
Unicorn Fears and Stopping Stops - Amorymeltzer
http://www.bloombergview.com/articles/2015-11-19/unicorn-fears-and-stopping-stops
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jusben1369
It's risky to draw too many conclusions from Square. Jack Dorsey's situation
is unique; it's hard to think of an example before (or ever again?) where a
CEO decides to take on another CEO position of a struggling company weeks
before an IPO. Think what you will about his capabilities but it was always
going to create real drag on their IPO; if only because there wasn't enough
time to know if he can pull it off.

One thing that is rarely discussed is how bubbles burst. Stock markets have
incredible visibility and liquidity so they'll burst in a matter of days
(minutes?) and weeks. Housing markets have strong visibility but less
liquidity so they're measured in weeks and months. Private valuations have
poor visibility ("show me a valuation and I'll tell you the terms") and very
poor liquidity; IPO'ing, being acquired are rare and difficult events.

So if there was indeed a bubble it was in the private capital markets and the
only way we'd know is when those companies leave that market for another
market (public market/acquisition by company) There are so many variables but
right now Square is telling us that the private markets were overinflating
prices by at least 50%. That's bubble stuff. The thing is it'll be a
slower/gentler correction due to the above issues.

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chollida1
The one thing I'll say about Square is that this is the first tech IPO in the
last 5 years where the investment banks are literally begging hedge funds to
take stock.

In an IPO process as a hedge fund you find out just where you stand with the
banks by how many shares you get issues at the IPO.

In squares case there I haven't heard of any one getting cut back on their
allocations.

I"m not sure if that's a good or bad sign, but its out of the ordinary.

One interesting note that bloomberg just popped up:

> 11/19 10:01 Market makers (Barclays) still indicating $11. That's an
> unofficial indication at this point, and above the $9 IPO price.

So I guess it could pop

Side note:

Burred near the bottom of Levin's daily letter is an interview with Cliff
Asness. If you are interested in quant finance, check out his blog that he
hosts on AQR's site. He's one of the stars of "The Quants" and started one of
the giant quant funds AQR out of Goldman.

[https://www.aqr.com/cliffs-perspective](https://www.aqr.com/cliffs-
perspective)

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nickbauman
This is hysterically funny.

 _Anyway don 't do any of this. Don't say "sodomy" unless you're sure you mean
it, don't call yourself a sapiosexual even if you get the word right, don't
give interviews during an IPO quiet period, don't found Tinder, all of it,
just don't._

Rad is such a fatuous, unhinged pinhead I think he needs his own Sheenesque TV
show.

~~~
deckard1
> The unicorn massacre continues. Lyft is having a rough tyme

I feel this is the article all writers wish to write one day.

~~~
nickbauman
Or _not_ write!

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logicfiction
I worked for a startup in the mobile payments industry for a while. While I
wanted to hope it would work out, deep down I never felt mobile payments at
the register (vs. credit card) was enough of a value proposition to the
consumer. I mean, I never felt like I would want to use this even though I was
working on it.

I think the industry over-emphasizes the minimal hassle of having a physical
card. Mobile payments are not that much easier. And unless you research how
the platforms are protecting your information and identity, I also imagine the
average consumer trusts a physical card more than a 3rd party vendor app on
their phone.

Finally, the mobile payments vendors are just one more middleman in the
payments game that needs to make a cut on transaction fees. Someone is paying
that fee somewhere and if a mobile payment platform becomes sustainable over
the long term that cost will likely trickle down to the consumer if the
platform hasn't already directly built in a consumer fee.

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mojuba
Funny read. Got me thinking that at any given point in recent history, at
least I can vouch for the past couple of decades, there's something terribly
wrong in the money industry. At least one thing at any given time. This
industry seems to be just hopping from one _terribly wrong_ thing to another.

Is it because there's too much money in the hands of mostly random, clueless
people?

~~~
lmm
I think it's the finance industry's version of the hype cycle. Every time a
new financial instrument is invented it gets used, overhyped and oversold,
there's a crash, and then it becomes a boring/useful tool in the toolbox. E.g.
options and the dutch tulip bubble, derivatives in the '80s, CDS in the '00s.

~~~
mojuba
Alternatively, it's meta-consumerism. We buy things we don't need, while
people with big money buy big things they don't need. Except big money
movements make waves and backfire on everyone.

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PaulHoule
My view on Square is that it does not have unique differentiation. I mean
yeah, they have cute little readers that plug into your phone or tablet, but
there are a large number of other payment vendors which are very similar and
no sign of a "moat". Square does not even have the two sided market moat --
the one thing that is certain is that using Square makes Mastercard, Visa and
American Express rich.

Banks have been fighting back against smartphone-based systems by pushing
contact chip cards instead of NFC cards (out of all the cards I've had
replaced this year, all of them are contact chip cards)

~~~
rjsw
The chip and pin cards have been in use outside the US for a fairly long time
now, NFC ones for several years too, Square won't be able to match the
economies of scale of the standard systems if they need their own reader
hardware.

