90% of the billion dollar unicorn startups are in trouble
uk.businessinsider.com
uk.businessinsider.com
Valuations and market corrections aside, this comment is the thing that resonates with me the most. I got into tech and the Internet as a kid in the early 90s because of all the cool, intelligent weirdos thinking about and building the future. I've been traveling out to SF for about a decade now from NYC to do work, and it's been sad to watch that city go from a place I thought could be the only other place besides NYC I could live to a city I try to avoid. It feels like it's getting harder and harder to find those awesome weirdo hackers. The homogeny is brutal in SF.
The one upside is that it's still the Internet and I don't have to be there physically to enjoy the parts of it I like.
> Here’s the Damaso Effect. [...] They come from the colonizing power, which is the mainstream business culture. This is the society that favors pedigree over (dangerous, subversive) creativity and true intellect, the one whose narcissism brought back age discrimination and makes sexism so hard to kick, even in software which should, by rights, be a meritocracy.
https://michaelochurch.wordpress.com/2014/01/05/vc-istan-8-t...
I write it off a lot of times as social awkwardness - which sometimes comes off as rudeness.
Right on. I remember being in Noisebridge, just after moving to the Bay Area, basically being snubbed and bullied by a poster child for "The Nerd-Jock Convergence." And that isn't even the worst story I can tell.
I've run into as many delusional, arrogant people on coke here in the Bay Area as I did going to an Ivy League school in the 80's. That's not an exaggeration, sadly.
You can easily tell apart CS majors and business school types.
2. Or the idea of "weirdo" itself has changed in a way not recognizable to aforementioned observer. Namely, "weirdo" may not be an ostentatious display as it was in the 90s but something entirely different...
[1] as in, not believable
And as for the calls. We don't get them directly from the company. It's banks who are organizing pooled investments.
I have done zero digging, but it doesn't shock me that people at JP Morgan and other investment banks are making calls to their private wealth management clients to offer them shares in large private 'unicorns'
Here, the banks don't buy a stake in Uber until they arrange the pool of investors. Or maybe they are selling shares from other clients who want to get out of the investment.
It's doubtful the banks themselves have Uber equity on their books.
http://qz.com/305996/all-the-ways-investment-banks-are-cozyi...
With term sheets the way they are with liquidity preferences if I as a VC invest $100 million in a startup for a 10% stake at a 1X liquidity pref, the valuation I'm placing on that startup is $100 million and that is therefore what its reported valuation should be.
No need for any repricing of these startups - just report their true valuation as largest amount invested with liquidity preferences.
Edit: Just an additional point to add - If I really valued it at $1 billion I wouldn't need the liquidity preference.
Many people got very rich from Facebook gaining such high valuation before IPO. And now many other VCs want to replicate that kind of sort of almost ponzi-scheme type of investment.
> I reached out to an investor in impossible startup I had talked about previously. Had a long phone call today, in which he explained to me he didn’t invest because he thought they’d ever be a viable business. He invested because he thought between their pitch/charisma and the names of the investors backing them they’d be able to get several rounds of funding, and he’d be able to cash out.
That is: there's so much VC money sloshing around that hoping for a Greater Fool literally counts as a business strategy.
It long since stopped being about innovation and disrupting markets and became mostly about shuffling piles of imaginary units around so a select few could get rich. Sadly the pawns in this whole game will be all the employees holding options that are soon to be worthless... and who were convinced to take those options in exchange for taking a proper cash salary.
The only good thing this time around is that (unlike the last big Silicon Valley implosion) most of these companies are still private. So it will be really messy for some private investors and the greater San Francisco area is going to have a mess on its hands, but the broader US economy isn't going to get impacted as much. The stock market of 2015 also isn't propped up by bloated tech stocks in the way it was in 1999-2000.
I would argue this is the best kept secret, because this flush out needs to occur to wash away all the so called disrupters who, as you put, are really just shuffling piles of money around instead of actually doing any innovation.
