The concrete financials are still dependent on an assumption that someone else will buy a product that the company makes. It seems inescapable that the bedrock of any definition of value is what someone else is willing to pay for something. As an example, you could assume that bitcoin should have zero value, but apply concrete financials to derive a non-zero value of a bitcoin mining company. To get the valuation of anything, you ultimately have to make an assumption about what people will value in the future.

> But they still use concrete financials (e.g. growth of revenue is just the derivative of revenue) to make those decisions, and are assuming that the future buyers will be looking at similar numbers that are based in the same real economic business process.

This makes sense to me, but I wonder how many VCs will pump money into a business, having a pretty good hunch that the business model will never make that much sense at a meaningful scale, but the numbers will probably look good enough for a return of investment until the pyramid collapses after the series C.

These companies are restructured for increase of perceived value, not multi-decade sustainability. Bitcoin to me is just the purest form of this culture.

I would bet money that this has happened a TON over the last decade, just as you say. Especially post-Uber where "hypergrowth" to get market dominance was all the rage even in extremely cost-heavy, lower-margin industries where scaling was always gonna be a big challenge.

If there's good news, though, it's that this appears to be slowing down. Lot of folks getting disillusioned with WeWork, Uber, etc now that those exits happened and went nowhere. I'm assuming investors are realizing they won't be able to play that trick too many more times.

>concrete financials laughing in adjusted ebitda

But really, I'd hardly call QE-driven financials "concrete". We Work, anyone?

How was WeWork QE-driven? It's financials were just plain bad, no? The story was that "scale + tech = magic" would happen at some point. The story didn't work. Everyone knew that it hadn't happened yet, though, as far as I recall.

You saying "I don't trust an adjusted ebidta metric" is perfectly valid, of course, but that number was there and the business processes behind it were there. A bit different from "i'm a bunch of bits stored on a computer."

QE drove investors to riskier returns and an inappropriate focus on growth companies that promise the future. This is a fundamental effect of low interest rates on valuation.

Suppose you open a spreadsheet right now, discount 100 years of cash flows, and measure each cash flow as a % contribution to the sum (aka npv). You will find that at medium to higher rates years 0-20 make up the greatest percentage of the npv by far. But as you lower them, that relationship flips and cash flows for years 20 to 100 become the lion's share of the valuation.

WeWork isn't the only 'ridiculous promise-the-future' company we saw over QE, just the first I could name off the top of my head. But through the lens I described above, all those weird 'how could investors be so stupid' situations make more sense because the valuation math was slanted to favor such situations.

It’s mostly looking at comparables… I don’t the crypto is substantially different in that regard.

Why do any comparables have value?

In the stock market, because if everyone in the world wanted to sell all their stock in some companies, some folks would snap up the opportunity to take control of at least most of those companies. Yes, this is several levels obfuscated by the time you get to retail investors (and if you look just at news media sources targeted at retail investors, it's almost all short-term reactionary bullshit), but ultimately that's the fallback for the system that is gonna keep prices non-zero. Very recent tangible example: Elon Musk willing to pay real money to take control of Twitter.

In the crypto market... what's the ultimate backing? Hope of various sorts of a future new world financial infrastructure, reserve currency, store of value? I've heard a thousand stories, none of them are true yet though.

Sure, if you believe in one of those futures, you should invest in the appropriate crypto tokens. You'll be better off if fewer of the rest of us believe in it now when you're about to buy, after all. ;) But if your analysis of where to put your money - trying to figure out what's likely to hold or gain value vs lose it - comes down to "eh it's all the same yolo" then just recognize that it's a gamble to invest in crypto - saying "I believe that it's also a gamble to invest in stocks" doesn't really make it a better gamble.