4 ms·
Easier to read as a scatterplot: http://s2.postimg.org/ysodz3mc9/multiplevmargin.png http://s2.postimg.org/ysodz3mc9/multiplevmargin.png This is great data, a
by paulsutter 11y ago
Easier to read as a scatterplot:
http://s2.postimg.org/ysodz3mc9/multiplevmargin.png http://s2.postimg.org/ysodz3mc9/multiplevmargin.png
This is great data, and a lesson for where an early stage company's valuation is headed as a company matures.
Also a reminder why VCs have a liquidation preference. At early stages they're willing to pay higher multiples assuming rapid growth continues. But they're protected if it doesn't.
- boulos 11y agoThe slope of your line is basically (EV/Revenue)/(Profit/Revenue) => EV/Profit which sums up what this article should have been about: P/E ratios are what actually matter. All the other terms just let you thread the needle between a company that's heavily reinvesting (where P may be misleading) versus one that's generating so much cash it can't imagine putting the rest to good use (Apple, Google, to some degree Facebook). Still, I definitely agree that your chart or something like it is what I expected from the article.