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Have you been living in a cave for the last decade? This is modern business, whatever is hot and gets a lot of users, gets a ridiculously unrealistically high v
by everyone 8y ago
Have you been living in a cave for the last decade? This is modern business, whatever is hot and gets a lot of users, gets a ridiculously unrealistically high valuation. Also, you never need to be profitable, as long us ure hot you can just keep doing more rounds of funding.
- amelius 8y agoSounds an awful lot like a Ponzi scheme to me. From Wikipedia: > A Ponzi scheme is a form of fraud in which a purported businessman lures investors and pays profits to earlier investors using funds obtained from newer investors. Investors may be led to believe that the profits are coming from product sales, or other means, and remain unaware that other investors are the source of apparent profits. A Ponzi scheme is able to maintain the illusion of a sustainable business as long as most of the investors do not demand full repayment and are willing to believe in the non-existent assets that they are purported to own, and there continues to be new investors willing to contribute new funds. https://en.wikipedia.org/wiki/Ponzi_scheme https://en.wikipedia.org/wiki/Ponzi_scheme
- phailhaus 8y agoNo. Businesses whose success depend on network effects are not automatically Ponzi schemes.
- amelius 8y agoWho said anything about network effects?
- phailhaus 8y agoThe comment you replied to is (snarkily) saying that as long as a company is "hot" (i.e., it has a lot of users) then investors will keep coming. That's totally reasonable; a product doing well that grows as a function of the number of users using it is a promising investment (especially when those users are paying!). That's not a Ponzi scheme.