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Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

nytimes.com

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Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#11

Post by posix_compliant »

Retric wrote: post #5
posix_compliant wrote: post #3

Earlier quoted context omitted.

I disagree. Uber facilitates the process of becoming a driver, therefore there will be a larger supply of drivers. I believe the price of a fare will decrease due to the increased competition.

Amortization over say 20 fairs per day * 20 days a month * 12 months a year, reducing the cost by 1 cent per ride per ~50$ dollars in cost savings. Suggests it's just not a meaningful savings.

Where are you getting the 1 cent reduction quantity? My only point was that a greater supply of drivers could yield a lower price, but I never asserted to what degree the price would decrease.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#12

Post by adventured »

maxxxxx wrote: post #8
allthenews wrote: post #6

So how do the "rest of us" profit from these IPOs?

I don't think these IPOs are designed to make profits for the rest of us.

That depends on what you're buying.

Atlassian has tripled since the early days of its post IPO trading.

Shopify is up 5-6 fold in two years.

Square is up four fold in 2.x years.

Baozun is up seven fold in 2.x years.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#13

Post by xsmasher »

asabhi wrote: post #2

There are some good and some not so good among these companies. Uber is a taxi company with an app. Cars still cost the same as before to run, drivers still cost the same as before, all costs are the same as before. So once the subsidization by VCs stops, Uber rides will be as expensive as any other ride. Self-driving cars will not save Uber either. There is no network effect with self-driving cars, and once the tech…

Re: "all costs are the same as before"

If you mean the same as running a Taxi, you're ignoring the higher prices caused by the artificial scarcity imposed by the medallion system, and ignoring the cost / fee for of the medallion itself. Uber could absolutely return some of that to the user in the form of lower prices than traditional taxis; and keep some for itself, of course.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#14

Post by mgummelt »

asabhi wrote: post #2

There are some good and some not so good among these companies. Uber is a taxi company with an app. Cars still cost the same as before to run, drivers still cost the same as before, all costs are the same as before. So once the subsidization by VCs stops, Uber rides will be as expensive as any other ride. Self-driving cars will not save Uber either. There is no network effect with self-driving cars, and once the tech…

Self driving cars have massive network effects, just like any product dependent on machine learning. More users -> more data -> better product -> more users.

It's the same reason Google is invulnerable in web search.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#15

Post by mistermann »

adventured wrote: post #12
maxxxxx wrote: post #8

Earlier quoted context omitted.

I don't think these IPOs are designed to make profits for the rest of us.

That depends on what you're buying. Atlassian has tripled since the early days of its post IPO trading. Shopify is up 5-6 fold in two years. Square is up four fold in 2.x years. Baozun is up seven fold in 2.x years.

I've thought for quite some time that rather than the broader overall market being allowed to participate in the possibility of crazy gains from technology startups, the rise of the VC financing model has resulted in the lion's share of gains (and losses) going to an elite group of well connected people, and once the easiest money is made, let the market have what's left over in a traditional IPO.

As you point out, there are still some examples of fantastic returns, but considering how the world has been transformed by startups, I don't recall reading very many stories of individual investors getting in early and making a killing, but I do recall reading plenty of stories of startups (that obviously needed significant funding along the way) growing into multi-billion dollar enterprises.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#16

Post by [deleted] »

adventured wrote: post #9
allthenews wrote: post #6

So how do the "rest of us" profit from these IPOs?

Pick the right growth candidate, hold your nose at the valuations, buy and hold for a few years until the growth catches the fundamentals up. Or wait until (assuming) the market drops at some point and buy the growth at dramatically more reasonable valuations. I'd also say buy what you know; that is, if you have experience with a company and know that their products are particularly good, providing the company a like…

[deleted]

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#17

Post by jgalt212 »

mgummelt wrote: post #14
asabhi wrote: post #2

There are some good and some not so good among these companies. Uber is a taxi company with an app. Cars still cost the same as before to run, drivers still cost the same as before, all costs are the same as before. So once the subsidization by VCs stops, Uber rides will be as expensive as any other ride. Self-driving cars will not save Uber either. There is no network effect with self-driving cars, and once the tech…

Self driving cars have massive network effects, just like any product dependent on machine learning. More users -> more data -> better product -> more users. It's the same reason Google is invulnerable in web search.

More users -> more data -> better product -> more users

s/b

More users -> more labeled data -> better product -> more users

ML systems need lots of labeled data, not just lots of data. This is one of the primary why game playing AI's have had such great successes, tons of labeled data are relatively cheap. Great discourse on this and other related issues here:

https://medium.com/@karpathy/alphago-in-context-c47718cb95a5

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#18

Post by baron816 »

Let’s say the company you work for goes public and your stock is suddenly worth $1,000,000 (as an example). A wise investor, you normally put all of your other savings into broad market index funds. Now, do you sell your company’s stock that was given to you and took you four years to vest into, or do you hold on to it and hope the valuation keeps rising? (This is a rhetorical question btw)

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#19

Post by frisco »

baron816 wrote: post #18

Let’s say the company you work for goes public and your stock is suddenly worth $1,000,000 (as an example). A wise investor, you normally put all of your other savings into broad market index funds. Now, do you sell your company’s stock that was given to you and took you four years to vest into, or do you hold on to it and hope the valuation keeps rising? (This is a rhetorical question btw)

It’s not all or nothing. Selling 25% probably makes sense. Selling 100% probably doesn’t. The right balance depends on what % of your total net worth that $1M represents.

I also think it highly depends on your answer to “how excited are you about the company’s roadmap for the next few years?” and “do you feel like you / the company have more to do on the topic?”

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#20

Post by wpietri »

xsmasher wrote: post #13
asabhi wrote: post #2

There are some good and some not so good among these companies. Uber is a taxi company with an app. Cars still cost the same as before to run, drivers still cost the same as before, all costs are the same as before. So once the subsidization by VCs stops, Uber rides will be as expensive as any other ride. Self-driving cars will not save Uber either. There is no network effect with self-driving cars, and once the tech…

Re: "all costs are the same as before" If you mean the same as running a Taxi, you're ignoring the higher prices caused by the artificial scarcity imposed by the medallion system, and ignoring the cost / fee for of the medallion itself. Uber could absolutely return some of that to the user in the form of lower prices than traditional taxis; and keep some for itself, of course.

If you're going to count that, you'll also have to figure out the costs for negative externalities like congestion, pollution, accidents, social services for drivers (health care, retirement, food stamps, etc), bankruptcies, and regulation.

The medallion system had its issues, but there were reasons it existed. City after city decided it didn't want infinite unregulated taxis in circulation.

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