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Fred Wilson's response to "Paul Graham's Letter to YC Companies"

avc.com

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Re: Fred Wilson's response to "Paul Graham's Letter to YC Companies"

#11

Post by aurelianito »

I needed to google what EBITDA is in order to understand the artice. EBITDA means "earnings before interest, taxes depreciation and amortization" (http://en.wikipedia.org/wiki/Earnings_before_interest,_taxes...). Id est, AFAIK, the money they get, without taking into account the money they spend because their "thigs" age.

I hope it helps fellow hackers who don't know finance (like me) to understand the article a little better.

Edit: Better explanation of what I mean by spend.

Re: Fred Wilson's response to "Paul Graham's Letter to YC Companies"

#15

Post by rjsamson »

My personal thoughts are that the greatest near term impact we'll see is in angel investment $$ in seed rounds. At least here on the East Coast there has been a boom of relatively unsophisticated Angels driven by hype. It is these individuals that, in my mind, will react more emotionally to a poorly performing Facebook IPO.

Not that one shouldn't be concerned about the broader venture market, but I'm a little less worried about the institutional money than I am about the Angels disappearing.

Re: Fred Wilson's response to "Paul Graham's Letter to YC Companies"

#17

Post by chrisaycock »

aurelianito wrote: post #11

I needed to google what EBITDA is in order to understand the artice. EBITDA means "earnings before interest, taxes depreciation and amortization" ( http://en.wikipedia.org/wiki/Earnings_before_interest,_taxes... ). Id est, AFAIK, the money they get, without taking into account the money they spend because their "thigs" age. I hope it helps fellow hackers who don't know finance (like me) to understand the article a li…

>> the money they get, without taking into account the money they spend.

That would be revenue. EBITDA is a way of only accounting for operational expenses a company faces. There's also EBIT, which subtracts the depreciation and amortization.

Re: Fred Wilson's response to "Paul Graham's Letter to YC Companies"

#18

Post by iand »

tocomment wrote: post #9

What is "enterprise value" and how does he come up with 43B?

It's the valuation of the company based on number of shares and share price less actual assets (cash in this case). What is left is the value investors see in the company simply by executing its business.

Re: Fred Wilson's response to "Paul Graham's Letter to YC Companies"

#19

Post by aurelianito »

tocomment wrote: post #9

What is "enterprise value" and how does he come up with 43B?

Enterprise value "is a sum of claims of all the security-holders: debtholders, preferred shareholders, minority shareholders, common equity holders, and others." (source: http://en.wikipedia.org/wiki/Enterprise_value)
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