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Comment by rhetocj23 | Hacker News Reader

Its a matter of time until the implosion happens.

As a corporate finance and valuation geek, Ill warn you now: dont try and time mood and momentum. Thats what is driving much of the valuations being thrown around.

If this blows up big time and it is found that the Big Tech firms were operating on lies and false hope, there will be consequences - in the form of shareholders demanding cash returned and setting limits on the cash balance held by Google et al. Apple has stayed smart staying out of this nonsense and not doing M&A.

Investing in projects with negative NPV destroys the wealth of shareholders.

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No what's driving much of the valuations is the biggest leap in human technology since the internet and skyrocketing revenues as a result

Private companies soaring to $100m ARR in 12 months is commonplace now. That's what's driving the valuation.

We don’t know how sticky that revenue is, or if it’s going to be a commodity in the long run. Similar things used to happen in ad-tech before investors got wise that there was no moat.

Revenues mean nothing without positive equity earnings, especially so without a viable path to get there. Without a clear path, how do you justify the valuation? Lol.

Uber and Amazon had a very logical path to get there.

The reinvestment is so high that once you tack that onto the earnings youre in a fat negative. What does that mean? You will eat into the cash balance and eventually have to go raise more.

> No what's driving much of the valuations is the biggest leap in human technology since the internet and skyrocketing revenues as a result

That is a 1999-like bubble and how you get 75 - 90% of these companies crashing when the music stops.

> Private companies soaring to $100m ARR in 12 months is commonplace now. That's what's driving the valuation.

We don't even know if that is even real to begin with. Even if it is, that revenue can be lost as quickly as it is gained.

This happened to Hopin and other companies who grew extremely quickly and then their valuations crashed.

The questions you should be asking yourself is even after looking at the competition, what is the retention and the switching cost of these said "$100m ARR in 12 months" companies if a competitor moves into their core business?

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