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Greed is the root of these investors problems. They offered up anything to get a piece of each round - in this case voting power and board seats. Uber investor

Greed is the root of these investors problems. They offered up anything to get a piece of each round - in this case voting power and board seats. Uber investors are not alone - Facebook and Google investors also have little control.

aetherson 9y ago
Facebook and Google have enriched their early investors in relatively straightforward ways. I mean, Facebook delayed its IPO and took a while to get revenue going, but it was still only about 8 years from "thefacebook.com" to filing for IPO. Uber has been around for 8 years now and it's asking for billions more from its investors to prop up massive operating losses while it takes longshot bets in heavily competitive spaces. This is basically a story of investors thinking that the magic bullet for more Google/Facebook-style successes was giving founders unilateral control of the companies, and then saying, "Oh, wait."
- adventured 9y ago
  It's pretty remarkable how fast Facebook scaled their business. The criticism in the early days, in hindsight, was dramatically overblown. They did $777m in sales for year six ('09), with $229m in net income. To put that into amusing perspective, Netflix did $186m in net income for fiscal 2016 - their 18th year in business. It's more net income (again, just in year six) than all of these following companies combined have produced in their entire histories: Uber, Didi Chuxing, Lyft, Zillow, Pinterest, Yelp, WeWork, Snapchat, Twitter, Groupon, JD.com, Zynga, Spotify, Reddit, GoDaddy, Pandora, Blue Apron, Quora, Shopify, Angie's List (could add a lot more to this list)
  - Nition 9y ago
    I wonder if you hypothetically had a list of every tech startup in the last decade, if the total net profit would be positive.
    - adventured 9y ago
      I think if you narrowed it down to every tech start-up that took on venture capital at some point in the last ten years, the answer would be a resounding no. It might be positive if you included all tech start-ups over ten years (any of the others that make it ten years pretty much have to be profitable by necessity and there are dramatically more of those than the well-publicized VC backed companies). The red ink pile from the VC companies is epic though, so the others may still not be close to an offset. I'm not aware of any tech start-ups from the last ten years, that are printing income at an impressive level (something akin to the profit ramp of a Google or Facebook). Airbnb might be a candidate for a large income generator, that segment has good margins if expenses are tightly managed; it was founded in 2008, so it's about to age-off that list. There certainly may be some young profit machines hiding in China, as a universe unto itself it can be difficult to track all the start-ups there. Jinri Toutiao for example, is at or around $2.5x billion in revenue for 2017, after just four years, a rather extraordinary growth rate for an ad business. As an aggregator, you'd think that would have tremendous margins, but they're raising tons of capital, so I'd guess they're currently spending at a very high level.
      - B1FF_PSUVM 9y ago
        > The red ink pile from the VC companies is epic Adding it all up would be interesting. The data may even be available.
    - eru 9y ago
      If you include founders' opportunity costs (they could have worked for a steady paycheck at eg Google instead), it's sure to be negative.
  - LunaSea 9y ago
    This is comparing apples to oranges. You can't just pick two startups, compare their revenues for a certain year and disregard their industry and operation costs.
    - mox1 9y ago
      You most certainly can if you are looking at them from a pure investment prospective.
dogruck 9y ago
Google explicitly gave little power to common shareholders when at IPO, and the shares continue to willfully trade. I don't understand your point about greed. Do you propose some alternative structure to corporate ownership? Seems beside the point of negotiating over voting rights.
- pkaye 9y ago
  The investors willingly gave away their voting rights in order to get early shares. So really there is nothing wrong except their own greed got the best of them.
  - dogruck 9y ago
    I don't understand your comment about "greed." Some people decide to buy, at say $54 in 2004. Others avoided the temptation for "greed," and decided not to buy. Then the stock went up 18x. Who's greedy now?
    - optimuspaul 9y ago
      Yeah I'm not sure this is greed at all. I don't think it rises above poor judgement in risk analysis.
    - pkaye 9y ago
      Greed means they had a strong desire for something. It has nothing to do with success. It is just that when they fail and ask why, people say their greed was their downfall. In otherwords look within themselves. Their strong desire for something overrode any critical thinking of the other risks involved. And if they succeed they will of course gloat about how great a investor they are.
- walshemj 9y ago
  well the UK/FTSE does not like this sort of dual class listing and one high profile media group (DMG) got kicked from the FTSE collated index over this a couple of years ago.
deleted 9y ago
[deleted]
JumpCrisscross 9y ago
> Greed is the root of these investors problems Lack of discipline is more precise. Greed parses as everything from myopia to selfishness. (Though even then, nobody on the Board is close to suffering actual losses.)

