How all these unprofitable companies sustaining high valuations:
bending reality today has three elements: a vision, fast growth, and financing.
A few firms other than Amazon have defied the odds. Over the past 20 years Las Vegas Sands, a casino firm, Royal Caribbean, a cruise-line company, and Micron Technology, a chip-maker, each lost $1bn or more for two consecutive years and went on to prosper. But the chances of success are slim. Of the current members of the Russell 1000 index, since 1997 only 37 have lost $1bn or more for at least two years in a row. Of these, 21 still lose money.
Source: SchumpeterFirms that burn up $1bn a year are sexy but statistically doomed
“The unicorn thing, I’ve been saying for a while now, is not great,” Benioff told Stephanie Ruhle on Bloomberg GO earlier this week. “The reason why it’s not great is not necessarily that these companies are not worth this much money or whatever — we don’t actually know because they’ve manipulated the private markets to achieve these valuations.”
“There is no reason why these companies who claim to be worth billions of dollars and making billions of dollars to stay private,” he continued. “They need to get out on the market, run their companies with the right level of governance, and let the market rationalize these valuations.”
“Being a public company is good. It forces us to make sure we keep the cadence…we have to keep our eye on the ball,” Benioff said. “The unicorn mania that’s going on, that’s dangerous for our Silicon Valley economy.”
Hey, he’s got all sorts of biases where this view favors him and Salesforce…but that doesn’t mean it’s wrong-think.
Source: Billionaire CEO and investor Marc Benioff says unicorn startups manipulated private markets and he’s done investing in them