Startup and unicorn brightness come, only at the price of everything
It’s a filthy day for asset prices.
All over the world, the stock market is selling. Here in the United States, stocks follow early morning trading. Technology stocks are taking another hit and sentiment among asset classes has gone from chilly to frozen as last year’s exuberance receives a long-awaited reality check.
To understand the magnitude of the pain, let’s use a few stocks as indicators. Coinbase, which saw its value skyrocket to a whopping $368.90 a share after its immediate listing, began trading today for less than $100 a share. Zoom, whose value rose to $406.48 last year, is now worth about $93 a share.
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The value of software stocks is generally no better. The Bessemer Cloud Index is more than 50% off last November’s all-time highs. In much less than a year, we’ve seen the value of technology companies spike and then collapse. The fall from favor has been quick, but not even, as startups have been in the water for months longer than their public counterparts. That is changing.
The world of blockchains and digital assets is also under fire from investors, who have sold off strongly in recent days.
Doom, gloom and sadness everywhere? Yes, but not whole†
The good news is that while prices for technical assets around the world are leveling off, we’re going to have a real shakeout in the coming quarters. It will be enlightening and will shine a light on a whole lot of nagging. Call it wildcard detection. Let me explain.
From delay to shakeout
It makes no sense in pig cosmetics; we could be heading for a massive startup correction on the order of March 2020, but for a longer period of time, and with declines eventually getting bigger.
So what’s the benefit? A drop of bullshit.
In a letter that the CEO of Uber sent to his staff over the weekend – CNBC has the scoop there – there was a lot worth chewing on, but one thing in particular stuck in my head (Emphasis Marketingwithanoy):
In times of uncertainty, investors seek safety. They recognize that we’re the scaled leader in our categories, but they don’t know how much that’s worth. If we channel Jerry Maguire, we have to show them the money. We’ve made tremendous progress on profitability, setting a target of $5 billion in Adjusted EBITDA by 2024, but the goalposts have changed. Now it’s about free cash flow. We can (and should) get there quickly.
Hot damn†