I hate to invoke schadenfreude here, but the past few years have been incredibly insulting to those of us who have been running highly profitable bootstrapped businesses, and so I eagerly await this flush. Picture Mr. Burns from the Simpsons tapping his fingers together.
But SV remains the one place in the world where smart investors with genuine science and technology backgrounds are willing to play the long game with entrepreneurs. I spend a lot of time in London and New York. The generally hidebound nature of their investment cultures, which make perfect sense when you're doing an Exotic Pet Vet Tax-Free Rollup, or a Midwest Refrigerated Storage Debt-Chummed Dividend Fête, would never have made a bet on Google, Oracle, Nvidia, PayPal, Oculus, to take a few at random.
So while there are a good dozen $1b liquidation preference-cap companies that are fundamentally silly, wishing for a tidal reversal in private tech funding isn't a good idea. VC qua asset class is important.
This is doubly so if you're not in need of Google-caliber talent. Then you're not even directly competing with Google et. al. in the first place.
No matter what the actual number is, if your salary translates into a sales pitch that looks like "comfortably afford a 3-4 bedroom house in a beautiful neighborhood, and enjoy an easy 15 minute commute by car while your kids go to a safe, reliably decent public school nearby", then you're going to get people interested.
Relocating outside of major hyper-expensive tech hubs shouldn't be seen as a failure. It should be seen as opportunity. There are reasons to be in San Francisco, and there are just as many reasons not to be in San Francisco or anywhere close to it.
You would think, right? The last two offers I made where to people in very low cost of living places. I offered them our "Bay Area, not Google $$ salary" and they both said they expected Google salaries and turned down the offer. Until that point, everything had been clicking perfectly.
EDIT: last three people.
As I said elsewhere, we had a developer poached from Google for $250k.
It sounds like you offered $75k a year [which you calculated as equivalent to a $125k/year offer for their location].
I'd turn that down too. People try to pull that adjustment trick on me all the time when I was looking to relocate, I'd go up there and they'd give me a number the day after I got home and I'd be like "...that isn't equivalent at all." and then politely decline.
Just fyi, maybe I misunderstood.
In retrospect it may have been more important to get your foot in the door of a company or industry that you wanted to stick with for a career. Alternately, if you get paid a lot when you are young it becomes your quote. In my experience, people who don't get paid a lot at the start tend to get paid less for the rest of their working lives.
Can I ask what number you went with?
The reason I ask is I don't live in the Bay Area and do live in a lower cost of living area [but still not cheap] but the figures for any decent senior engineer here are still $100k+.
I definitely know folks who claim Bay Area $ to be $60-$70k and play the numbers game... but then they play the numbers game (and 3 isn't a numbers game).
I mean, the broader question seems to be, is this just a thing we're going through or has the world changed and are developers just demanding more money for the kind of work you're doing?
1. That was deemed illegal and they've stopped.
2. Salaries are not being kept down in SV. The whole topic here is that they are out of control. Have you actually tried to hire anyone? I have. Even people that telecommute from low cost of living areas want SV salaries. I've had to go outside the US for my last 2 hires.
options in a startup, especially since ~95% of startups fail, are generally worthless.
https://news.ycombinator.com/item?id=10946880
He's spot on.
that is called market economy. Whoever can use programmer more efficiently and thus pay higher salary would get that programmer. In a big picture, using a resource less efficiently means pretty much wasting it. Do you make revenue per programmer like Google? If not, may be you need to look at where is a waste in your business process. Your employees wanna be productive and as result wanna do a lot of money for you and the themselves. You owe them efficient organization of business.
> 10 years ago the pay we offered was competitive,
the point of technology industry is to facilitate the process of natural selection out of anybody anywhere who hasn't changed in 10 years.
I'm not trying to offend you. I've been sitting in my current BigCo for 4 years already, and see how i myself starting to be the candidate for being selected out if don't do something in the near future. 10 years is a historic epoch in the industry. The industry did look completely different back then.
On my grad student stipend.
You are talking about something completely different than the rest of us.
Obviously, this just underscores your point, but I wanted to give you some datapoints since you seemed surprised that someone might not take the $125k offer. It's a seller's market.
