if the rumors are to be believed they lost $45m last year. I hate being negative about startups. I love them and I sincerely hope I am wrong, however this feels a lot like something I experienced in the late 90s Dot Com Boom.



$45m is a lot of cash to burn, essentially you are subsidising your customers. I know that they will draw comparisons to Amazon and their many years of losses and now market dominance and massive scale, but its a different market, very few people globally will buy from Australia, Amazon has a massive global business + the local market of 300 million + a highly developed logistics business and a scale which cannot be matched in a massive country like Australia with a comparatively tiny 22 million people.

Its easy to give Gerry Harvey, Myers and David Jones a hard time about retail and predict their demise but I remember the last time this happened and the Dstores of the world (yep every country had one) were predicting that the big retailer would die, however Gerry et all is still making money and I predict that long after the dust has settled he will still be selling more Whitegoods every week than The Iconic lost.

For those of us who were in business during the DotCom boom many of you will remember massive amounts of cash being raised by both private and listed companies (many of which were backdoored into old Junior Minor Exploration shells with HQs in St Georges Terrace in Perth with no cash and massive losses which just got worse)

Some of you may recall the Schadenfreude when after 5 years of slogging away you were still in business and the guys who raised $20m plus were being wound up and the Herman Miller chairs auctioned for 10c in the dollar.

Here is a trip down memory lane for those of you who experienced it and a history lesson for those that were in kindergarten.


Raised $36m, sold to Harris Scarf for $3m, resold for $600k, still in operation very modestly.

Peakhour (I saw one of the original business plans, couldn’t not believe they raised $30+m off that document) Raised $50m + Crashed and burned, I struggled to Google these guys, even the internet forgets history.

Spike – The first of the big web development and digital strategy shops. They had a saying

“We’re Spike, you’re not.”

Crashed and Burned. One of my HP mates at the time said this deal with Spike is really strategic, strategic means I want to lose money on it, really strategic means I want to loose a lot of money.

Solution 6 – Stock market darling, run by a convicted drug dealer, this was a laugh a minute, I think every dot com trader made some money out of this one and then lost it again 6 months later. My favorite example of a guy who understands term sheets, Chris Tyler managed to convince the board and the float that he should have an anti dilution clause in his contract so that when they raised more capital he kept the same % shareholding. This is truly awesome salesmanship.

Sausage Software Sold to SMS for $300+ million, SMS wrote this off 18 months later.

Davnet worth $7 billion during the dotcom boom (more than QANTAS at the time), eventually sold to NTT for $16m (better result than most), in its defence I did a bit of business with these guys and it was a real business, provided a service that businesses really wanted and were willing to pay for, but like most infrastructure businesses suffered from the curse of the 3rd Owner Theory (see below)

Libertyone – Crashed and Burned

Bigshop – domain name is now for sale

Isis Communications — spent $5 million sponsoring World Reconciliation Day starring Nelson Mandela. WTF

3rd Owner Theory.

I have this theory about certain asset classes, I call the 3rd Owner Theory. Some asset classes consistently make huge losses for their first and second owners. Islands, Pubs, ISPs, Ecommerce sites, tourist resorts. The 3rd owners seem to make money because they pick them up for a song < 10c in the dollar and all the wasted money has already been lost.

What are the warning signs?

  • Any market that is supposedly moving extremely fast and the promoters have to spend massive amounts to get first mover advantage or that require massive capital to get established
  • You get a feeling the emperor has no clothes
  • The hype and glitz is too good to be true
  • Hockey stick growth and profit predictions
  • Sudden inexplicable publicity that far outweighs the actual benefit the company brings
  • You cant actually put your finger on what they do or how they make money
  • The technology is so new or advanced thats its taking the world by storm.
  • Lots of hubris

Give me two guys in a garage growing on the smell of an oily rag with a long term plan to do something special. Forget the hype, hubris, parties and showmen.

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About The Author
Mike Nicholls Australian Inventor + Entrepreneur working with a small team of engineers building prototypes from Inventions including two medical devices. Publishes and has assessed/reviewed +500 inventions and +200 startups in the last 3 years. Mentors Sydney Startups via Incubate and other incubators and helps members of the Australian Startup Community via the website with free publicity and advertising. Experience in numerous industries including Digital Publishing, Cloud Computing, Apps, Hardware, Aviation, Real Estate & Finance and Health/Medical Devices.