4 ms·

If others are willing to trade ownership in your company such that 100% equaled 1 billion then the answer would be yes. Valuations are made based on exchanges r

If others are willing to trade ownership in your company such that 100% equaled 1 billion then the answer would be yes. Valuations are made based on exchanges relative to the whole's worth. That's a simplified way of how public stock markets work too.

cortesoft 10y ago
A public stock market with common stock is very different than early funding with preferred stock. They are getting more than just at fraction of ownership; they are getting liquidation preferences and other perks that make the stake worth more than just the ownership percentage.
deleted 10y ago
[deleted]
matt_wulfeck 10y ago
So if I buy a 0.0000000001% stake in his company for $1, then suddenly it really is worth $1B? I'm suddenly reminded of his onion article[1]: > U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion 1. http://www.theonion.com/article/us-economy-grinds-to-halt-as-nation-realizes-money-2912 http://www.theonion.com/article/us-economy-grinds-to-halt-as...
- bowersbros 10y ago
  No, because you wouldn't be willing to buy the entire company, or a large enough percentage to show interest in the entire company
- NumberCruncher 10y ago
  Basecamp is valued at 100 B$: https://m.signalvnoise.com/press-release-basecamp-valuation-tops-100-billion-after-bold-vc-investment-c221d8f86ad7#.4gvg4umsd https://m.signalvnoise.com/press-release-basecamp-valuation-...
- ipnon 10y ago
  No, but if a billion other people joined you in a similar fashion then yes. It's kind of like the Architect scene in the Matrix. To paraphrase, "ignorance is the most predictable of all human responses, but rest assured. This is the sixth time we have valued a unicorn, and we have become exceedingly efficient at it." Look into the efficient-market hypothesis. Basically, the potential for profit motivates the members of financial markets to always seek the most accurate valuation of a stock as possible. This means that if there was a discrepancy in the perceived value (in this case $9 billion) and the "actual" value (in your imagination something close to $0), then the price of the stock would be more-or-less automatically corrected because an enterprising individual such as your self would be able to capitalize on this gross negligence on the part of all other financiers. If we generalize this notion, we can conclude that the price of a public stock already includes all available information because if it didn't the potential to profit would see a shift in its price by people either shorting or longing it. So you are kind of right. Kind of.
- barrkel 10y ago
  The value of the bet you make is only $1, so we shouldn't lend much credence to it. The more money is at stake, the more credible the valuation. It's always speculation, of course.

cortesoft 10y ago

A public stock market with common stock is very different than early funding with preferred stock. They are getting more than just at fraction of ownership; they are getting liquidation preferences and other perks that make the stake worth more than just the ownership percentage.

deleted 10y ago

[deleted]

matt_wulfeck 10y ago

So if I buy a 0.0000000001% stake in his company for $1, then suddenly it really is worth $1B? I'm suddenly reminded of his onion article[1]: > U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion 1. http://www.theonion.com/article/us-economy-grinds-to-halt-as-nation-realizes-money-2912 http://www.theonion.com/article/us-economy-grinds-to-halt-as...

bowersbros 10y ago
No, because you wouldn't be willing to buy the entire company, or a large enough percentage to show interest in the entire company
NumberCruncher 10y ago
Basecamp is valued at 100 B$: https://m.signalvnoise.com/press-release-basecamp-valuation-tops-100-billion-after-bold-vc-investment-c221d8f86ad7#.4gvg4umsd https://m.signalvnoise.com/press-release-basecamp-valuation-...
ipnon 10y ago
No, but if a billion other people joined you in a similar fashion then yes. It's kind of like the Architect scene in the Matrix. To paraphrase, "ignorance is the most predictable of all human responses, but rest assured. This is the sixth time we have valued a unicorn, and we have become exceedingly efficient at it." Look into the efficient-market hypothesis. Basically, the potential for profit motivates the members of financial markets to always seek the most accurate valuation of a stock as possible. This means that if there was a discrepancy in the perceived value (in this case $9 billion) and the "actual" value (in your imagination something close to $0), then the price of the stock would be more-or-less automatically corrected because an enterprising individual such as your self would be able to capitalize on this gross negligence on the part of all other financiers. If we generalize this notion, we can conclude that the price of a public stock already includes all available information because if it didn't the potential to profit would see a shift in its price by people either shorting or longing it. So you are kind of right. Kind of.
barrkel 10y ago
The value of the bet you make is only $1, so we shouldn't lend much credence to it. The more money is at stake, the more credible the valuation. It's always speculation, of course.