Hell, I'd probably still keep a better lifestyle staying put here in Florida where I make about half of that (and I'm considered highly paid around here). I would never expect SV pay for a 100% remote job that allowed to me to stay in my lowish COL beach town, and I don't know who would. That doesn't even make any sense.
The best advice for those of you getting paid $150+ an hour is save your money and don't take on long term liabilities.
That's good advice, regardless of how much you earn (but it might need a 'save your money when you can').
Spending money when you don't actually have to is a bad strategy when you're young and you can still materially alter you later-in-life situation with relatively little funds.
That's why I hate student debt of any form, it saddles those that would benefit the most from some savings with debt so they can't start to save until they're in their mid 30's or even later.
Also, $150 /hr is a pretty low rate even in the leanest of times.
EDIT: Really surprised at the down votes on this. What I'm saying is hardly radical. There seems to be a lot of sour grapes in this thread sadly.
My tip: don't envy those doing better than you, learn from them.
Around here in the midwest, under those long-term circumstances, many contractors don't hit the three figures. A whole lot of senior devs around here are slumming it at a $50-$80/hr range.
That was my point about how $150 isn't some insane amount of money. Depending on the length of contract, it may be almost nothing at all with the overhead factored in.
Out of curiosity are those senior devs keeping their skills up, or are they programming in Java/.NET or something similar?
At those rates I'd definitely be interested in taking a look at their CVs since I often need to hire developers. It's WAY below market.
There's a lot of folks like me who program on older, non-sexy, maintenance roles on established systems which use older technologies. Outside of big cities, these positions don't generally command a big wage.
That's my point. As a developer (especially a contractor) you must always be learning new things and technology. It also helps to specialize in a field/domain.
If you're a senior developer you could absolutely make double $60/hr as a contractor by just focusing on the business side of contracting a bit more.
I've been paid $109k a year for work on Smalltalk. And yes, it was this century, in Houston. (As of this writing, 4th largest city in the US.)
Those two things aren't mutually exclusive. There is very good money to be made consulting at the enterprise level doing Java/.NET or something similar, but you also have to keep your skills up.
I am reminded of that lovely remark once made by Boris Johnson's, London's blond bombshell of a mayor, when asked about his £250,000 a year contract to write a column for The Daily Telegraph: "It's chicken feed."
$150 /hr is basically the least you're going to want to charge. Realistically you're going to be looking at 90-120k /year depending on how much work you land at that rate.
For highly skilled intellectual work, that's not very much money.
It is not what you "want to charge", it is what they are willing to pay you, that counts.
What happened to contractor pay in 2000?
My experience is most of these people will leave the industry. Very few have the skillset to become an independent contractor because of all the sales and marketing involved (in addition to the tech skill set you're actually selling).
> What happened to contractor pay in 2000?
I have no official data, but I was contracting at the time and continued to raise my rate a reasonable amount at semi-regular intervals (every year or two). During that time, people needed to get work done but they wanted one super contractor to do the work that a team of middling engineers used to do, for 1/5 the cost.
> I hate to invoke schadenfreude here, but the past few years have been incredibly insulting to those of us who have been running highly profitable bootstrapped businesses, and so I eagerly await this flush.
I wouldn't say its insulting. Business is business. You'll have a company when this mess implodes, they won't.
As someone mentioned on another thread a day or two ago, just look at the latest YC batches, particularly the IT companies. They're largely "X for Y" sorts of companies that already have significant traction. It's unlikely that the Airbnb founders would be able to get into YC in 2016.
> Sadly the pawns in this whole game will be all the employees holding options that are soon to be worthless... and who were convinced to take those options in exchange for taking a proper cash salary.
And on the other side, once the bubble bursts and the options are exposed as worthless at many of these companies, it's going to be much harder for startups to recruit employees with equity compensation, which will only make it more difficult to control burn rates.
