Wayfair: $32.18 to $37.81 (Oct '14 - present)[1]

TripAdvisor: $27.91 to $70.63 (Dec '11 - Present)[2]

Hubspot: $29.05 to $50.04 (Oct '14 - Present) [3]

Tesla: $10.40 to $204.99 (Jul '10 - Present ) [4]

ZenDesk: $15.25 to $23.10 (May '14 - Present) [5]

LinkedIn: $90.09 to $196.10 (May '11 - Present) [6]

0: https://www.google.com/finance?q=facebook&ei=OGyZVsiyEYqNmAG...

1: https://www.google.com/finance?q=wayfair&ei=k22ZVqnFKoShmAHG...

2: https://www.google.com/finance?q=NASDAQ%3ATRIP&ei=DG2ZVpGGGI...

3: https://www.google.com/finance?q=hubspot&ei=2m2ZVvmlEImamAHg...

4: https://www.google.com/finance?q=tesla&ei=Am6ZVuHRBNGzmAH9n7...

5: https://www.google.com/finance?q=zendesk&ei=UnGZVtK-Go21mAGr...

6: https://www.google.com/finance?q=NYSE%3ALNKD&ei=ZXGZVqCWA4qH...

The only way to settle this is for someone to make a weighted index of tech IPOs in the last n years.

Facebook, however, has been demonstrably successful since going public, despite the massive SV hype. Zuckerberg and his team deserve full credit for delivering on a successful mobile monetization strategy and making some great acquisitions (particularly Instagram, given its acquisition price and its estimated valuation now.)

The TripAdvisor/Yelp comp is great—they're direct competitors. TA also didn't really launch in its current form until 2002 so it's not as unfair as it appears on first glance!

Yes but you're ignoring that it took more than a year for FB to get back up to its IPO price after going public

So, ya, it's basically a software company.

Basically build a bunch of hype around fad-based, unprofitable companies with unsustainable business models and capture massive valuation of ~50x sales before going IPO and then insiders dump all the overvalued shares on the naive dumb money and only stick around long enough to dump the majority of their stake by SEC regulations. Then proceed to shout about how you changed the world and how it wasn't for the money from your yacht.

Twitter? No good way to monetize. Groupon? Failed to monetize effectively after virality faded and without a moat competitors did the same thing. Yelp? A web version of the BBB protection scheme whose profit comes from the shake down protection racket against small businesses, not from users. Zynga had no moat and other companies quickly did the same thing with much leaner overhead, like King and a dozen other cheap but profitable game makers. Box was just overvalued for what it is.

On the flip side, every time someone takes an Uber or rents a room on AirBnb, they pay the company.

As in, those companies accept money for every transaction and profit on them.

Twitter, box, groupon, yelp don't do that. And Dropbox doesn't and they aren't publicly traded and if they did sell stock it would probably be overvalued and shrink over time like Box.

Let's compare eBay to AirBnB.

eBay incorporated in 1996, AirBnB in 2008. After 6 years of existing, eBay's revenue in 2002 was $1.21 billion[profitable]. AirBnB's revenue after 6 years is $400+ million[not profitable].

Now, eBay got that revenue+profits by 2002 when:

> (1) there were only few hundred million people online - 7x less than now. Slow internet connection, ugly websites, no mobile.

> (2) people were somewhat insecure about transacting online and paying was pain in the ass.

> (3) they were only popular in the US, UK, AU and had recently entered Germany.

Compare that to AirBnB, which after the same number of years operates in environment where:

> (1) there are over 3 billion people online.

> (2) payments online are very common(booking hotels pioneered by other companies) and easy.

> (3) says it operates in 190 countries, 20+ languages.

Even after all these advantages, they only got 1/3 of eBay's revenue in 2002 with the same current valuation.

But, that is year 2015, which is 7th year since they incorporated and I was writing about first 6 years of existence.

For the record, eBay's revenue in 2003 (7th year of existence) was $2.2 billion.

I think the difference is that Uber and AirBnB's valuation assumes continue, explosive growth over the next decade.

Uber could slow and still grow at a decent rate and the valuation would plummet.

Other companies don't go full board, with more conservative growth in terms of features, but can scale more customers without the draw of huge marketing or in some cases smarter marketing. Viral-peer marketing works as long as your conversion out-paces your free sign-ups. I don't have any insights into Dropbox, but can say they're probably fine. There really isn't great competition in this space.. there's competition, but none of the cross-platform options are as good or at least not clearly better.

