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Which one of these will be the biggest “unicorn” failure ever?
- fullshark 4y agoNeed to add a column with the IPO valuation to answer this properly. I'm guessing when you add that column all of these were massive successes except WeWork which went public via SPAC and their IPO imploded.
- Bubble_Pop_22 4y agoValuation is meaningless from the perspective of analyzing if a company has been a success or a failure. Valuation concerns the players who sit at the poker table and how each and everyone of them managed to fare during the game. The table being the company and the players being the investors. The OP is right in accounting funds raised vs. losses incurred as the metric to watch for. The funds raised belong mostly to public pension/private funds and insurance companies, with the intermediation of PE/VC funds.
- fullshark 4y agoIt was a half-joke, designed to illustrate that goals of successful company and successful IPO dump have been conflated the last several years. Ultimately the poker game as you call it is what the people holding the money care about so...
- Bubble_Pop_22 4y agoHa sorry for not getting it. You are mostly right, but I still hold out that very smart and competitive people might want to do all. Meaning having their fingerprints on a company that achives the trifecta of being a financial success in terms of profit/FCF, marketcap valuation and also makes a trademark product/service used by everybody. Eg. Google or Amazon or Facebook.
- deleted 4y ago[deleted]
- Ancient 4y agoSurprising Magic Leap is not in the list which was a failed "unicorn".
- cryptoanon 4y agoBrex
- lordleft 4y agoTeladoc Health 2002 $0.17 billion $11.2 billion ..how is this possible? Doesn't this suggest that Teladoc can cover their expenses pretty well via revenue (because how else are they in business?)
- adventured 4y agoThe losses they're showing aren't all cash / operating losses, which rather damages the article.
- cragfar 4y agoThey used their high stock price to buy Livongo, and then did massive write downs on it when it ended up not being that great (~$9 billion in total). They had two quarters in a row where they did good will impairments of 30-40% of their market cap. Bought Livongo October 2020 (stock price $200)for $18 billion- https://www.fiercehealthcare.com/finance/teladoc-finalizes-blockbuster-deal-livongo-less-than-three-months https://www.fiercehealthcare.com/finance/teladoc-finalizes-b... Q1 2022 6.6 billion write down- https://www.fiercehealthcare.com/health-tech/teladoc-takes-66b-hit-q1-write-down https://www.fiercehealthcare.com/health-tech/teladoc-takes-6... Q2 3 billion write down- https://www.insiderintelligence.com/content/teladoc-health-turns-steep-3-1b-loss-q2-how-much-finger-pointing-goes-livongo https://www.insiderintelligence.com/content/teladoc-health-t...
- yrgulation 4y agoPalantir is not going anywhere anytime soon. They are about to sleaze their way into the british healthcare system. Uber is likely to go under, sold for their rider and driver base at a discount value. Airbnb’s bubble has burst. Door dash? Why is even door dash such a popular thing. And why do these companies need so many people to maintain their apps? Should be max 100 devs and everyone else in sales and support.
- kman82 4y agoSleaze?
- yrgulation 4y agoIn British English this means immorality, corruption. I am referring to this: https://www.theguardian.com/society/2022/nov/13/controversial-360m-nhs-england-data-platform-lined-up-for-trump-backers-firm https://www.theguardian.com/society/2022/nov/13/controversia... Please ignore the trump bit. It’s about what they will do to our data and how the corrupt tory government is turning a blind eye to it.
- worik 4y agoThat is terrifying. I am in a different country. I argued with my doctor that I would not tell them confidential health related information that could have consequences for me, or held against me. They said "do not worry, it is entirely confidential". I did not share the information, told my doctor lies (as I said I would if they were putting their notes in a database). I feared hackers (happened recently to a neighbouring health group https://en.wikipedia.org/wiki/Waikato_District_Health_Board_ransomware_attack https://en.wikipedia.org/wiki/Waikato_District_Health_Board_...) but the NHS actually selling the data? They are completely mad, bad, unbelievably irresponsible.
- kornhole 4y agoYes and Palantir is deeply embedded into many US government agencies. They are somewhat protected by this, but they may need to slim down to justify the bailouts they might receive.
- moralestapia 4y agoHow come they can lose more money than they raised? If that's because of revenue, why is that being accounted as a loss? Is it because they spend it all? No real profits?
- ygjb 4y agoRaise money. Use raise as an asset to secure credit. Accrue liabilities during normal business operations. Fail to generate revenue and raise more money and credit. Demonstrate growth without profit. Rinse, repeat.
