I know almost nothing about finance, and the only things I had to look up in the linked post were "EBITDA," "DJIA" (which turns out to just be an acronym for the Dow Jones) and "flywheel effect." Seems pretty plain to me.
* EBITDA or Earnings Before Interest, Tax, Depreciation and Amortization. It's pretty much the net (before-tax) income of the company (per year), but after expenses that are easy to calculate (like employees' salaries and rent).
* DJIA or Dow Jones Industrial Average. It seems to be an index of the stock market, meaning a number calculated from the price of a selected number of stocks (in practice, 30 large US companies).
* The Flywheel Effect. I guess to understand this one you need to understand what a flywheel is, it seems to be a pretty heavy wheel. The metaphor here is that building a successful company is like pushing a massive wheel for a very long time until it catches some momentum and roll by itself?
"Similar to the DJIA, last-round private valuations are harmful metrics that create the illusion of prosperity."
A lot of people just wish the DJIA 30 would disappear from popular use. It's a harmful metric that gives the illusion of prosperity.
Examples: I take a loan with 1 million a month in interest payments and I "invest it" and "earn" 1 million a month. EBITDA: 1 million a month. Amazing! Real world, net zero.
I buy a 20 million dollar piece of equipment that lasts 20 years. From it, I "earn" a million a year. EBITDA: great! Real world, net zero.
For instance, Companies A and B are competitors in the same market and both have a million dollars in annual revenue and earnings of $100K. Are they both worth the same? What if I told you that Company A has no debt, and is depreciating its assets at an accelerated rate (ie is "paying off" its capital investments rapidly) while Company B is loaded up with massive debt and is depreciating more slowly? That changes the picture a little bit, doesn't it? This is why you have different metrics. Think of them as clues in a detective story rather than horses in a race.
> although it has some uses in comparisons
So we agree about that. In terms of EBITDA's "other uses" your example proves my point? From an EBITDA perspective, those companies look the same, so if you want to paint a rosy picture and you're the company with lousy financials, EBITDA is your go-to metric for your talking points.
Dow jones compiles indices on several sectors, not just the Industrials. Hence the four letters in the acronym.
"The Dow" or "the Dow Jones" always means DJIA.
It comes up in their articles sometimes, and is probably why they prefer to refer to the DJIA as a measure of market price than the SPX.
We have lots and lots of words; I don't believe this BS phrase fills an otherwise unfillable gap.