The chasm between public and private valuations of ‘Unicorns’

The journalists are the ones that are trying to get us fooled sometimes

I wish everyone treated all news so skeptically. Software people know that the tech news is laughably bad. Finance people know that financial news is garbage. And so forth. But most people then fail to extend that same skepticism of the media to areas outside of their expertise. Michael Crichton put it well:

“Briefly stated, the Gell-Mann Amnesia effect is as follows. You open the newspaper to an article on some subject you know well. In Murray's case, physics. In mine, show business. You read the article and see the journalist has absolutely no understanding of either the facts or the issues. Often, the article is so wrong it actually presents the story backward—reversing cause and effect. I call these the "wet streets cause rain" stories. Paper's full of them. In any case, you read with exasperation or amusement the multiple errors in a story, and then turn the page to national or international affairs, and read as if the rest of the newspaper was somehow more accurate about Palestine than the baloney you just read. You turn the page, and forget what you know.”

I think journalists should submit themselves to the same kind of public scrutiny as politicians. People like Don Lemon, Chris Cuomo, Sean Hannity, Wolf Blitzer, and Tucker Carlson should be getting grilled by other journalists and defending their decisions in press conferences, just like they expect politicians to. They're actually more politically powerful than most elected officials.

The worst of tech journalism is almost always content which is novel only to a total outsider. It's like journalists say "ok, a short investigative piece should take me 5 hours of research", and then apply that 5 hours to both deep dives on topics they know well, and basic reading on topics they don't know at all.

Longform.org is a favorite of mine because it sidesteps that problem. I basically never encounter a piece that makes me think "I knew all of that already, and more accurately". Journalism that could be created by reading Wikipedia and synthesizing is often wretched, and the sheer need to fill pages prevents that.

Noam Chomsky used to talk about how there are markets for good journalism. Economic journalism for people on wall street. Academic journalism for academics. These journalists are usually high quality, because they have to be, their audience understands the topic material and will make economic and career bets based on the text. By contrast, many types of mass reporting (economic reporting for the masses) has no such constraint, and hence becomes subject to whoever the highest bidder's spin/story is.

Well, for starters, there's the image part of it: the higher the top-line number, the more prestige comes with that.

Then there's the potential that the founder has taken money off the table (giving up on-paper money for cash), so even if the deal isn't quite as nice as it could be, they still own a significant portion of a "successful" company.

Also, the higher the top-line valuation, the more free marketing you get (the headlines read the same, just with a bigger number in it). This can translate into an easier time of hiring, and the ability to hand out smaller and smaller slices of equity for that top talent (employees generally will never see the term sheets to understand that even their 0.01% of the company is likely to be worth very little).

Obviously some founders will optimize for the former (lower valuation for better terms); others will be more interested in ratcheting up that top-line number to attract future investors, high-value employees, book deals, press, etc. That's ultimately the founder's prerogative.

That's the point of the article! What do those negotiations do?

>The tools used to negotiate a higher share price with investors often come at the expense of employees and early shareholders, sometimes drastically reducing the actual value of their stock.

Come on, it's corruption. It's people at the top playing numbers games so they can make a lot of money while basically defauding all the people at the bottom who should also stand to make a lot of money.