- bobthepanda 4y agoI could be wrong but I would imagine that funds raised would be the amount strictly raised from outside investors, not total revenues. Example, Uber still makes revenue from its rides, just not enough for a profit and in this case funds raised would be making up the difference.
- hn_throwaway_99 4y agoBut the whole point of "cumulative losses" is that one would assume losses means revenue - expenses. If "revenue - expenses" is a negative number that is far larger than the amount you have raised, how are you not bankrupt yet?
- moralestapia 4y agoYes, this.
- deleted 4y ago[deleted]
- splitstud 4y agoSay you received 1,000 when graduating high school. You then got a job making 100/month, signed a lease and moved out of the house. You have expenses of 180/month. How long before you are destitute?
- xbar 4y agoNetScape ~$8Billion, cumulative losses ~$8Billion
- ChuckNorris89 4y ago"Perfectly balanced, as all things should be"
- whiplash451 4y agoHey, it’s called a balance sheet for a reason.
- _448 4y ago> "...the business plan of some of these companies was to become so useful to the decision-making class (business executives, government officials, and rich people) that they’d ultimately get some sort of government support." This! The speculative investors have tasted blood during the 2008 financial crisis and the general public has already been conditioned to accept the idea of "too big to fail". So this music chair game is going to be played for a long time.
- pessimizer 4y ago> the general public has already been conditioned to accept the idea of "too big to fail". No, the general public has been made aware that once businesses hit a sufficient level of financial entanglement with people in government, they will not be allowed to fail. The general public was not consulted on this, because it doesn't matter what the general public thinks when something is bipartisan (which is true for all but <10 "wedge" issues.) Handing wealthy people tax money is bipartisan, for example. Handing poor people tax money is a wedge issue.
- woeirua 4y agoFor those of you confused as to how these companies are running at all given that they have never turned a profit the answer is: 1 - they pretty much all raised a ton of capital by going public, 2 - they have all taken on significant amounts of debt. This was previously considered a good move because of low interest rates. 3 - some of these companies actually could be profitable, but only if they cut expenses, I.e. Layoff overpaid employees. Now to be clear, some of these companies are hopelessly screwed.
- lmarcos 4y ago> Now to be clear, some of these companies are hopelessly screwed. I'm not sure about that. I imagine that for the founders and top executives of these "loser" companies, they are having the time of their lives: Earning top money fast without doing too much. So, from their point of view, the company is doing fine. Now, sure, employees are always screwed no matter what ;)
- z9znz 4y agoThere is a big distance between the unmentioned 0 and your 1. 0.1 - 0.999 - they raised round after round of VC, paying back the previous round with big profits. 1 - they sold the gullible public (which never should have happened - regulators should have prevented the IPO!) on a business model with no real hope of profit.
- biggoodwolf 4y agoGullible indeed, all those ETFs investing by default in these? Check.
- z9znz 4y agoETFs investing in utterly non-profitable companies does not make it valid. The reason ETFs are putting money in riskier and riskier places is that there is too much money concentrated in a few places, and there are rules as to what % of their investments can be put into one investment.
- 4y ago
- lordnacho 4y agoDepends a bit on what failure means. "Sold for less than raise" perhaps counts? My guess is one of the first two, Uber or WeWork. Uber doesn't seem like it's cheap anymore as a customer. How is that going to compete? And WeWork is already competing with standard rent-an-office businesses that are worth a lot less.
- hedora 4y agoThe table really should include revenue, assets and debt columns, along with some notes about how any debt is structured. For instance, Nutanix has $1.6B in the bank, $1.2B in annual revenue, and their annual loss per share is trending down while sales trend up. They also have a ton of debt. Hopefully there isn't a balloon payment / interest rate adjustment coming soon. Assuming they're not heading to some financing cliff, then borrowing at less than inflation rates, and using the money to buy market share was probably the right move.
- bob1029 4y agoNot sure about Robinhood being on this list. They actually have billions in cash on hand right now. They also have some valuable IP that a lot of people don't give them much credit for. One example being a brand new, in-house trade clearing system. This is similar to rewriting an IBM core banking system from scratch. https://www.cnbc.com/2018/10/10/robinhood-launches-its-own-trade-clearing-system-as-customer-growth-surges.html https://www.cnbc.com/2018/10/10/robinhood-launches-its-own-t...
