
Interest Rates, Unicorns and What the Fed Means to Silicon Valley - prostoalex
http://techcrunch.com/2016/01/11/interest-rates-unicorns-and-what-the-fed-means-to-silicon-valley/?ncid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29
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theseatoms
> Already we can see that the public markets can’t possibly absorb all the
> unicorns at their current prices.

Is there any evidence to back up this assertion? Seems to me that companies
are voluntarily choosing to stay private, not that public equity markets can't
handle the unicorns. (edit: Or is he saying that unicorns are overpriced
because private investors value these companies more highly than public equity
market participants would?)

All in all, business models that can't handle marginally higher financing
costs probably weren't all that healthy to begin with. Rising rates should
shake out the weaker hands, in a form of creative destruction.

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paulpauper
It's just unsubstantiated assumption, which is common when journalists cover
things they have little knowledge about. If the public market can't 'absorb'
it, then the prices will fall. A marketplace exists at these high pries
because that's what people are willing to pay.

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pkaye
By why are they willing to pay these high prices now vs a few years ago? What
has changed in the economy or investing climate and is it sustainable?

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edgyswingset
Totally inexperienced opinion here:

We're in an advertising bubble. Remember the ridiculousness surrounding the
"Yo" app? People running around in circles about how it can be a great way to
increase brand awareness due to the simplicity of it all? How it can connect
with so many different apps? Yeah ... it's panned out _exactly_ like its
detractors predicted: sharp declines in downloads, hype is dead, and people
have moved on to the next social app fad.

Another factor I'm noticing is international money. Uber didn't start
approaching ridiculous valuation levels until Chinese investors started
getting on the train.

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shostack
You cited one defunct app that never went anywhere as evidence of an
advertising bubble?

While I definitely think display and video CPMs are overvalued compared to
what they drive (which attribution solutions will help correct), there is
strong measurable value that Google, FB and Bing are delivering from a post-
click measurement standpoint. But let's just conveniently ignore these
companies that drive billions in revenue for their customers.

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lumpypua
> You cited one defunct app that never went anywhere as evidence of an
> advertising bubble?

That they were able to raise $1.5M in seed funding is evidence of a bubble.

[https://www.crunchbase.com/organization/yo](https://www.crunchbase.com/organization/yo)

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shostack
It is not. You are citing a single example of one company that got _seed_
funding from a few investors who are not top tier players.

Your point provides zero evidence to a bubble in the advertising industry,
which is a behemoth filled with established players driving measurable value
for their customers.

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worik
This time is different