Yes, but Uber and AirBnB do not have (from a technical perspective) innovative products, nor strong lock-in businessmodels. Everybody could start a competitor. In fact, Uber faces a lot of competition already; see e.g. [1], [2].

[1] http://www.forbes.com/sites/liyanchen/2015/09/09/uber-wants-...

[2] http://www.wsj.com/articles/uber-meets-its-match-in-france-1... (paywalled)

AirBnb raised $1b last year, projecting 2015 revenues at $900m [0]. Until financials show otherwise, they appear to be doing just fine.

[0]: http://www.wsj.com/articles/the-secret-math-of-airbnbs-24-bi...

They're also the property owners right now, relative to the millennials.

It may be that for every $100M they spend on acquisition, they make $200M over three years in sales, in which case it would make sense to burn cash now to capture the market. They could also be going all LivingSocial: setting money on fire with no path to unicorn profitability.

Anyway, no real way to know without the inside financials.

Approx 30 calls, 6 or 7 responded, a couple of those hadn't kept their calendars up-to-date, and only 2 actually were available and matched the info on the site. I was doing my best to spend $6k on a ski vacation and vrbo just didn't want to cooperate. The whole thing was a giant waste of time.

Would recommend using http://www.homeaway.com (parent company of VRBO) instead - has same inventory but better interface.

People in tech just assume airbnb is better.

AirBnB prevents pre-booking contact because their model is different. They make money on bookings, mostly from the consumer. For HomeAway I pay them ~$1600/yr and get featured placement and no booking fees. That is actually a small marketing expense for my property so the consumer can actually pay quite a bit less by booking my property on VRBO instead of AirBnB which charges the consumer 6-12%.

AirBnB has the problem of being seen as the platform for renting shared space. I think they will do a good job branding as a place for entire home rentals but that may take some time with the older crowd. They have a good renter review system which doesn't exist on VRBO. They are prioritizing hosts that respond quickly because they know that in order to take real share from hotels/resorts and HomeAway/VRBO they will need to provide a better booking experience and also excel at last minute bookings. HA/VRBO doesn't have a lot of checks in place to ensure the consumer receives adequate service and this is mostly due to their chosen business model.

I don't know how this will shake out in full but as an owner, you should be on both. Expedia bought HomeAway so I think that is huge for them because they could launch a really compelling reward platform and provide owners more distribution. I would bet AirBnB would get scooped up by someone as well or finance a strategic acquisition of their own.

Once business travel falls to AirBnb/HA/VRBO due to incentivized rewards programs, hotels will be extremely scared, esp since most are franchises who are losing power. This hasn't happened yet. They're telling the story that AirBnB/VRBO has simply provided more room-nights that wouldn't have happened without them but I don't buy it.

Regardless, there is plenty of space for two heavyweights and I'm bullish on both.

People can live without Groupon. It hasn't changed habits fundamentally.

Uber and Airbnb, on the other hand, have changed consumers' habits.

If you can make something a habit, you're going to win (see: cigarette companies)

They have beat analyst expectations for both revenue growth and profit (well, less loss) for every quarter since IPO, it's just a tough market.

Hire an IT guy and have him setup network shares, done. But obviously there seems to be some need I'm overlooking, considering the revenue these companies are making.

Granted that businesses like Amazon are unprofitable, but Uber is not nearly going to be as stable

I think both these businesses are fantastic businesses that will make a lot of money, but I would not buy at their current valuations.

AirBnB's valuation is 25B. It could make a trivial dent in the worldwide hotel market and crush that valuation many times over.

Uber is 50B. The global taxi market alone is worth many multiples of 50B, and that's not counting all the delivery services, bus/public transit-replacements etc that Uber is pushing for.

I'm not saying these companies WILL capture all of their current markets, but it's ridiculous to say the valuations wouldn't be supported if they captured the whole market.

How defensible is the model when then either don't own the real estate (even McDonalds is famous for making money this way) or have contracts to manage the real estate (as many hotels that are now management companies do).

Right now they may seem to own both the people who have places to rent and the people who want to rent but in no way is that as solid as having actual hard assets (or even long term contracts and most importantly a hotel brand). Or even in the case of an Amazon warehousing and logistics (or owning actual data centers).