- lake_vincent 4y agoSpoiler alert: they had help. Robinhood is a wolf in sheep's clothing - they are controlled by, and beholden to, criminal enterprises such as Citadel. This "in-house" trade clearing system is actually Ken Griffin's personal honeypot. It is built for one, and only one purpose, and that is to fleece retail investors at all costs while simultaneously creating the appearance of being retail's champion. It's a neat trick, and I'd almost respect their enginuity if they weren't robbing people blind. I wouldn't touch Robinhood's products or common stock with a 100 foot pole, and neither should you. Edit: See my other comments below for an idea of how/why this works.
- MrMan 4y agoI also would ever use Robinhood instead of a reputable broker like TD Fidelity Vanguard IB etc. But not for the reasons you stipulated. Back office systems aren't put in place to "fleece" anyone.
- lake_vincent 4y agoBack office systems are exactly where Citadel, the market maker, could put a tiny little window to peep at data they shouldn't, so they can frontrun every trade retail investors make!! The secret ingredient is crime ;)
- mywittyname 4y agoSounds like they found a way to make the plot of Office Space work in real life.
- kuwoze 4y agouber and door dash
- _ea1k 4y agoI've alluded to this in other comments, but these fundraising numbers have to be incomplete. Rivian raised 10.7B, lost 11.1B, and yet they have close to 14B in cash on hand? They've overlooked a lot of fundraising. I'm guessing others have similar mistakes.
- deleted 4y ago[deleted]
- anonu 4y agoThe tide is going out: higher interest rates mean the economic decisions of the last 15 years will need to be recomputed. Cheap money is no more. Easier to earn a good return with a CD or bank account even.
- cma 4y agoWhere good return == lower than inflation rate. TIPS are positive rate now but unless in a tax advantaged account could fail to keep pace with inflation too.
- dont__panic 4y agoWhen stocks and real estate are inflated and you fear a crash, isn't it better to put your money in bonds, CDs, etc?
- toomuchtodo 4y agoI-bonds (lots of restrictions apply) are the instrument that loses the least value in this macro. Bonds have seen a spectacular haircut over the last 18 months [1]. You’re up against duration risk. Treasuries are only federally taxed, CDs are fully taxed, so a strategy some adopt is a short term treasury ladder until Fed go forward benchmark policy crystallizes (which leads to more firm asset class pricing information), at which point you possibly rebalance or reallocate. (not investing advice) [1] https://www.marketwatch.com/story/bond-markets-facing-historic-losses-grow-anxious-of-fed-that-isnt-blinking-yet-11665104885 https://www.marketwatch.com/story/bond-markets-facing-histor...
- streblo 4y agoThere's a pretty low limit on the amount you can invest in ibonds per year. It's in no way a solution for people looking to protect assets in a bear market.
- deleted 4y ago[deleted]
- insane_dreamer 4y agoWeWork already failed so I guess it's them, for now
- ajaskiewicz 4y agoWhy is it? It seems reasonable for them to grow after the pandemic ended and people switched to remote
- paxys 4y ago"Cumulative losses" is meaningless in the way they are using the term. You need many, many more datapoints to judge the overall health and value of a company. And even after that you are likely going to be wrong in your prediction. Uber raised $25 billion and is worth $60 billion in public markets today. By what criteria is it a bigger failure (or a failure at all) over Theranos, FTX and thousands of other companies that raised a significant amount of money and are worth exactly $0?
- z9znz 4y ago> worth $60 billion in public markets today In the same way that Shibu Ino coin is "worth" 4.9 billion - ie, meaningless and entirely fictional; lacking any substantive value. Uber stock is worth what it is because there are still more fools available to buy it. Theranos failed and was completely exposed, and even the fools are no longer interested. That's not to suggest that Uber did not do some things very well. They identified a need and provided a solution (mostly software-based), but their actual on the ground solution wilfully ignored local laws globally. Even ignoring legislation and regulation which costs money, they still tried to use loss-leading tactics to win markets. So they burned vast amounts of money to undercut the market. Had they ever rectified those two HUGE issues, they would be struggling to make a profit. Even not rectifying them, they are struggling. So holding them up as a success is just naive and wishful, but wrong.
- z9znz 4y agoWith all the unspoken but obvious disdain for the ridiculous cryptocurrency schemes, I wonder if the HN crowd will recognize the elephant in the room here. TFA illustrates that the venture capital/startup tech scene is arguably the biggest Ponzi scheme in the last 20+ years. Even ignoring the financial losses, most of these companies have operated in a gray or fully illegal manner. So imagine that the financials don't work and the legalities don't work... and yet this is our HN universe. Edit: (added) sorry to offend those of you who work for Uber or other companies which operate on fantasy funding with no actual profitable business model; sometimes I forget the illusion is so strong and people immersed don't know better.
