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It seems like it's doing well because things are bad in silicon valley, not in spite of. It sounds like there are a lot of desperate startups getting loans to '

It seems like it's doing well because things are bad in silicon valley, not in spite of. It sounds like there are a lot of desperate startups getting loans to 'simulate' growth by having negative profit margins (since they can't get real growth otherwise), then they use that fake growth to get investors' money which they use to service debt, then they keep raising money until they exit or IPO. It doesn't seem sustainable. All these debts end up the hands of corporate shareholders. There's a point where companies and the public will stop buying useless startups (if that point hasn't already passed).

dehrmann 7y ago
> things are bad in silicon valley Really? > there are a lot of desperate startups getting loans to 'simulate' growth by having negative profit margins (since they can't get real growth otherwise) You're conflating a few things, here. The Amazon strategy of reinvestment works as long as it's genuine growth and not overdone. Uber's more of an open question: they've increased demand through subsidies, the question is what will demand look like when prices reflect the true cost. Postmates is in the same situation as Uber, but much worse because they offer a service people can trivially do themselves. > All these debts end up the hands of corporate shareholders. Not usually. And startups don't usually use debt (except in ~2015/2016), they sell equity. VC funds tend to have more pensions and sovereign wealth.