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> It's understandable for startups who don't yet have a business model not to make any money. I don't understand how anybody can value a company without a busi
by jlarocco 11y ago
> It's understandable for startups who don't yet have a business model not to make any money.
I don't understand how anybody can value a company without a business plan and some idea of how to make money at anything higher than zero dollars. Do they even meet the qualifications for the traditional definition of "company" if they have no plans to make money?
It seems to me as long as venture capitalists are okay investing shit tons of money into silly "startups" that don't know how to make money we're just going to see bubble after bubble after bubble.
It's tempting to speculate that the people inflating this bubble are the ones who managed to cash out of the first dot com bubble before the crash came. Most "real" investors learned their lessons the first time around, and want nothing to do with it. It would explain why so many "unicorns" get such a tepid response when they finally IPO.
- GFischer 11y agoI like Steve Blank's definition of startup: "A startup is an organization formed to search for a repeatable and scalable business model." So, by definition, you don't know how much it's worth using traditional valuation methods you'd use for "normal" companies, so investors use other indicators like growth, number of users, etc. (which can be gamed). As the grandparent post states, "unicorns" are companies that already have a repeatable business model, so they should start to be looked at differently. It's in the "unicorn's" best interests to be valued as a startup for as long as possible, that's one reason they cling to the title far after it's not applicable. It's also a status symbol :) , but it sounds silly when people talk about their "10 year old startup".