aetherson 9y ago

Facebook and Google have enriched their early investors in relatively straightforward ways. I mean, Facebook delayed its IPO and took a while to get revenue going, but it was still only about 8 years from "thefacebook.com" to filing for IPO. Uber has been around for 8 years now and it's asking for billions more from its investors to prop up massive operating losses while it takes longshot bets in heavily competitive spaces. This is basically a story of investors thinking that the magic bullet for more Google/Facebook-style successes was giving founders unilateral control of the companies, and then saying, "Oh, wait."

adventured 9y ago
It's pretty remarkable how fast Facebook scaled their business. The criticism in the early days, in hindsight, was dramatically overblown. They did $777m in sales for year six ('09), with $229m in net income. To put that into amusing perspective, Netflix did $186m in net income for fiscal 2016 - their 18th year in business. It's more net income (again, just in year six) than all of these following companies combined have produced in their entire histories: Uber, Didi Chuxing, Lyft, Zillow, Pinterest, Yelp, WeWork, Snapchat, Twitter, Groupon, JD.com, Zynga, Spotify, Reddit, GoDaddy, Pandora, Blue Apron, Quora, Shopify, Angie's List (could add a lot more to this list)
- Nition 9y ago
  I wonder if you hypothetically had a list of every tech startup in the last decade, if the total net profit would be positive.
  - adventured 9y ago
    I think if you narrowed it down to every tech start-up that took on venture capital at some point in the last ten years, the answer would be a resounding no. It might be positive if you included all tech start-ups over ten years (any of the others that make it ten years pretty much have to be profitable by necessity and there are dramatically more of those than the well-publicized VC backed companies). The red ink pile from the VC companies is epic though, so the others may still not be close to an offset. I'm not aware of any tech start-ups from the last ten years, that are printing income at an impressive level (something akin to the profit ramp of a Google or Facebook). Airbnb might be a candidate for a large income generator, that segment has good margins if expenses are tightly managed; it was founded in 2008, so it's about to age-off that list. There certainly may be some young profit machines hiding in China, as a universe unto itself it can be difficult to track all the start-ups there. Jinri Toutiao for example, is at or around $2.5x billion in revenue for 2017, after just four years, a rather extraordinary growth rate for an ad business. As an aggregator, you'd think that would have tremendous margins, but they're raising tons of capital, so I'd guess they're currently spending at a very high level.
    - B1FF_PSUVM 9y ago
      > The red ink pile from the VC companies is epic Adding it all up would be interesting. The data may even be available.
  - eru 9y ago
    If you include founders' opportunity costs (they could have worked for a steady paycheck at eg Google instead), it's sure to be negative.
- LunaSea 9y ago
  This is comparing apples to oranges. You can't just pick two startups, compare their revenues for a certain year and disregard their industry and operation costs.
  - mox1 9y ago
    You most certainly can if you are looking at them from a pure investment prospective.

dogruck 9y ago

Google explicitly gave little power to common shareholders when at IPO, and the shares continue to willfully trade. I don't understand your point about greed. Do you propose some alternative structure to corporate ownership? Seems beside the point of negotiating over voting rights.

pkaye 9y ago
The investors willingly gave away their voting rights in order to get early shares. So really there is nothing wrong except their own greed got the best of them.
- dogruck 9y ago
  I don't understand your comment about "greed." Some people decide to buy, at say $54 in 2004. Others avoided the temptation for "greed," and decided not to buy. Then the stock went up 18x. Who's greedy now?
  - optimuspaul 9y ago
    Yeah I'm not sure this is greed at all. I don't think it rises above poor judgement in risk analysis.
  - pkaye 9y ago
    Greed means they had a strong desire for something. It has nothing to do with success. It is just that when they fail and ask why, people say their greed was their downfall. In otherwords look within themselves. Their strong desire for something overrode any critical thinking of the other risks involved. And if they succeed they will of course gloat about how great a investor they are.
walshemj 9y ago
well the UK/FTSE does not like this sort of dual class listing and one high profile media group (DMG) got kicked from the FTSE collated index over this a couple of years ago.

deleted 9y ago

[deleted]

JumpCrisscross 9y ago

> Greed is the root of these investors problems Lack of discipline is more precise. Greed parses as everything from myopia to selfishness. (Though even then, nobody on the Board is close to suffering actual losses.)