There’s just not enough “stuff” to go around.
Yelp stock got hammered in part because it said it can’t find enough salespeople to meet its revenue projections.
Airbnb’s calling the talent war insane.
Twitter can’t seem to figure out how to grow usage.
Everybody knows about how scarce and expensive Bay Area housing and office space has gotten.
Good companies like LinkedIn and Tableau are trading down heavily on good earnings reports. Same to a lesser extent for Facebook – multiples are coming down as valuations shift from revenue multiples to EBITDA and earnings multiples.
If 80 unicorns all wanted to go public now, it’s not clear if there are enough I-bankers and underwriters to work the roadshows and make the deals all happen in a short period of time (the whole liquidity problem), to say nothing about prospective investor demand in the public markets.
The Bay Area is basically experiencing a mini-1970′s runaway inflation cycle – excess demand for talent and real estate and constrained supply is making costs grow faster than revenues, at a time when revenue growth is slowing and investors seem like they’re starting to get concerned about cash flows (or lack thereof), runaway spending/stock-based compensation, and so forth. For those of us too young to remember, the 1970′s was a great time for nominal wage and real estate growth, less so for equities and “capital” more generally.Permalink
Some companies may welcome the reprieve (easier for the winners to hire/retain people). But the gravy train is coming to an end
HT: Abnormal Returns' "The tech IPO conundrum"
Also at Conor Sen's tumblr:
Calling Bullshit on Silicon Valley Culture
