simonrobb

Certainly the preferred shares are worth more, in that one should be prepared to pay more in order to buy them, but I'm not convinced that those disparate buy prices should be incorporated into the value of the company as a whole, since a preferred share and a common share represent the same percent ownership of a company. Perhaps somebody with more understanding than I could comment.

I don't understand how this model can be applied to private companies. It seems to require a cap table, which isn't publicly available until after the company goes public. I understand that in the example given (Square), the analysis calculates the fair market value at the time of their Series E, but it was performed after they went public, with the benefit of the cap table. Can this actually be used by the public in place of a funding valuation?

I agree there are flaws in using that number as a representation of a company's value, and to be clear: I'm not arguing that Uber's $69B valuation is not inflated. I'm arguing that it's inaccurate to report Uber was worth $69B at their last round, and now that SoftBank intends to buy common stock at $48B, Uber are valued at $48B (or some dramatically reduced value in-between). I'm arguing that because SoftBank is not offering $X/share to Uber in exchange for newly issued shares, as is the case in a funding round. This is a transfer of ownership between existing shareholders, and if they can strike a deal in this secondary market then so be it. It doesn't affect Uber in the way a funding round does: they've allowed the deal to go down, but they a) receive none of the money changing hands (that goes to the shareholders who are selling), and b) take no dilution. So it's unfair to say that this sale price is indicative of the company's valuation in the same way a new funding round would be - they are entirely different beasts.

This deal is effectively a one-time secondary market for existing investors to sell their stock. If I'm an early employee who has been wearing golden handcuffs for the last eight years, I'd probably accept a lower purchase price than "what they're worth" for the sake of that liquidity. That doesn't reflect upon Uber, or Uber's value. What you're saying might be true if this were a perfect market, but there's externalities in that market (like liquidity) which you're not considering.

> valuation = number of shares times last preferred price, but that’s a convenient fiction.

Fiction as it may be, it's the best instrument the public has to work out the value of a private company. Investors have access to internal numbers, apply due diligence (we assume, since it's their money), and give their best guess as to future returns. That doesn't mean we shouldn't scrutinise the valuation investors accept during a round, but let's not pretend it's not a good marker.

> $48B (or whatever it may be) is a spectacular success by any measure

I doubt existing investors would see it that way, if $21B were wiped off the valuation as reported.

> I’m not sure what you’re so defensive about

My apologies if that's the way it came across. I stand by the criticism I made of the article.

Does that imply that they'll be buying Benchmark's stock, rather than employees'?

> SoftBank is getting extremely cheap debt at the moment

That sounds like some interesting background to the deal, please expand if you have more detail!

Early shareholders gain liquidity, Softbank gets cheap stock, and the market gets some bullish signals on Uber in the form of Softbank's backing. From the outside it looks like a pretty good deal. Of course there might be internal panic and I've got it all wrong, but I see some big wins for both parties.

Agreed, this statement was probably a little strong. But certainly it doesn't represent a new $48B valuation as the article suggests.

I suppose I'm objecting to the implied suggestion that Uber is having a down round (a few other commenters have jumped on that) because of the negative public sentiment they are copping at the moment. It's not like Uber needs cash right now, and I really doubt the board would approve a deal which brought their valuation down for the sake of money they don't need.

This is not true, it has no effect on the current valuation at all. Softbank are looking to buy shares at this lower valuation since they are a different class of share to what they would get otherwise; these are common stock (employees will be a major source of stock for the sale) and therefore don't have the same benefits of preferred stock, of course they expect a better price. Where they are receiving preferred shares (the $1B investment) they are using the $69B valuation from Uber's last round (presumably this $1B is being added as a late-comer to that round).

I can't believe that a Bloomberg reporter would get this wrong, so this sounds a lot like jumping on the media band wagon. Suggesting Uber has lost 30% of its value is blatantly false.

Edit: It's fair to say there might be some impact on the notional valuation between rounds, which is hazy at the best of times. However it's not a 30% cut.

I've put a lot of hard work into this and would love to see it in somebody else's capable hands rather than going to waste - would you like to talk it over more? Drop me an email at sajrobb at gmail dot com.

Funnily enough, a little while back my neighbour made the exact same point about Hoddle Street - in (say) twenty years the property values are going to see a massive shift because of changing technology in our cars. However I think it will be the move to electric cars that makes the real difference. No more fumes, no more grime covering every surface, far less noise. Add in reduced traffic because of self-driving tech and suddenly that property will be worth a packet.

You've suddenly got a massive amount of capital to execute on the things you've been dreaming up along the way but have never been able to do before. Zuck sure had a company of thousands of employees to look after. And even if your mission was always just to exit... get a new vision.

Do I really need to invoke Elon and his first acquisitions here?

This is pretty common practice, in Australia at least.

Interesting thoughts on the reusing the waste. I toured the Carlton United breweries the other day, and found out it's their waste that has formed the basis of Vegemite since its inception. i.e.: there are massive wins to be made when you can "close the loop" on food production. When you've got production, processing, and reuse all under one roof like you could with vertical farming - gold.

I apologise if this is nitpicky, but I think a more accurate description would be "I reverse-engineered a $500M AI company's algorithm in one week".

Is rice agreeable to vertical farming? i.e.: could the bulk of China's crops be moved to VF? In my understanding it's typically a hydroponic practice, so I imagine so.

In my understanding vertical farming is usually a hydrocultural practice (doesn't use soil). That works well for a lot of horticulture, but not so much for broadacre crops.

Although it's a much more difficult problem to solve being an uncontrolled environment, my company is working on this automation but for traditional farms (http://touch.farm). The first step is gathering rich data from different crops/climates, which is why we're starting by designing the cheapest and most usable ag sensors we can. If we can make sensor tech accessible to a wide range of farmers, we'll gain a rich enough dataset to start applying ML (and farmers and the environment win in the process).

tl;dr: vertical farming is great, but what we really need is innovation/investment in traditional farming.

I'll be evaluating mobx for my next project, definitely, along with Relay. If I can maintain the same view-as-a-function-of-state approach of redux while writing less code, I'm sold.