A substantial portion of the valuation of early stage startups is not their user/engagement/revenue numbers, it is the discounted value of the uncertainty of growth of those numbers until future checkpoints.
One of the structural reasons for pivots is that pivots present an argument for refilling the uncertainty bucket which has been drained by thoroughly investigating the pre-pivot opportunity and finding it did not conceal a huge amount of value.
A thing which is obvious but probably confounding to people outside of the ecosystem:
“Two kids with a gleam in their eye” (I.e. no indicia of progress) can produce a company with immediate implicit valuation far in excess of e.g. operating, profitable businesses that I sold.
This is because they’re selling uncertainty and I sold cash flows.
I could sell uncertainty, too, and market prices for it are market prices but I’d speculate with high confidence that it is worth rather more than that of the notional “two kids.”
A lot of the angst about startup valuations is a commingled business and aesthetic judgement that professional investors are overpricing uncertainty and that this overpricing carries with it a moral claim that the uncertainty is “worth more” than other businesses/other pursuits.
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A contractor said something during this project which I thought was both compassionate and the sign that he was a skilled professional, and I thought I’d share:
Scene: My mother, who has some mobility challenges, is sketching out what she wants in her kitchen. He listens.
Then he takes me aside. Following conversation is indicative.
Me: All sound reasonable?
Him: I’ll build whatever you two decide on, but I wanted to have a conversation with you in private first.
Him: Nobody wants to get old and nobody wants their parents to get old, but it happens to everyone, and may God grant your mother many happy years.
Me: Thank you for saying that.
Him: How big do you think a wheelchair is?
Me: Mom doesn’t…
Ruriko: I asked at the train station how to use the automated gates to get the child’s rate for Lillian.
Me: OK.
Ruriko: That was really hard.
Me: OK.
Ruriko: Then I asked the attendant how old children could be and still receive the child’s rate. Do you know what she told me?
Me: I will bet it did not include a correct answer.
Ruriko: How can you work as a train station attendant and not know that answer.
Me: *sigh* America.
I try to be non-partisan in professional spaces. That is due, in no small part, to the acceptable spectrum of opinions in tech spaces as having been about 70 nanometers or so wide for much of the last few years.
Also, related to that, there is this fun game which is played on Twitter, where you adversarially claim that someone represents their employer, elaborate that something they have said causes a workplace safety or PR issue, and then ask for them to made an example of.
One subvariant of them is that early adopters of LLMs outside of companies are going to tell those companies *things they do not know about themselves.*
People often diagnose malice or reckless indifference in a SOP which misquotes the constellation of agreements backing e.g. a rental contract.
Often it is more Seeing like a Really Big Business issues than either of those. Everyone did their job, system in totality failed.
I'll observe two things which are counterintuitive:
1) You might naively assume that "identities" get more valuable as one moves up the socioeconomic ladder, but there is a discontinuity, because certain societally-favored identities have payment streams associated with them.
These go down sharply in working class and don't rise above that level again until you either a) get fairly deep into the upper middle class / PMC or b) somehow manage to get someone's full social security payment, which is (for various reasons) much less likely than other ways.