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Private valuations aren't based on current revenues, they're betting on future revenues. In the case of Uber, they're predicted to grow 6x from last year (on ta

• ThomPete 11y ago
  Oh I agree. Of course it's based on betting on future revenues which will work for some and not for others but thats not really the point I am trying to make. What I am saying is that on the current private market you can keep a company with a fundamentally unsound business in suspended animation for a long time and keep enjoying growing valuation as long as you can convince investors that they will be able to raise the next round. I.e. without it actually having proven that's it's a sustainable business. Most of the unicorns happens to be from the valley and as far as I can see have more or less the same investors behind them indicating at least to me that it's not purely based on being better at betting on the right companies. This is a very different feedback-loop than the public market where your ability to make a profit at market expectations often is is king and where this ability is measured every quarter. Maybe I am paranoid but thats what I see. And yes I haven't gotten my head around a proper way to formulate his intuition yet.
• forgetsusername 11y ago
  "Private valuations aren't based on current revenues, they're betting on future revenues." Private valuations aren't unique in this aspect. All prices are based on expectations of claims on future cash flows.