GSW (ASX) Now what

Originally posted by roofy: ↑

Hey, this isn't financial advice. But the lesson from this shouldn't be 'blue chips good, start-ups bad'. The lesson should be that you need to scrutinise your investments and not listen to the noise. Lots of people looked at the insto investment and saw that as a signal of this being an investment grade company.

What came out in the courtroom was that the investment advisors were totally useless. They even admitted to it during questioning (by the GetSwift barristers). They didn't investigate the founders (at a personal level) or their supposed contracts. That's where this all went so wrong. And $100m went up in smoke (not to mention all the shareholders cash that got smoked).

So, yeah. If you're investing in pre-revenue companies, you need to do your research. I think about 3 phone calls would have set the investors straight. But they were lazy AF.
End rant.

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+1

The problem with this company was that it was serially "too good to be true". I watched this one come out of BlueChilli. At no stage did GSW or its predecessor Liquorun have anything like the kind of technical depth to be doing more than a thin layer of Javascript as a veneer on Google Maps. They just didn't have enough engineering hires to be doing anything unique, or any notable technical talent at the management or senior technical level.

Essentially all they had was a messaging and organization system taped to the side of someone else's IP - probably a solution that would have seemed pretty good if you had 5 people in-house and they came to you with it, but as a product for a successful company? Much less one with a massive runaway valuation?

The helplessness continued - once they had a big valuation, they tried to Frankenstein together a real company with acquisitions - which revealed how useless the original product was (suddenly all the revenue was in the USA, with almost nothing in Australia). The first couple were not completely insane - although one got the impression that they were opportunistic sales of struggling companies, but the logo d.o.o one was outrageous. Pure manipulation of incentives (although these were sort of futile, as they ultimately resulted in Joel and Bane getting to walk away with lots of worthless stock).