Interesting comment. Bringing up the capital intensiveness is an interesting point and really gets to the heart of how inherently insane valuing these companies

Interesting comment. Bringing up the capital intensiveness is an interesting point and really gets to the heart of how inherently insane valuing these companies is. The archetype story in my mind of how public companies work is: A company has some proven way of turning capital into revenue. They go to capital markets. Raise money Make the revenue stream and pay it to investors as dividends. This revenue stream has some risks and companies can always fail, but ultimately they risks are small enough that companies can be treated by investors as living forever. Obviously that story gets complicated by reality. But, it's a starting point and it has some core of truth when looking at companies like IHG. Companies like Twitter or AirbnB essentially don't have capital investments in the same sense. They have something like R&D costs (though even calling it R&D is weird if you compare it to the R&D of companies like pharmaceuticals) but those are covered by VCs earlier on. They do have revenues and they have even more potential revenues so they have value. But, they are clearly not going public to raise capital with which to grow the business. They are going to get liquidity for their shareholders. The other big difference with IHG is the risk profile. Twitter & AirBnB do have much more rapid growth potential. They also have much more spectacular failure potential. Even a solid company like Google could be obliterated in a few years by an upstart search engine. Facebook, Twitter & AirBnB have even moor 'gone tomorrow' potential. Twitter or Facebook might just become unpopular, giving way to the next new thing. Most users even expect them to. I think the recent examples from Blackberry & Nokia will be repeated, with even younger companies. I'm not implying that tech companies can't last for generations. I just think they have much higher chances of losing all their value in any given 5 year interval than a bricks and mortar company. All the underlying things are different. The concept of a company as machine turning capital, inputs and labour into revenue doesn't apply. The concept of IPOs as a way of raising capital doesn't apply. Growth potential is completely different. The idea of companies as semi-immortal doesn't apply in the same way. All those things are supposed to add up to a guess at a companies intrinsic value, the rational valuation of the company. Intrinsic/expected value is a pretty abstract concept. It's a lot more abstract when we're talking about lower chances at a bigger prize. I don't know what that means for how companies are valued. I suspect there is more systemic risk as this stuff moves to public markets.