Hasn't that always been what "merger" meant? :p
Edit: My joke is that corporations have been making dumb amalgamations for many many years now. Anybody remember "Mr. Sparkle" from The Simpsons, where two companies in fish vs. heavy-industries combined to sell detergent? That was amusingly-relatable even when it came out 18 years ago.
The general explanation for this phenomena that I've read bandied about (but have no idea of its veracity as I'm just an industry outsider): financing films has gotten so expensive and risky, that only proven models of making money are commonly given green lights. It's considered innovation at the financial level to mix-and-match proven models, because that's all the risk that is willing to be absorbed. What the purchasing side actually wants is too opaque/non-linear/unpredictable/take-your-pick-of-explanation for the big name finance people to consistently figure out what really is innovative. That's probably why YC attracts a lot of attention from the big names, because they hold out the promise of piercing that veil.
Now, these people are plenty smart. They usually have gotten great educations and whatnot, but they lack the drive to be motivated by a love of doing this great thing, rather than accumulating some money. Some of the greatest creations in tech were not motivated by money at all. When a great film maker goes to bed or on vacation, he's sometimes kept awake with ideas on how to make a better film or pondering a new concept. He takes no real vacations, because he loves his art so much that he never even wants to escape it. The money-driven type doesn't. When they go on vacation, they escape. And professionally, they tend take the easiest path to their destination. And the easiest path to cashing out is to look at how other people became successful, and make a small deviation from their path then copy or exploit rent seeking advantages or be unethical.
I think that's where all these portmancos come from. It's really really easy to look at existing business models, and come up with a way to blend them into new company.
[1] I'll assume everything you just told me is correct
Ageism in the valley is probably caused in part by that. Older developers have already been burnt in 2000 and are less willing to try another round (I have known a few of the virtual millionaire) and even those that have been working through the crisis are going to have a cautious approach. So that tilt the balance even more toward the younger developer working in hot startup and it becomes easy for their owner to mistake correlation for causation and assume older developer simply don't have what it takes.
I remember raising my eyebrows when my grand father was skeptical of banks and government guarantees. I have now lived through banks failing, government taking money off private account, ... Today I wouldn't be so dismissive of his concerns. So easy to mistake wisdom for old age stubbornness when you only have had an uneventful short existence.
As someone who lived through TechBubble v1: People said exactly the same thing back then. There's always a new batch of graduates with dollar signs in their eyes who believe "it's different this time".
Square is a great example of a company that people joined for all the wrong reasons. Not only are they incredibly unfocused when it comes to their mission, products and customer base, but the people joining it seemed to be doing so out of a mercenary instinct triggered by an expectation that Jack's second company would of course be a hit.
If you actually look at what Andreessen did at Netscape, he was little more than the pawn of Jim Barksdale and Jim Clark, who trotted him out as the "boy genius" every time they needed to do some PR or developer/community outreach. The vast majority of the code was written by the far better software engineers than Andreessen who joined the founding team (Lou Montulli, Jamie Zawinski, Ramanathan Guha, Aleksandar Totic, and more).
Other than that, I'm not even sure why Clark approached Andreessen to co-found Netscape. There were multiple people who worked on NCSA Mosaic, which was itself based on open standards (and the source could be obtained). And Andreessen didn't really believe in its commercial potential at first - he moved to SV to work at Enterprise Integration Technologies, only to quit his job after a few months, when Clark emailed him.
Great. The employees who don't want to, or can't accept potentially risky future compensation for their work, no matter what the reasons, shouldn't have to. That's why investors exist. They take on the risk, you get to pay employees actual money, win/win.
In addition, equity is just as much a "burnable resource" as money is. Those percents add up. If you're using it as an infinitely-growing imaginary carrot because you find that your runway is getting shorter and shorter as the months go by... well, that's probably not a good sign.
Even some of the more legit "unicorny" companies like Dropbox have issues. I've been a happy user of Dropbox for many years, but they refuse to provide a service offering that I can actually justify paying for in my personal life. And while they have an awesome service, they refuse to make the security investments that would allow my employer (who desperately needs a good solution in the space) to give them money. Anecdotally, I've found a few people with the same takeaway -- they want to give them money, but can't justify it at home or deal with service gaps in a business settings.
