Uber's failed IPO changed investor sentiment in the market from fantasy valuation back to profitability.
failed IPO. The company immediately garnered a valuation north of $80 billion and then it fell like a stone. This experiment – bringing a company public at a massive valuation that stated in its S-1 filing that there was a chance they'd never earn a profit – produced a mass sentiment shift among savvy investors and retail buyers alike. It was aI think had Uber successfully listed and held onto a premium, WeWork would have had no problem.
AirBnB is the next big unicorn to come out. Unlike Uber and WeWork, they actually have a path toward sustained profitability. The numbers aren't Disneyland nonsense. The management is serious about running the company. They're not gouging their shareholders or playing Catch Me If You Can with their board of directors. Depending on where it attempts to open at, I think it'll be okay.
The Vision Fund – Softbank's vanity project that has come to be emblematic of the Growth At Any Cost style of investing – may be permanently off the field of play; the Antonio Brown of venture investing. In the short-term, this presents a challenge because there is no longer a huge player setting prices at whatever number gets the deals done. Real VCs will benefit from its benching, though, because now they can invest in a more realistic environment.
And don't take this the wrong way, but when startups need money from Instagram scrollers, it's probably not because they have amazing deals and prefer to bypass the smart money. It's more likely because the smart money passed. There are exceptions, but I'm speaking. If one doesn't speak generally about finance, it would be impossible to say anything meaningful at all, so bear with me.
If the WeWork collapse represents the moment the pendulum stopped swinging away from private market fantasies and back toward realism, I would argue that it's a good thing for the investor class overall. It's proof the system is still working. Valuations won't be the only thing that come into focus.
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