
Expect Some Unicorns to Lose Their Horns, and It Won’t Be Pretty - cryptoz
http://www.nytimes.com/2016/01/20/business/dealbook/expect-some-unicorns-to-lose-their-horns-and-it-wont-be-pretty.html?smid=tw-nytimestech&smtyp=cur
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The trap:

(1) (1-2 years ago) Money is cheap! It won't be this cheap forever! We should
raise as much as possible now just in case it gets harder to raise in a few
months/years.

(2) Now we're under pressure to put all this money to work. If you have it,
you have to spend it.

(3) Burn rate is now very high, and our business model is proving harder to
convert into revenue than we thought. Looks we're going to need to raise
again.

(4) Oops... it's harder to raise now and valuations are lower. Choices are to
(a) cut burn rate by letting people go and nuke morale, (b) take a down round
and nuke morale, or (c) sell below valuation and get almost nothing for
founders and employees.

Companies will experience this to the degree they did #1 times how easy it is
for them to flip the revenue switch.

