There comes that moment where the veiled threats against logic such as the go-to excuse of “it’s different this time” are exposed against the harsh light of reality for all to see with such clarity, “it’s different this time” is precisely the apt statement to show why it was all fallacy to begin with.
Uber™ has just had that moment, and the resulting fallout as I’ve iterated before: Will. Be. Legend.
To think, let alone, believe that the current implosion (and yes, I mean implosion) will be isolated within Uber is as much of a fantasy as was believing: “it’s different this time.” Why? Because: It is precisely that.
I believe (and have written) the remaining unicorns along with entire “tech” or “Valley” model for valuation are now facing what I called, “an extinction event.” Or said differently: The moment Uber is made to state publicly its current valuation going forward? It’ll be the equivalent for both “The Valley” and “unicorn” metric modeling – as was for the dinosaurs. e.g., Stick a fork in it, it’s done.
Now to be fair Theranos™ was/is caught up in what has been deemed as fraud for their product offering, Uber is not. However, why I use the “moment” appraisal is this: Once it was shown that the whole “so worth it” valuation metric was no longer above reproach? The jumping-of-ship for those closest happened so fast even rats took notice.
Ms. Holmes publicly declared any, and all, accusations as false before finally having to recant in the form of pulling, or re-verifying prior testing results. But as she was doing that publicly, quietly many either working for, or involved in management were reported to be heading towards any and all exits. Then, precisely one year ago this week (yes, it’s the anniversary) Forbes™ revised, and declared Ms. Holmes net worth had gone from $4.5 BILLION – To Nothing. And just like that it was over almost as fast as it had began.
So exactly where is the equivocation argument? Good question, and it is this:
The revising of valuations and more came when suddenly everyone no-longer could justify the valuations based on “it’s different this time” arguments.
That argument works fine when the Fed’s QE program is in full effect and works like some magical cloak to hide the naked fallacy that a company with less than $100 Million in revenues is worth some $9 BILLION because the VC’s invested say it is. (I can’t help myself from laughing as I typed that, it’s so far beyond ludicrous.)
But once the term “law suits” and more get thrown across a unicorns saddle? Let’s just say – viewpoints, and valuation metrics begin to change, and change quickly.
Uber is currently valued via all reports at around $68 BILLION dollars. And with that valuation it is currently the #1 unicorn, and most valued startup, and private tech company, in the world. And it’s core product? It’s an app to hail a cab.
Re-read the above line a few times, and let it sink in. Because as I implied earlier – this is where the equivocation moment comes. e.g., When all-hype suddenly meets law suits? All, and I mean just that – all – perspective changes. Especially for those of the unicorn variety.
Theranos, for all that it was going through at that time, one could argue (and some did making snake-oil salesmen look trustworthy) that there was at least some possible future if the law suits turned out to be defendable, or were misplaced. After all, it was about patented machines, diagnosis, and more. Nevertheless – it was over with near immediacy once it was blatantly obvious people once loyal and intimately involved, along with companies using the service publicly began jumping ship.
Suddenly every “news” outlet that once couldn’t get a flattering story out quick enough tripped all over themselves to re-write the now how, and why, for the imminent collapse of the once storied unicorn.
This time – is no different, for the stories have already begun. Again, once the unquestionable becomes questioned? I believe you already know the answer. But if you need reminding – again – just look to Theranos.
Now, much like Ms. Holmes, the founder and CEO had to quit, or resign, to appease those calling for change. And, much like the previous example – those closest, and who should be the greatest ally for change and stay as to help weather out the storm are also jumping. Sound familiar?
The optics of such a “jump” while in the midst of such a sh*t-storm at Uber, from my perspective, shows only one thing: You know the jig is up, it’s all about managing the fall, and there’s no need to do that in plain view.
If I’m wrong, then why would such a staunch defender of the company and its CEO resign when the negative optics of such a move are clearly visible? Unless? See above.
And just like Theranos – Uber’s valuation has already began slipping.
The real difference here? Remember: Theranos was said to be worth $9 Billion when their fall from grace began. And that was all based upon the idea that they were involved in life changing medical technology. Uber? They are said to be worth $68 BILLION – and they’re an app to hail a cab. Think about that, again.
And lest one forget – Uber burns through, not makes: $BILLIONS. And its “world domination” thesis has already been cleaved when it gave up on China. And that realization alone has yet to be priced in, or out, one might say. Add to that just some of the above and “cleave” might be an understatement for future valuation adjustments going forward.
Just ask Ms. Holmes.