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Your experiment fails, I think, because it's not making an apples-to-apples comparison. No one has spent $18 billion on Uber; total investment to date has been
by legutierr 12y ago
Your experiment fails, I think, because it's not making an apples-to-apples comparison. No one has spent $18 billion on Uber; total investment to date has been ~$1.5 billion. To do what you're describing, someone with $17 billion in liquidity would have to want to spend it on creating an Uber clone, and would have to have the organizational resources and wherewithal to use that cash productively. It's one thing to make an over-valued investment; it's another to spend 17x that amount on a green-field project.
- mcherm 12y agoReally? Because I think it's very much the same thing. I think that a company which wishes to invest should always compare to the price of a green-field investment. If someone were purchasing Uber for $18 billion, they should do so only if it would be more effective then dumping 18 billion into a green-field startup. If someone is investing by purchasing some shares at an $18 billion valuation then the comparison is slightly harder: own 100% of a startup with a much lower investment or x% of the market leader. The comparison is now always trivial, but I think that anyone looking at these sorts of investments needs to be doing this comparison before spending the money.