"For instance, there seems to be a consensus that the most lucrative cab market in the world is in Japan, where yearly revenues are estimated to be about $20 billion to $25 billion just in Tokyo, followed by the United Kingdom with revenues of $14 billion, the bulk from London, and the U.S. with $11 billion overall and about $3 billion in New York. Assuming taxi revenues in the rest of the world add another $50 billion to this total, I arrive at a total market of $100 billion."

http://fivethirtyeight.com/features/uber-isnt-worth-17-billi...

You might as well pretend AirBnB is only trying to capture the hotel market's value. When in fact they're vastly expanding upon it while simultaneously taking market share away from hotels.

Then on top of this you've computed $100 billion per year which can easily justify a $50, $100, $150 billion valuation since you'll in theory be getting that $100 billion every single year

They're not trying to capture an old market, they're building a new one.

edit. The comments on this story sum up the ludicrous nature of this $500 million dollar revenue [1] - $625 per person per year!

1. http://sfist.com/2015/01/19/uber_says_sf_revenues_are_500_mi...

I never incur surge pricing and infrequently take Uber yet I can easily pay $100-200 in Uber costs per month. Then you factor in the non-UberX options that are way more expensive, UberEATS, etc. etc...

It is also unbelievable if you try to do the bottom up revenue numbers. Uber claims to have 11,000 drivers in SF [1], but most of them are part time. This implies a monthly revenue per driver of ~$3800 at the $500 million revenue number. Actual data from surveying SF Uber drivers working more than 41 hours a week showed they only generated revenue of $2971 a month [2]. The drivers working part time (20 − 25 hours a week) only generated revenue of $1376 a month. I can’t think of a way of making the top down and bottom up numbers agree.

Edit. I fixed the broken link [1].

1. http://archives.sfexaminer.com/sanfrancisco/uber-releases-dr...

2. http://www.sfgate.com/business/article/Lyft-Uber-drivers-tur...

The more fundamental problem is how much profit can they generate. Historically, the taxi industry is not one that has generated large profits without political protection (i.e. medallion limitations). It is very hard to see how Uber will be able to achieve monopoly level profits going forward. As I said in the beginning I think Uber is a great business that will make a lot of money, but it just isn’t worth investing in at its current valuation.

That has always been the VC-funded startup model. The difference between now and the dotcom boom is that the public isn't so gullible anymore (or at least not so soon after the financial crisis). Your grandma in Wisconsin has long since shut down her brokerage account, and has no intention of reopening it.

No it hasn't. Intel, Apple, 3Com, Compaq, DEC, and Lotus are all companies that took venture capital to get started. They are also all companies whose business model was "make things and then sell them for more than they cost to make" instead of "aggregate a lot of eyeballs and then figure out how to make money off them later." There's nothing special about venture capital that requires one model or the other.

What's changed is the underlying need for venture capital in the first place. It was originally needed because the things startups wanted to make and sell required a huge up-front investment to get started -- building fabs or factories, hiring lots of engineers and programmers, etc. There was just no way to bootstrap a business that needed so much cash up front, so VC money made businesses possible that otherwise could not have ever gotten off the ground.

Nowadays the cost lots of that stuff that people had to expensively do for themselves has been commoditized down to nearly nothing, so nobody really needs VC just to get started anymore. What they need VC for is to get big faster than their competitors, in order to muscle those competitors out of the marketplace. And VCs need horses to bet on, so when all the horses are running the "get big fast" game, their money is going to flow towards the companies that show the best possibility of getting big fast. Which is to say, companies that make stuff and then give it away for free.

And there's a prisoner's dilemma element to that -- if you are the one VC who's still interested in funding companies that make stuff to sell at a profit, your investments will get clobbered by competitors funded by all the other VCs who are giving it away. So you have to play the game, whether you want to or not.

That is a strong statement. Care to justify?

Google has now been king for a while, but if someone came out that did things clearly better, people aren't tethered.. even Facebook has its' upstart competition (that they keep buying off).

People are less tied to their services than you think.. yeah, plenty of people are still using yahoo mail, and others aol for email even... but few are dialing in and fewer still could remember their icq login if they tried.

At the core AirBnB and Uber are selling commodities. They appear to be the lowest-cost producer because of their cost structure and scale. The price advantage alone is a high wall to scale.

