There is validity to scaling while incurring losses, and requiring funding to do so. But that doesn't mean that all companies are in that boat. Certainly not all companies that are publicly traded. So the statement is a reasonable description of where the company is at, allowing potential investors to judge for themselves whether that meshes well with their own risk profile.
Eventbrite has gotten close to profitable which I assume made them feel comfortable stepping back up the investment into growth (which achieved 61% 1H17 to 1H18). Probably will be awhile before it makes its way into indexes so I wouldn't worry about that now.
Hyman Minsky argues that "hot messes of unprofitability" tend to be a common phenomenon after long periods of economic success. Stability breeds instability. Tech didn't introduce this behavior.
> In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance. Furthermore, if an economy with a sizeable body of speculative
financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values.
I think that really just means that the market has changed and you're no longer for this market, rather than that new companies are not for public market.
Market is literally made up of the companies and people that participate in it.
codingdave|7 years ago
That simply isn't true.
There is validity to scaling while incurring losses, and requiring funding to do so. But that doesn't mean that all companies are in that boat. Certainly not all companies that are publicly traded. So the statement is a reasonable description of where the company is at, allowing potential investors to judge for themselves whether that meshes well with their own risk profile.
donald123|7 years ago
koolba|7 years ago
toomuchtodo|7 years ago
VCs are for gambling, public markets are for profitable businesses.
pbreit|7 years ago
kaycebasques|7 years ago
> In particular, over a protracted period of good times, capitalist economies tend to move from a financial structure dominated by hedge finance units to a structure in which there is large weight to units engaged in speculative and Ponzi finance. Furthermore, if an economy with a sizeable body of speculative financial units is in an inflationary state, and the authorities attempt to exorcise inflation by monetary constraint, then speculative units will become Ponzi units and the net worth of previously Ponzi units will quickly evaporate. Consequently, units with cash flow shortfalls will be forced to try to make position by selling out position. This is likely to lead to a collapse of asset values.
"The Financial Instability Hypothesis", p. 8 [1]
[1] http://www.levyinstitute.org/pubs/wp74.pdf
donald123|7 years ago
icedchai|7 years ago
yzmtf2008|7 years ago
Market is literally made up of the companies and people that participate in it.
captn3m0|7 years ago
gammateam|7 years ago