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> 4. The Managed Marketplace Era (Mid-2010s) In the context of VC investing (outsize returns, $1B valuation targets) this is such a joke, because these types o
by mbesto 8y ago
> 4. The Managed Marketplace Era (Mid-2010s)
In the context of VC investing (outsize returns, $1B valuation targets) this is such a joke, because these types of companies will never reach software-like margins. Their scale is almost entirely correlated to HR count, thus affecting DCF numbers.
That being said, these companies absolutely deserve a chance as heavily tech-enabled business services firms reduce a lot of undesired waste in their business processes...it's just not appealing from a VC perspective.
- btown 8y agoUnless this parallels a thesis that AI will in turn allow HR costs to scale sub-linearly as these companies grow...
- mbesto 8y agoExcept no one's proven that to work yet. For the same level of investment dollars, you'd be better off buying a mom-and-pop service company and throwing the software in there.
- csa 8y agoI think that at least OpenDoor and Atrium can scale at a VC trajectory. There are probably others that I don’t know about. That said, I agree that a lot of the markets are addressable with tech or tech-enabled solutions, but not at VC valuation targets. I personally see these domains as well as possibly the startup financing world moving more towards a modest but still lucrative business model (e.g., something more like bootstrapping than VC financing). P.S. You are a pro at getting downvotes simply for raising a slightly contrary opinion. Even when I disagree with you, I find your posts thought-provoking, so please don’t stop!