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If you exit as a $10 billion unicorn, does it matter if the wheels fall off immediately after?
by jsprogrammer 11y ago
If you exit as a $10 billion unicorn, does it matter if the wheels fall off immediately after?
- idlewords 11y agoWhy would a unicorn have wheels? I am so confused
- krapp 11y agoObviously, that's the disruptive feature that makes it worth $10 billion.
- 7Figures2Commas 11y agoIts hind legs have been amputated.
- danieltillett 11y agoAren’t these called decacorns these days :) It only matters if you have any morality since selling a company to investors for $10 billion when you know the wheels are about to fall off is not exactly the right thing to do.
- jsprogrammer 11y agoI don't assume that you know the wheels are about to fall off, only that it doesn't matter to any decisions made prior to the exit. Assuming a voluntary transaction, it is incumbent upon the investors to perform any due diligence they feel they are entitled to.
- danieltillett 11y agoI would hope as a CEO you would know of something major like the wheels falling off immediately after you exit. If the event was truly unknowable before you exited then you are morally fine, but to knowing exit when you know there are serious issues is not fine.
- jsprogrammer 11y agoOne would hope. As long as everything is fully disclosed, an investor may purchase without recourse. For example, M. Cuban achieved a $1 billion valuation of a company on $3.1 million in revenue and $2.7 million in net losses. This was transformed into a $5.7 billion exit months later. Yahoo's market cap was then chopped down by about 80% over the next few years.
- danieltillett 11y agoThere is still a moral duty of care towards non-sophisticated investors. You can make an argument that an investor that buys a company knowing all the risks and who is able to rationally evaluate the risk is responsible for their actions, but many investors are not able to determine the risks involved.
- jsprogrammer 11y agoAn investor who cannot determine risks is not really an investor. More of a cash supply.
- pjc50 11y agoThis is capitalism. As people like to say, you're "obliged" to get the best deal for your current shareholders. As long as you don't lie or omit required information, you're not required to point out that a particular growth metric is slowing down, and can point to a different one. (and as one of the other comments has pointed out, quite often the acquirer will shut down the acquired)