OneDrive claims to do this at the service level, but the implementation is poor and the controls aren't very robust when you implement. (Unless you buy Azure AD and double the cost or wait for their rewritten sync engine) Google & Box (although Box wants a high premium $$) are a lot better, but Dropbox is still best in class for sync.
In some cases, we are forced to throw features away. For example, we have some users where a solution that encrypts data, limiting editing & search capability is a requirement for some information.
Beyond that, a broader concern that would be of interest to me would be narrowing the scope of some of Dropbox's features like dedupe and "forever" files. (It's been awhile since I looked, so this may have changed) I would prefer a solution where there was a key isolating our data from other data in the Dropbox cloud. (bonus points if we controlled that key) That way, nobody outside of our enterprise would have a way to know if a specific piece of information was already uploaded to Dropbox.
To me, it's great tool for a single person or a team of 8-25 people. It's missing stuff and is expensive for a real big org, and doesn't scale low enough for a family. (at least at a price that I'm willing to pay)
No one bats an eye at Google Docs today, but when Corel tried to do it earlier, they suffered for it. It takes time for markets, people, and processes to adapt to new ways of doing business.
Nobody wants to see a collapse for collapse's sake, but there is quite a bit of social good in avoiding or deflating an asset bubble, be it in residential mortgages or late stage technology companies.
1: https://pando.com/2014/01/23/the-techtopus-how-silicon-valle...
2: http://www.usatoday.com/story/money/markets/2015/12/04/maris...
3: http://nypost.com/2016/01/18/marissa-mayers-job-safety-joke-...
4: http://www.businessinsider.com/eric-jackson-slams-yahoo-for-...
5: https://www.atlantic.net/blog/how-elon-musk-ceo-of-telsa-mot...
The problem isn't a shortage of engineers, it's a shortage of quality engineers who don't subtract more value than they produce.
If you increase any one of these factors, you get more production (i.e. more prosperity). For instance, Capital: if Chinese/Russian billionaires decide to invest all their money in American companies in America, then it would result in huge economic growth.
Similarly Natural Goods: If prices of oil fall drastically, or lots of natural goods (even land) are discovered, then again there will be increased production of goods (i.e. more prosperity).
Finally, Labor: if labor prices fall drastically, or labor force is increased, again more production will happen. Prosperity will ensue.
The first two makes sense to most people, but somehow the third point doesn't because most people are part of the labor force therefore emotions kick in. The simple logic you're demonstrating is a childish whining:
> Tech execs and investors love to complain about having to pay six figure salaries to the engineers doing all the real work, all while carting home hundreds of millions themselves in just severance pay<
The whole job of tech execs and investors is to increase production. Acquiring capital for cheap (lower interest rates) would do the job, acquiring land/natural goods for cheap (like moving office to a cheaper part of the town) would also do the job, and finally getting cheap labor would also do the same thing.
Complaining against a businessman trying to find cheaper labor is like complaining against the QA for trying to find bugs in your code.
> if labor prices fall drastically ... more production will happen. Prosperity will ensue.
> somehow the third point doesn't because most people are part of the labor force therefore emotions kick in. The simple logic you're demonstrating is a childish whining
Next time a bubble pops and I get a 30% pay cut I will take comfort in the fact that the prices of goods & services around me will soon fall by >30% to compensate (because of all the prosperity) thus preserving my quality of life and proving that my concerns were merely "emotions kicking in" and "childish whining" rather than predictions that the terms of my social contract were about to get dramatically worse.
My post was responding to the fact that increased immigration (of high tech or white collar, both) helps people in general by increased prosperity (nothing in this post was about an emotional outburst of the conditions and welfare of immigrants).
You respond by talking a non-sequitur about a bubble. It doesn't make any sense.
Funny thing is, what you wrote rhetorically is exactly what happens in a crash.