Could another entrant come and improve the AirBnB or Uber experience 10x? Maybe. I wouldn't bet money on it though.

https://www.google.com/finance?q=NASDAQ:TEAM

https://www.google.com/finance?q=NYSE:GDDY

The point is the companies that seem to be getting the most hype (young, 'disruptive' companies) don't seem to be doing well as IPO companies. This is an issue for the public investors (who are often pension funds, average investors, etc) and employees.

This seems to be a clear indictment of tech media, who are more interested in hyping up stories than really digging into a company's fundamentals. The only losers are common people in this scenario.

I don't know why TechCrunch is indicted because it writes catchy profiles about cool-sounding companies instead of digging into the economic fundamentals. That's just two different things you can write about. AFAIK (not very far) it never pretended to be doing the other one.

Add this to the fact they announced layoffs a little while ago + are now experiencing significant competition from bigger players, one has to have a not-so-great forecast for the company

But there are pretty big structural differences between going short and going long. In particular, you need to know much more precisely when the bad things are going to happen. Sometime do a short (and if you already have, great, you know what I'm talking about). Its not nearly the "haha how stupid are they", people think it is.

My comment really was saying, "I believe that tech startups have significant headwinds, poor underlying fundamentals, and would like a simple way to capture the profits from trades made around those assumptions."

I am actually surprised Yahoo is worth three times as much today as it was in 2011.

"The latter part of the business is clearly pulling the former along. Here’s how to think about it: Yahoo has a stock market value of $34.1 billion, and owns a 24 percent stake in Alibaba. Estimates for the current value of Alibaba, which is planning an IPO, range between $75 billion and $125 billion. If it comes in at the low end of that range, Yahoo’s stake would be worth $18 billion, or just over half of Yahoo’s total market value. At the high end, Yahoo’s stake in Alibaba would be worth $30 billion—which would imply that the rest of Yahoo’s enterprise is worth as little as $4 billion, or 12 percent of its current value."

http://www.bloomberg.com/bw/articles/2013-10-16/how-much-is-...

http://www.marketwatch.com/story/is-yahoo-really-worthless-w...

http://qz.com/528986/charted-the-value-of-yahoos-alibaba-sta...

If Yahoo were floated on the public market, with $4.8 billion in sales and $200 +/- million in profit, the valuation they would receive is not zero.

Proof? See: the valuation AOL had before being sold (not to mention what they got sold for). Yahoo is very obviously worth more than AOL was.

The bad analysis that Yahoo is worth less than zero, is caused by people that don't understand how you actually value corporations in reality. The bogus $0 valuation appraisal only exists in a fiction (and it makes for excellent clickbait), not in reality.

Fair value on stand-alone Yahoo is a lot closer to $5 to $10 billion than not. Verizon just paid $4.4 billion for AOL, which has a fraction of the business that Yahoo does.

I could claim that Microsoft being worth more than $1 is merely an opinion. Does that mean Microsoft's market value is subject to such whims? No, there's a vast historical basis to go on, and a well understood approach for valuing such companies and their businesses. The opinion of Microsoft being only worth $1 is wrong, and easily proven so. The same is true regarding Yahoo's core business being worthless, and for the same conceptual reasons. The only valid room for opinion in the matter, is in how much it's worth. Anything else has no historical example to back it up (there is not a single example in modern history of a public corporation of Yahoo's sales size, with a positive balance sheet and earnings, that isn't collapsing due to some scandal, that is worth less than zero; not one example exists).

We can simplify this really fast: give me one example of a public company of even remotely similar financials trading with a negative market cap in the last ~30 years in the US equity markets.

As a side effect, I'm recalling the days when Yahoo was a directory of websites, and getting nostalgic for the days when people actually had websites.

It's amazing how bad their email has become. Constant timeouts. Have to switch the "basic" mode to actually get email to load sometimes. The mobile version is barely alpha quality - the drafts workflow is horrible, it sometimes sends the same email multiple times. Issues with refresh. Shows stale emails. "Your login session has expired, you must log back in" errors even though a refresh makes it go away...

I mean it's bad. Really bad. Embarrassingly so. Like "how has someone not lost their job over this" bad. Or maybe they all did and now there's no-one left...

http://www.google.com/finance?q=GPRO

...until I checked and both companies had similar percentage drops within 9 months of IPOs as the other companies. Tech stocks are funny.

http://www.nasdaq.com/symbol/zg/stock-chart?intraday=off&tim...

From a high of ~$28 in Jun 2013, to $8.x now (IPO opened at $15 over four years ago).