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0 pointspc10y ago0 comments

> Because I can guarantee you that the "valuation" of $65B+ is a totally meaningless number. This includes every single company that had a huge, unsustainable up round which will almost certainly be devalued based on future financings or exits.

"Meaningless" is hyperbolic. How much would you pay for a share of Airbnb? More than nothing, I assume. I think one can conclude something from consummated, informed responses to this question.

0 comments

lawstudent210y ago

No - I stand by that as a literal use.

Does 65B represent the actual money value that people will pay for the shares of 100% of the ~600 currently existing YC companies?

Does it tell us the average value? The mean? Standard deviation? Quintile distributions? P/E? Is that number just based on valuations from funding rounds? Projections?

It is literally meaningless. It is not verifiable. The standards that are used to calculate it are not explained. There is no explanation to how it relates to the companies in the portfolio.

I'm a bear by nature. I think that the current batch of SaaS unicorns have an unsustainable valuation, and I think this unverified number feeds into that.

austenallred10y ago

Valuation means the price that investors or acquirers were willing to pay. That someone was willing to pay that is a verifiable fact.

What the returns will be is an unknown, of course. But to say that is "meaningless" is either naive or a misuse of the word. Stock prices and market caps are decided the same way.

gress10y ago

Public stock prices are decided by supply-demand balance. In no way does this valuation resemble that mechanism.

1 more reply

staunch10y ago

The problem is using the words "valuation" and "worth" interchangeably. Just because someone pays $50 million for 5% of startup doesn't make it magically worth $1 billion. No one would actually pay anything close to $1 billion for the whole thing, hence it is not worth anything close to $1 billion. That's just the implied valuation.

T2_t210y ago

AirBnB: $24 Billion. DropBox: $10 Billion. Zenefits: $4.5 Billion Stripe: $3.5 Billion. Instacart: $2 Billion Twitch: $1 Billion

Total: $45 Billion.

Source: http://graphics.wsj.com/billion-dollar-club/

So they value the rest of the portfolio at $20 billion. Does that seem reasonable?

loumf10y ago

I believe that they just added up acquisition amounts and the last funding rounds of each company. I don't believe that number represents what "they value" the portfolio at beyond that.

SandersAK10y ago

Happy to buy any shares you have in any of the YC unicorns.

austenallred10y ago

Especially for $0

sskates10y ago

You can calculate the mean yourself by taking total valuation divided by number of companies. I'll do it for you:

$65 billion / (940 companies) = $69 million / company

aj_icracked10y ago

Who else wants PC and Lawstudent2 to continue this debate? :) I'll bring popcorn.

j / k navigate · click thread line to collapse

0 comments

lawstudent210y ago

No - I stand by that as a literal use.

Does 65B represent the actual money value that people will pay for the shares of 100% of the ~600 currently existing YC companies?

Does it tell us the average value? The mean? Standard deviation? Quintile distributions? P/E? Is that number just based on valuations from funding rounds? Projections?

It is literally meaningless. It is not verifiable. The standards that are used to calculate it are not explained. There is no explanation to how it relates to the companies in the portfolio.

I'm a bear by nature. I think that the current batch of SaaS unicorns have an unsustainable valuation, and I think this unverified number feeds into that.

austenallred10y ago

Valuation means the price that investors or acquirers were willing to pay. That someone was willing to pay that is a verifiable fact.

What the returns will be is an unknown, of course. But to say that is "meaningless" is either naive or a misuse of the word. Stock prices and market caps are decided the same way.

gress10y ago

Public stock prices are decided by supply-demand balance. In no way does this valuation resemble that mechanism.

1 more reply

staunch10y ago

T2_t210y ago

AirBnB: $24 Billion. DropBox: $10 Billion. Zenefits: $4.5 Billion Stripe: $3.5 Billion. Instacart: $2 Billion Twitch: $1 Billion

Total: $45 Billion.

Source: http://graphics.wsj.com/billion-dollar-club/

So they value the rest of the portfolio at $20 billion. Does that seem reasonable?

loumf10y ago

I believe that they just added up acquisition amounts and the last funding rounds of each company. I don't believe that number represents what "they value" the portfolio at beyond that.

SandersAK10y ago

Happy to buy any shares you have in any of the YC unicorns.

austenallred10y ago

Especially for $0

sskates10y ago

You can calculate the mean yourself by taking total valuation divided by number of companies. I'll do it for you:

$65 billion / (940 companies) = $69 million / company

aj_icracked10y ago

Who else wants PC and Lawstudent2 to continue this debate? :) I'll bring popcorn.

j / k navigate · click thread line to collapse