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corford 7y ago
Sky high valuations that limit your options/exits, potentially pushing your company down a path it shouldn't take.
- looping__lui 7y ago
  ... based on false and unrealistic promises? When did the discussion about “financing structure” become a discussion on ethics? Or are you already taking the “bullshit business hockeystick promises” as a “given in the industry”? Why are fraudulent business practices the first thing that come to your mind? If you told me about WACC and how equity is like actually really expensive way of financing: ok, I get it, some cool discussion on a provocative questionmark. Kind a telling on the industry in a sense :-D
caspper69 7y ago
You can't maintain anything for free; everything has a carrying cost-- even cash in the form of depreciation. Use it or lose it as they say.
- samsonradu 7y ago
  Not everything depreciates over time, does it? Looking at housing in many hot markets or at collectible watches fe.
  - looping__lui 7y ago
    You have something called opportunity costs. Equity is the most expensive financing - especially for startups. The opportunity costs for funding a “high risk of failure startup” that even just has your money sitting on a bank account is fairly high. When S&P500 markets return 20% p.a. - I’d wanna see 100+% return p.a. on my risky startup (it is of course less of a normal distribution kind of thing, more a “lose many and maybe win one”). So actually due to inflation and the opportunity costs associated with the risks you have - stuff may or may not depreciate unknowingly. Watches are only gonna be worth what a seller gives you when the need of selling it arises. Correlation breakdown between asset classes etc etc has made many people not so happy about the decisions they made with more exotic investments and the believe that “not everything depreciates”. A more fundamental and underlying problem may be: we print too much money and inflation is probably hitting insane levels but “hidden well beneath the improvements in society’s productivity”. In a Knightean’s risk sense, we may actually be constantly facing “uncertainty” but believe we are dealing with a more predictable concept of “risk” in our lives. Taleb has written a few good books on it.
looping__lui 7y ago
Guys, take an Accounting 101 class before starting to downvote my questionmark. I’ll take your equity any time. Your debt not so much. Burning through other people’s cash on false promises IS NOT the same as having a more equity heavy financing. Either you fund your companies operations through equity or you fund it through debt. So how on earth are you going to fund a company if you don’t want to do equity or debt? I’m an equity guy. Funded all my shit with my own money and enjoyed the upside. So you’ll get an exclamation mark you can downvote in addition in this post: !

Sky high valuations that limit your options/exits, potentially pushing your company down a path it shouldn't take.

looping__lui 7y ago
... based on false and unrealistic promises? When did the discussion about “financing structure” become a discussion on ethics? Or are you already taking the “bullshit business hockeystick promises” as a “given in the industry”? Why are fraudulent business practices the first thing that come to your mind? If you told me about WACC and how equity is like actually really expensive way of financing: ok, I get it, some cool discussion on a provocative questionmark. Kind a telling on the industry in a sense :-D

You can't maintain anything for free; everything has a carrying cost-- even cash in the form of depreciation. Use it or lose it as they say.

samsonradu 7y ago
Not everything depreciates over time, does it? Looking at housing in many hot markets or at collectible watches fe.
- looping__lui 7y ago
  You have something called opportunity costs. Equity is the most expensive financing - especially for startups. The opportunity costs for funding a “high risk of failure startup” that even just has your money sitting on a bank account is fairly high. When S&P500 markets return 20% p.a. - I’d wanna see 100+% return p.a. on my risky startup (it is of course less of a normal distribution kind of thing, more a “lose many and maybe win one”). So actually due to inflation and the opportunity costs associated with the risks you have - stuff may or may not depreciate unknowingly. Watches are only gonna be worth what a seller gives you when the need of selling it arises. Correlation breakdown between asset classes etc etc has made many people not so happy about the decisions they made with more exotic investments and the believe that “not everything depreciates”. A more fundamental and underlying problem may be: we print too much money and inflation is probably hitting insane levels but “hidden well beneath the improvements in society’s productivity”. In a Knightean’s risk sense, we may actually be constantly facing “uncertainty” but believe we are dealing with a more predictable concept of “risk” in our lives. Taleb has written a few good books on it.

looping__lui 7y ago

Guys, take an Accounting 101 class before starting to downvote my questionmark. I’ll take your equity any time. Your debt not so much. Burning through other people’s cash on false promises IS NOT the same as having a more equity heavy financing. Either you fund your companies operations through equity or you fund it through debt. So how on earth are you going to fund a company if you don’t want to do equity or debt? I’m an equity guy. Funded all my shit with my own money and enjoyed the upside. So you’ll get an exclamation mark you can downvote in addition in this post: !