4 ms·

Personally I believe that if a company is trying to raise private funding beyond a certain very high valuation, say over $1B-2B, rather than going public, there

by yumraj 4y ago

Personally I believe that if a company is trying to raise private funding beyond a certain very high valuation, say over $1B-2B, rather than going public, there is something iffy and it's being done to avoid all the scrutiny and compliance that going public requires. I still remember when Groupon went public, and soon after it was revealed that they had engaged in all kinds of funky accounting leading to stock crash. Not sure if there is something similar going on here, but raising private funding at such a high valuation doesn't seem normal.

ergocoder 4y ago
I don't think it is anything shady. Just your regular not-that-profitable thingy to justify high valuation.
SamReidHughes 4y ago
They'd get endless specious shareholder lawsuits or SEC lawsuits like the way Exxon does.
raverbashing 4y ago
Especially if you have a "money printing business" (which I really think Stripe qualifies, or is really close to)
- enahs-sf 4y ago
  They take a rake on pretty much all e-commerce so I’d say that qualifies.
  - matthewdgreen 4y ago
    How does Stripe not have a well-developed set of competitors after all these years? What is its network effect? Every time I ask people about this, they say it has an amazing developer-friendly set of APIs. But it’s hard for me to believe nobody has been able to replicate this experience a decade later, when Stripe’s APIs are sitting right there to crib off of.
    - 0xy 4y ago
      It's because Stripe negotiate steep discounts. The APIs are merely the trojan horse to get inside your org. Speaking from experience at the table at some of these deals, Adyen or other competitors would often approach my employer (large e-commerce company) offering a better deal, but executives would merely take the deal to Stripe and say "match it or we're leaving", and they would. Given the cost of leaving is only somewhere between $50-200k depending on the complexity of your checkout systems, the client base isn't particularly sticky. I'm bearish on Stripe for this reason. If they're just racing to the bottom with Adyen and others then where are they going to make money? Their other products are pure garbage (Stripe Radar is worse than useless).
- yumraj 4y ago
  Groupon[0] was also considered a "money printing business" at the time of their IPO. But post IPO they had to open their kimono and everyone found out that it was all just funky accounting. They went from reporting a positive operating income of $60.6 million for 2010 to an operating loss of $420 million for 2010 after proper accounting. [0] https://en.wikipedia.org/wiki/Groupon https://en.wikipedia.org/wiki/Groupon
  - twelve40 4y ago
    I dunno, I haven't really bought into Groupon hype. Its easy to imagine life without coupons. It's much harder to imagine life without payment processing. For all of its flaws, Stripe is plugged into almost every online business I've worked with, so I'd say they are in a position that is harder to screw up than Groupon. But possible, of course.
- deleted 4y ago
  [deleted]
pjc50 4y ago
It is probably iffy in the sense of being massively overvalued, but on balance it's socially beneficial to part naive billionaires from their money. I'm quite happy for the Saudi sovereign wealth fund to keep making dumb investments through Softbank, like WeWork.
- gruez 4y ago
  You're forgetting that institutional investors (eg. pension funds, university endowments) also exist, and can get caught up in these "dumb investments" as well
  - lotsofpulp 4y ago
    I am happy for them to make dumb investments too. They always have the option to buy an index or target date ETFs if they do not want to risk losing money.
  - juve1996 4y ago
    Institutional investors should be adequately managing their risk.
    - adenozine 4y ago
      Would you tell your parents or grandparents that, when they find out they won’t be able to afford their lifestyle and have to move in order to retire? That their fund should’ve managed the risk better?
      - coffeebeqn 4y ago
        No? They’re not the ones managing the funds. The fund managers - yes I would tell them to stop playing VC with retirement funds
        candiodari 4y ago
        Since those funds are underfunded, which is not the fault of those managers, wouldn't not playing VC with the funds simply turn bad odds of maintaining their lifestyle into guaranteed failure?
SamReidHughes 4y ago
Another reason is that it benefits them for the competition to not know how well they're doing. This was one downside Home Depot had when going public.

by yumraj 4y ago

ergocoder 4y ago

I don't think it is anything shady. Just your regular not-that-profitable thingy to justify high valuation.

SamReidHughes 4y ago

They'd get endless specious shareholder lawsuits or SEC lawsuits like the way Exxon does.

raverbashing 4y ago

Especially if you have a "money printing business" (which I really think Stripe qualifies, or is really close to)

enahs-sf 4y ago
They take a rake on pretty much all e-commerce so I’d say that qualifies.
- matthewdgreen 4y ago
  How does Stripe not have a well-developed set of competitors after all these years? What is its network effect? Every time I ask people about this, they say it has an amazing developer-friendly set of APIs. But it’s hard for me to believe nobody has been able to replicate this experience a decade later, when Stripe’s APIs are sitting right there to crib off of.
  - 0xy 4y ago
    It's because Stripe negotiate steep discounts. The APIs are merely the trojan horse to get inside your org. Speaking from experience at the table at some of these deals, Adyen or other competitors would often approach my employer (large e-commerce company) offering a better deal, but executives would merely take the deal to Stripe and say "match it or we're leaving", and they would. Given the cost of leaving is only somewhere between $50-200k depending on the complexity of your checkout systems, the client base isn't particularly sticky. I'm bearish on Stripe for this reason. If they're just racing to the bottom with Adyen and others then where are they going to make money? Their other products are pure garbage (Stripe Radar is worse than useless).
yumraj 4y ago
Groupon[0] was also considered a "money printing business" at the time of their IPO. But post IPO they had to open their kimono and everyone found out that it was all just funky accounting. They went from reporting a positive operating income of $60.6 million for 2010 to an operating loss of $420 million for 2010 after proper accounting. [0] https://en.wikipedia.org/wiki/Groupon https://en.wikipedia.org/wiki/Groupon
- twelve40 4y ago
  I dunno, I haven't really bought into Groupon hype. Its easy to imagine life without coupons. It's much harder to imagine life without payment processing. For all of its flaws, Stripe is plugged into almost every online business I've worked with, so I'd say they are in a position that is harder to screw up than Groupon. But possible, of course.
deleted 4y ago
[deleted]

pjc50 4y ago

It is probably iffy in the sense of being massively overvalued, but on balance it's socially beneficial to part naive billionaires from their money. I'm quite happy for the Saudi sovereign wealth fund to keep making dumb investments through Softbank, like WeWork.

gruez 4y ago
You're forgetting that institutional investors (eg. pension funds, university endowments) also exist, and can get caught up in these "dumb investments" as well
- lotsofpulp 4y ago
  I am happy for them to make dumb investments too. They always have the option to buy an index or target date ETFs if they do not want to risk losing money.
- juve1996 4y ago
  Institutional investors should be adequately managing their risk.
  - adenozine 4y ago
    Would you tell your parents or grandparents that, when they find out they won’t be able to afford their lifestyle and have to move in order to retire? That their fund should’ve managed the risk better?
    - coffeebeqn 4y ago
      No? They’re not the ones managing the funds. The fund managers - yes I would tell them to stop playing VC with retirement funds
      - candiodari 4y ago
        Since those funds are underfunded, which is not the fault of those managers, wouldn't not playing VC with the funds simply turn bad odds of maintaining their lifestyle into guaranteed failure?

SamReidHughes 4y ago

Another reason is that it benefits them for the competition to not know how well they're doing. This was one downside Home Depot had when going public.