- JumpCrisscross 4y ago> venture capital/startup tech scene is arguably the biggest Ponzi scheme in the last 20+ years Between VC returns, at the top decile (where it outperforms) and broadly (where it simply performs), and the tangible track record of VC-backed companies from SpaceX to Moderna, this comparison is foundationally false.
- p0pcult 4y agoLet's just ignore all the externalities created by market-breaking and law-ignoring, tho!
- cercatrova 4y agoWell, I'd rather ride in an Uber than a cab and until very recently stay in an Airbnb rather than a hotel. For better or worse, they truly did disrupt those industries for consumers, much as non-customers might complain.
- piva00 4y ago> For better or worse, they truly did disrupt those industries for consumers, much as non-customers might complain. Ignoring all the suffering caused by the externalities on rental market caused by Airbnb in very touristic areas (e.g.: Lisbon, Barcelona, etc.), it's great for consumers. The issue is that none of these externalities are priced in, there is no compensation or fair counterpart for the victims of these companies. And somehow it all seems ok for some people...
- recuter 4y agoI propose a new term for these volatile times instead of unicorns: Wily Coyotes.
- leobg 4y agoI wonder how Stripe will do. HN is full of bitter stories.
- paxys 4y agoHN is bitter about everything. Stripe – and really most companies on that list – are going to be just fine.
- arcturus17 4y agoStripe is an outstanding set of products that are not, AFAIK, making a loss on every sale or in a yet-to-be-proven business model.
- jiggawatts 4y agoHaving worked with Nutanix, I would bet on them failing. Their products are consistently medium good. Not great, not terrible, just… “okay”. The problem is that the competition is getting very good very fast. Nutanix competes with the cloud, which means that as Azure and Amazon get better they get less compelling. Most of our customers that choose Nutanix previously are on Azure now.
- deleted 4y ago[deleted]
- robocat 4y ago> Their products are consistently medium good Oddly enough, this can be a sign of an excellent business. Microsoft originally provided some very mediocre products, but in a world fulled with absolutely shit products, being predictably mediocre was astonishing! Before 2000, when Microsoft produced a lemon, they always seemed to recognise the problem and then replace it with something that was crappily useable (and they also had a few products that were actually good). Your comment makes me think that products and services are higher quality now, so it is harder to compete by being merely mediocre or even “medium good” (as you point out).
- Bubble_Pop_22 4y ago> Oddly enough, this can be a sign of an excellent business. Microsoft originally provided some very mediocre products, but in a world fulled with absolutely shit products, being predictably mediocre was astonishing! Before 2000, when Microsoft produced a lemon, they always seemed to recognise the problem and then replace it with something that was crappily useable (and they also had a few products that were actually good). People in here including me dream of living in an era where there is such a giant leap such as the leap to GUI provided by Win95, or even the revolution of the chip. If you didn't like being around when Win95 was coming out, I guess living in today's timeline where innovation has reached stagnation must be pure hell! /s
- throwayyy479087 4y agoNutanix's website gives absolutely 0 real information about what they do. There's some fluff about apps, cloud, and transformation - are they a body shop? AWS competitor?
- abigail95 4y agoThis is FTX style accounting
- insane_dreamer 4y agoUnless it shows the nature of the losses (opex losses? taking on low-interest debt? huge write-off of acquisitions made with stock?), this chart is somewhat unhelpful.
- KaoruAoiShiho 4y agoFor sites like airbnb it's not possible for the story to be "not real". It's just a website guys, there is no per-unit costs that makes the economics not work out.
- BeetleB 4y agoAirbnb spends a lot for support, which doesn't scale (e.g. dispute resolution, etc). Not saying they provide good support, but they have to staff for it.
- arcturus17 4y agoBy that reasoning, all software plays must be profitable, but alas, zero marginal cost of distribution does not entail profitability.
- suzzer99 4y agoTwitter has entered the chat.
- qqtt 4y agoWould be interesting to see cash flow, which is probably more relevant when comparing against capital raised. If this is EBITDA, then included in those losses for these companies is a ton of stock based compensation which really has zero effect on cash flow. Also, if we are talking EBITDA, Snap did hit a positive GAAP net income for a single quarter: https://techcrunch.com/2022/02/03/snap-finally-did-it-yall/ https://techcrunch.com/2022/02/03/snap-finally-did-it-yall/
- panick21_ 4y agoPeople love to joke about Tesla and claim that 'they just threw cash at it' and the company was 'burning cash'. Compare history of Tesla to that of Rivian and what kind financing and cash they operate with.