This means that the company will either need to keep raising money to buy out earlier investors that need to hit their fund target dates (Rather than raise it all for themselves), or they'll need to go public at some point, even if they don't need the money per se. Keep in mind that investors get lot's of sway via their board seats.
If you're in the business of losing money, this game of hot potato becomes harder and harder to play over time.
(Someone correct me if I'm wrong.)
Isn't this the literal definition of a Ponzi scheme? Isn't using new money to pay old investors technically illegal?
The line can be a little fuzzy, since some Ponzi schemers pretend to be an honest business and some real businesses end up being, functionally, a Ponzi scheme.
Slack simply chose not to do so.
Some of the companies that have IPOed recently can only be destroyed by massive investment. Uber for example, should be sized like Craig's list connecting drivers and riders, not 20,000 employees with billions in valuation doing autonomous car bullshit.
But they had a hard time raising money because they were too big and were profitable. They ended up being acquired by some big dumb dotcom conglomerate and the spun back out at a 5x return to a big evil company who was smart, invested in the platform and makes a lot of money.
IMO it’s an example of the “bulls run, pigs get slaughtered” idea... these funds have to swing for home runs, then panic when rough times loom.
I don't think the target is retail investors, at least not directly.
This is an unprecedented time when it comes to two things:
* The amount of money flowing into index ETFs that don't really discriminate what they buy
* The globally low interest rates leaving huge funds seeking returns anywhere they can find them
All they need to do to get a ton of interest is fit the criteria of some of the broad index ETFs (e.g. be listed within the S&P 500) or be more attractive than the competition.
I also don't think it's the assets/companies that are worth as much, but rather that currency has lost a ton of value - exponentially more than any of the reported inflation measures.
Ugh, old data, but https://s3.amazonaws.com/cbi-research-portal-uploads/2019/05...
A successful company will have a trajectory like a sigmoid function (see above). The problem is IPO investors want in when growth still looks exponential.
There's no moat. It's easy to create hyperlocal competitors. There are many. This market is saturated.
I can't see how postmates can continue to grow wealth for investors. Neither can the public markets. They are barely better than index funds with way more risk.
The problem here is that of pricing (and nothing more).
Wallstreet wants to pay X, but VC wants 5X. This is why the "window" is closing.
Apparently they had early partnerships with celebrities like Kylie Jenner and it created a loyal following that stuck?
I guess I assumed in the age of the internet you wouldn't see something like a delivery app only "work" like that in one city, primarily due to local marketing efforts.
Amazon sold books. They collected enough personal data and built out their infrastructure enough that it allowed them to branch out into...everything. Facebook was a glorified online forum. Now they are minting a new currency and working on the frontier of VR. Uber was a taxi company. Now they are into computer vision, AI, robots, mapping, etcetera.
That's the model that these companies are trying to follow.
You can do that at a small to medium scale without a lot of technology, e.g. taxi dispatch in a city can be operated by a small group of people in an office. But to scale such a service across an entire country, or the world, operating 24/7, is a massive coordination problem where technology can have a huge impact.
That doesn't make Ford or Honda a tech company. They're automobile companies and Postmate is a delivery company.