Above the Crowd

Archive for the ‘IPO’ Category

How to Miss By a Mile: An Alternative Look at Uber’s Potential Market Size

July 11, 2014:

On June 18, Aswath Damodaran , a finance professor at NYU’s Stern School of Business, published an article on FiveThirtyEight titled “ Uber Isn’t Worth $17 Billion. ” This post was a shortened version of a more detailed post he had written for his own blog titled “ A Disruptive Cab Ride to Riches: The Uber Payoff .” Using a combination of market data, math, and financial analysis, Professor Damodaran concluded that his best estimate of the value of Uber is $5.9 billion, far short of the value recently determined by the market. This estimate of value was tied to certain “assumptions” with respect to TAM (total available market) as well as Uber’s market share within […]

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A Rake Too Far: Optimal Platform Pricing Strategy

April 18, 2013:

In a casino, the term “rake” refers to the commission that the house earns for operating a poker game. With each hand, a small percentage of the pot is scraped off by the dealer, which in essence becomes the “revenue” for the casino. While casinos use the term “rake,” a plethora of interesting word choices exist which all describe the same thing – keeping a little bit of the revenue for the company that is running the service. Examples include “commission,” “fee,” “toll,” “tax,” “vig” or “vigorish,” “juice,” “the take”, and “graft” (although this last one is typically associated with […]

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Why Facebook Clearly Belongs in the 10X Revenue Club

February 1, 2012:

Attached are my thoughts on the Facebook S-1 along with some quick stabs at valuation.  Brief disclosure, Benchmark Capital has a minority position in Facebook as a result of the acquisition of FriendFeed, a company that was incubated in our offices. I thought it would be useful to look at Facebook using the scorecard from our May 24 blog post, “ All Revenue is Not Created Equal, the Keys to the 10X Revenue Club .” For those that want to save time, the key point of this piece is that there is a broad disparity of Price/Revenue multiples for global Internet stocks, and that only a very small fraction of these companies achieve a […]

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You Don’t Have to Tweet to Twitter

November 15, 2011:

Frequent comparisons to Facebook leave many confused about the true value of Twitter. [Follow Me on Twitter] “In a brand new direction A change of perception On a brand new trajection” – UB40 [Disclosure: Benchmark Capital is a major investor in Twitter, and my partner Peter Fenton sits on the Twitter BOD.] Twitter is having a remarkable year. Active users have soared to over 100 million per month, with daily actives now above 50 million. Tweets per day are over 250 million. Most top actors, athletes, and artists are all active on Twitter. Every news and sports program proudly advertises its Twitter account handle. No one would consider […]

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On IPOs: If You Are Going To File, Make Sure You Price

September 14, 2011:

As you likely know, I am a big believer that the IPO can play a key role in the development of a company’s life. Moreover, I have argued that many in our ecosystem have an unhealthy anxiety regarding the dangers and consequences of being public. Lastly, I have argued that the IPO window is wide open for great companies – something I still believe today. All that said, I have been quite surprised by the recent trend in companies that file and then chose to delay. If you are going to file the S-1, it is imperative that you are prepared to follow through. Standing too long in […]

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