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Comment by yumraj | Hacker News Reader

Personally I believe that if a company is trying to raise private funding beyond a certain very high valuation, say over $1B-2B, rather than going public, there is something iffy and it's being done to avoid all the scrutiny and compliance that going public requires.

I still remember when Groupon went public, and soon after it was revealed that they had engaged in all kinds of funky accounting leading to stock crash. Not sure if there is something similar going on here, but raising private funding at such a high valuation doesn't seem normal.

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It is probably iffy in the sense of being massively overvalued, but on balance it's socially beneficial to part naive billionaires from their money. I'm quite happy for the Saudi sovereign wealth fund to keep making dumb investments through Softbank, like WeWork.

You're forgetting that institutional investors (eg. pension funds, university endowments) also exist, and can get caught up in these "dumb investments" as well

Institutional investors should be adequately managing their risk.

Would you tell your parents or grandparents that, when they find out they won’t be able to afford their lifestyle and have to move in order to retire?

That their fund should’ve managed the risk better?

Appeal to emotion.

But either way fund managers shouldn't be putting near retirees or retirees in high risk investments. I'm sure my parents or grandparents would not be happy with their fund managers if that happened, either.

No? They’re not the ones managing the funds. The fund managers - yes I would tell them to stop playing VC with retirement funds

Since those funds are underfunded, which is not the fault of those managers, wouldn't not playing VC with the funds simply turn bad odds of maintaining their lifestyle into guaranteed failure?

If this was insurance, where you accept a negative EV transaction to eliminate a catastrophic outcome, the you could make that argument.

If your retirement fund was 20% smaller than you wanted, would you spend it all on lottery tickets so that there is a possibility it would be the right size?

If the result is only coming in 10 years, and you're 5 years away from retirement, sure, why not? I mean, assuming it's not too obvious.

https://en.wikipedia.org/wiki/Apr%C3%A8s_moi,_le_d%C3%A9luge

But I don't think that's what's happening here.

I am happy for them to make dumb investments too. They always have the option to buy an index or target date ETFs if they do not want to risk losing money.

Socially beneficial how? Where do you believe the money from investors is going in the case of Stripe?

They'd get endless specious shareholder lawsuits or SEC lawsuits like the way Exxon does.

Especially if you have a "money printing business" (which I really think Stripe qualifies, or is really close to)

Groupon[0] was also considered a "money printing business" at the time of their IPO.

But post IPO they had to open their kimono and everyone found out that it was all just funky accounting. They went from reporting a positive operating income of $60.6 million for 2010 to an operating loss of $420 million for 2010 after proper accounting.

[0] https://en.wikipedia.org/wiki/Groupon

I dunno, I haven't really bought into Groupon hype. Its easy to imagine life without coupons. It's much harder to imagine life without payment processing. For all of its flaws, Stripe is plugged into almost every online business I've worked with, so I'd say they are in a position that is harder to screw up than Groupon. But possible, of course.

They take a rake on pretty much all e-commerce so I’d say that qualifies.

How does Stripe not have a well-developed set of competitors after all these years? What is its network effect?

Every time I ask people about this, they say it has an amazing developer-friendly set of APIs. But it’s hard for me to believe nobody has been able to replicate this experience a decade later, when Stripe’s APIs are sitting right there to crib off of.

It's because Stripe negotiate steep discounts. The APIs are merely the trojan horse to get inside your org.

Speaking from experience at the table at some of these deals, Adyen or other competitors would often approach my employer (large e-commerce company) offering a better deal, but executives would merely take the deal to Stripe and say "match it or we're leaving", and they would.

Given the cost of leaving is only somewhere between $50-200k depending on the complexity of your checkout systems, the client base isn't particularly sticky.

I'm bearish on Stripe for this reason. If they're just racing to the bottom with Adyen and others then where are they going to make money? Their other products are pure garbage (Stripe Radar is worse than useless).

Another reason is that it benefits them for the competition to not know how well they're doing. This was one downside Home Depot had when going public.

I don't think it is anything shady.

Just your regular not-that-profitable thingy to justify high valuation.

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