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The herd of tech startups valued at more than a billion dollars – so-called “unicorns,” Airbnb, Uber – and whether their bubble is about to burst.
For a startup tech company to be valued at a billion dollars before it ever goes public was once so rare that those few were called “unicorns.” These days, there are unicorns running all over the place in Silicon Valley. Private money has gushed into quite young companies. Some you know: Uber, Snapchat, AirBnb. Many you don’t: CreditKarma, Thumbtack, Twilio. Has all that money blown American high tech into a giant bubble? It’s a hot question right now. And if it pops, who gets hurt? Does everybody? Do you? This hour On Point, Unicorn fever, and fears of a high tech bubble.
-- Tom Ashbrook
From Tom’s Reading List
The Economist: The rise and fall of the unicorns — "Many investors in unicorns had bet that a new generation of technology firms would unsettle the old guard, but that has not happened as quickly as they had predicted. Tech giants like Amazon, Google and Facebook have continued to grow impressively, especially considering their already large size; and they have been adept at entering new markets that startups might otherwise have claimed."
Vanity Fair: Is Silicon Valley in Another Bubble . . . and What Could Burst It? -- "the best way to understand the current situation in Silicon Valley is to recall the last bubble. Mark Cuban, who sold his Broadcast.com for $5.7 billion several months before the dot-com bubble burst, told me that there is no question whatsoever that we are in the midst of another one. And as with the last one, there is no question that a lot of people will be devastated when it pops. 'The biggest of all losers will be anyone who has borrowed money to invest in private companies,' he told me. 'You were stupid. You blew it. You lost. That simple.'"
Financial Times: Unicorns take investors on wild valuation rides — "Many of the best-known tech start-ups have been avoiding the stock market like the plague. Better to toil in private, they argued, undistracted by the market’s wild gyrations. But suddenly, when they were not looking, the market came to them. News that mutual fund group Fidelity Investments has marked down the value of its stake in social media darling Snapchat by 25 per cent threw a bucket of iced water over the so-called 'unicorns'. But this is not the first markdown to suggest that some of the $1bn-plus valuations these companies boast are as mythical as the beasts they are named for.
This program aired on December 2, 2015.