As a consumer you don't care whether your salary is $100K or $50K, what matters is what you can buy from your salary. If you can buy a home on mortgage on $50K salary and save for your kid's education, but can barely pay rent and groceries on $100K then the $50K Salary is higher 'real salary' (albeit a lower 'nominal salary').
Any recession is only cleared when real wages fall faster than the real prices of the goods (because only then businesses can be profitable again).
According to free market economists, let wages and goods of prices fall. This will eventually clear the market.
According to non-free market economists (which includes Keynesians and monetarists) increasing the money supply is the solution because it lowers the real wages (albeit keeping the nominal wage high). So at the end of a recession you still make same salary as you did at the start of the recession, but you can afford fewer goods now. This ALSO clears out the market and businesses become profitable again.
Introduction of educated immigration labor would actually result in faster recovery (just like lowering of interest rates would make businesses more profitable).
Fair enough. You might even be right. Even if one were to assume that you are, however, why does it follow that those involved should be happy with their fate as a stepping stone for society? That their complaints are nothing but "childish whining"?
Furthermore, the fact that an action creates winners and losers is far less open to interpretation than its ultimate connection to the progression (or regression) of society. If you substitute faith in one system for faith in another then the same argument you made earlier has been made in a million other contexts to defend acts that you would consider unconscionable. In this context "It's for the best, honest!" is a weak argument regardless of how convinced you are that your model of ultimate benefit/detriment to society is correct.
When the tech bubble crashed in 2000, and I moved from a startup to a Fortune 500 company, my job became less enjoyable, but my salary did not go down. Then again, I began looking for a job in April 2000, as I had been anticipating a correction - some people with no college and no non-startup experience rode it out to 2001 at their startup, were laid off and had trouble finding work.
Being based in a big job market outside the Bay area where I am rooted and networked was also helpful in 2000.
One difference between now and 2000 - the only real capital expense to start many software businesses nowadays is payroll. It is much less expensive to start a business. This may affect things.
The ones that were really hit were new grads who had accepted jobs that went away before they got there or had only been on the job a couple of months.
Another big difference (I hope) was that 9/11 came along right after and changed things in a much more macro scale. Don't know how much we can draw from that.
There is absolutely this attitude present. I've heard it both in the Midwest and out west in San Francisco and Oakland both.
I can even understand it to an extant, because although I am in the not-a-bubble camp, I am annoyed when I see media and others acting like "Uber for pizza" is a mind-blowing idea.
What I have seen evidence of is a slowing economy and a shift towards more conservative investments. It happened in the early 2000s, in 2008, and it seems to be happening now.
It's utter bullshit that advertising is good for the web because it gives us stuff "for free": https://news.ycombinator.com/item?id=7485773
Why aren't there more publicly traded "Venture Capital" firms?
Transparency, investor scrutiny and ability to vote out the board is good thing.
Silicon Valley would benefit by having good old fashioned one share, one vote governance
that isn't a secret, that is a celebrated strategy of "fake it until you make it"
If nothing else this article does a good job of demonstrating why its important to always check your sources and their biases.
On almost a daily basis I get recruiters contacting me with interview offers from companies who have no chance of surviving past the end of the year. Their messages are often accompanied with bravado about their company's VC backers' other, more successful projects, which only makes me more skeptical.
Your time and expertise in these areas will give you better insight that most other investors will not have. See Warren Buffett's "circle of competence".
'Course, that invites some comparisons to equity in startups...
In Portugal it caused the first signs of the current crisis, and caused quite a few of us in IT to move abroad.
Despite not being invested in complex derivatives, middle america sure noticed the banking crisis.
Doesn't this ratio seem about right for any basket of unprofitable (or even zero-revenue) high-growth companies regardless of valuation? If those 14 winner companies average greater than a 10x return then everything pans out as expected--lots of risky investments together produce a reliable if more modest return on investment.
It seems like the only abnormal aspect is the size of the valuations, but that might be just what happens in a low interest rate environment--too much money chasing too few deals. Whether this affects this success rate of these investments remains to be seen I guess.
