From $6bn to $4.2bn to $2.9bn: Square's ever shrinking unicorn horn Silicon Valley is going to see just how much of its own hype has transferred to Wall Street Thursday with a rare IPO of one of its "unicorns" – companies that venture capitalists have valued at over $1 billion. The credit card reader company Square – which has yet to turn a profit – will be selling a portion of its shares at a …
Actually, given that valuations are being cut, I think people do remember a few things about the first dotcom bubble. But, it does amaze me that I'm still seeing/hearing the same stuff:
- Companies using the 2015 equivalent of "eyeballs" to determine value
- "This time it's different!"
- Crazy SV/San Francisco startup culture making its way back into popular media
I know an IPO is just a way for founders to cash in, but I do feel bad for suckers who think they're going to get rich. Look at Twitter -- there are only so many ways you can make money off a free platform, and most of them involve data mining or ads. Or Square for that matter; they're a ripe target for the mobile phone payment networks (Apple Pay, etc) and card issuers themselves (Visa's e-payment system for example) but just because they do "credit cards on a phone" they have a crazy valuation.
As someone whose friends lost money on dotcomboomandbust1.0 (taking me from jealous to smug at the same time), I can testify it's exactly the same, only bigger. And last time was big enough to kill Marconi, and nearly kill BT, both of whom were very profitable but invested heartily in tech stocks. And there were plenty of other casualties.
I don't care about private investors who can't evaluate a company - that's their punt, I care that peoples pension funds etc are going to go into this shit.
>Why don't people remember Bubble 1.0?
I say this more and more about things now that I am comfortably over of the median age of my population. There is a reason why the whole Iraq adventure occurred a full generation plus after Vietnam. New fools to learn the lesson.
Because it was in 1637?
Or because they don't want to, no money in that. And of course it's all different now and it's a whole new ball game and naturally they are so much cleverer than the last lot. And that wasn't a bubble either, just bad management by others and a bit of bad luck.
Not hip, not cool.
A PITA to use.
Why on earth did the investors fall for this snake oil of a system?
How many outlets have signed up to this walking disaster?
I say disaster because I have only ever seen one place that advertised it and the retailer said, 'Oh that. I does not work and never has properly. We are getting rid of it next week. Waste of time.'
I've dealt with at least a dozen small retailers - usually individuals selling things on the road, at fairs and powwows and such - who used Square. Never had a problem.
I'm not enthusiastic about it myself; as any number of people have pointed out, there are lots of firms that sell and lease credit-card readers and related services. Square's contribution was basically "connect it to an iPhone and market the hell out of it", as far as I can tell.
But in some circles it is widely and successfully used. And unlike some Unicorns, Square at least has a product and a business model. Will they still be around in ten years? I don't know, and I'm not rushing out to place bets on it. But it's less stupid than some of the latest breed of tech startups.
Can someone explain this please ?
On say Uber example. It is valued at 40 billion and had 1 billion in funding but does not really have any assets, so how VCs are in profit if Uber does not go IPO or just simply flops ?
Because you can trade those *private* shares off to punters much more freely than publicly registered shares... There's preciously few rules governing the trade of private equity, so the tricks that can't be pulled at Wall Street can be pulled in that arena.
Every company has founders, each founder has shares in the company. As long as the company is private, each founder can decide what he wants to do with his own shares and, unless the statutes of the company demand a specific process, nobody has the right to call him on it.
For example, I am in business with an associate. Together we head a small company. I have a certain amount of shares, he has the rest (the majority actually, I joined his company). We are not and never will be publicly traded, but I still have a share of the company. If we are very successful, when I retire I will be able to sell those shares at the best price I can get, and there is no law that says otherwise.
Every company has founders, each founder has shares in the company
True of corporations (broadly speaking - really it's true of joint-stock corporations), but not necessarily of all companies, unless you take "shares" in a very general sense and not as a financial term of art - which is clearly how it's being used in the article and most of the subsequent discussion.
This is going to worth bazillions but oh no... All of you scum have to come out of the woodwork and start dissing it.
First off you are not allowed to comment unless you are invested. Then if you do comment in a negative manner it is quite obvious you are not invested or otherwise either/and/or,
1) Short on the stock.
2) Work for a competitor.
3) Got the sack from the company.
Do kindly fuck off whilst the rest of us believers, and anyone else we can drag in, gets to share in the new found wealth created from nothing... apart from those we will be dragging in to act as the sink to our profit taking.
Yours Sincerely
Mr Angel Investor/Venture Capitalist/Entrepreneur
Bubble 1.0 was about pumping up the stock price with fraudulent claims of revenue and productivity, often from empty offices. The Securities and Exchange Commission won't be fooled by that trick again. Bubble 2.0 is scaring crusty old software companies into believing that they have one foot in the grave and new startups are taking over. Bubble 2.0 grows because the premise is true yet it will pop because spending billions to buy startups is an expensive way of feeding your disease.
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