Thread by @paraschopra

It's insane that media and the startup community worships financial success of companies like Uber without knowing why they're worth so many billions.

First, know that Uber's strategy is to burn money and grow.

Uber's pre-IPO valuation of $49 Billion was driven by Softbank's massive financial kitty.

They have seemingly infinite cash because interest rates in Japan are zero or negative. Plus, sovereign arab funds with oil money are so large that they need to invest in everything.

How big is Softbank?

"The overall group has ¥15.7tn ($143bn) of interest-bearing debt and ¥27tn of total liabilities, far greater than its ¥11.6tn market cap."

Softbank has $150 billion of debt, and its liabilities is more than its market cap.

capitalistexploits.at/hold-my-beer/

Think about it for a minute.

This is a company (Softbank) which is over flowing with debt, funding a company that burns money to grow (Uber) and does an IPO to offload all that to retail investors.

And we think that's something to envy?

And what happens when retail investors refuse to participate in this Ponzi scheme?

Well, Softbank has to pay back its debt, and being unable to, it would default but it's too big to fail (half of Japan's corporate debts are from Softbank).

We have heard this story before.

When large scale default happens, economy recession ensues. And in a recession, it is always the poor and the unsuspecting that are hit the most.

So, envying billions created in this manner is really envying not being a (massively indirect) villain.

We entrepreneurs can justify anything under the banner of "value creation".

Remember: not all $$$ are created equal. Think about the history of the $ before envying it.