But the real problem with bubbles isn't that loser companies are pumped up, but real profitable companies are way overvalued too. During the dotcom crash Microsoft lost half its value. It was a winner. It had massive profit margins the whole time.
So Uber may be in the 10% success. But if you invest right now, it might be worth half as much in 5 years.
Well, here's what we learned in 2008 - in a down market, it's possible for _way_ more than x% of people to default all at the same time.
I was just trying to point out that it's not impossible for the current crop of unicorns to produce big enough winners to outweigh the failure of the rest.
I'm definitely skeptical that this will happen though, because the winners would have to be really big (hundreds of billions in actual market cap in the public markets) in order to make up for the really big failures.
You saw this with hedge fund managers and the stock market as well. Lots of hedge fund managers went on and on about how irresponsible Bernanke was because he kept interest rates low which raised asset prices.
To be clear, I don't think this is a nefarious or even conscious process. However, I think if someone really wants a particular scenario it tends to color their thinking.
Also the actual claim made isn't as sensational as the headline. Just says that 90% might take a lower valuation. All that requires is a general market decline.
Anyway, take a look at the list of unicorns.
If the buying price of Y goes on a 75% sale, while the selling price of 10Y also goes on a 75% sale[1], the VC makes 75% less money.
[1] Things usually don't go that way. Smaller prices tend to fall less than big prices, and the VC will almost certainly get into the negative.
If the businesses are based on bullshit, then he's probably right. If the valuations truly are wildly out of control (and it does seem like it), then sure, they're due for a correction.
It's also worth keeping mind that if there are 144 of these startups, 90% of them is 129. That doesn't add up to that much money in SV terms. This seems like a tempest in a teapot. People love to make headlines, it seems, with "OMG bubble OMG!"
Not that such a geographically and industrially concentrated collapse wouldn't be a big deal, and it surely would have broad secondary effects.
Wasn't that inevitable though?
There's a lot of money at stake, but the number of affected people is relatively low, isn't it? I understand why HN readers are interested in this, but is it a big story outside of tech circles?
Well, that's kinda how it's supposed to be. That's why expected value is more important. A few $200+ billion Facebooks and Googles can compensate for a lot of smaller $1 billion failures.
I thought this was always the assumption.
Is it because they are already valued at $1B+ that this thesis should change? I don't see why that should be the case...
One would assume that if it's valued so high they have a fair amount of funds in the bank from VCs in which case they could downsize considerably and still survive for quite some time. So I feel like if you're valued at $1B I wouldn't expect you to die even if you're in a decline for some considerable amount of time.
Does a down exit count as dying? Do you have to IPO or be acquired to be a successful Unicorn? What about IPO'd unicorns that tank in the market like Box?
I think we need a better metric for success than valuation.
Maybe something like: Did they actually lead to the increase of adoption of a better process/technology.
So, in my opinion, the real substance is: nobody knows what is going on, this creates a kind of fear and a negative atmosphere. Not a good thing.
I didn't realize that there are this many unicorns. Or is this a typo?
They may be valued at $1B+, but they're not worth that much.
This company alone has convinced me that the term unicorn means very little.
Market's across the board are doing pretty bad this month - It would be interesting to how bad tech is doing relatively to oil futures and other commodities.
Edit: I don't know why I'm being downvoted for asking a question. I've many times seen a stock sector performance chart (I don't know the technical name) with most of the market red and tech lit up bright green.
In a site like this, where we care specifically about the health of tech, claiming that the sky is falling for our sector without looking at other sectors would be folly.
Volatility appears (and is fed back) as people re-evaluate risk vs reward.
People who held unfashionable Microsoft stock made more money than people who got in on the last two Tumblr rounds over the same time period. Early investors are no longer just technology zealots who made $300 million 10 years ago -- actual financial companies are involved now.
Also early-stage startup investing is a drop in the bucket of the greater market. If people are even bothering to move their money out, that's an even more significant indicator.
http://finance.yahoo.com/echarts?s=XLK+GSG+Interactive#{%22r...
add GSG to compare.; set to 3 months.