Insights on VC Pricing: Lessons from Uber Technologies Inc (UBER), WeWorks and Peloton Interactive, Inc. (PTON)!

The flood of companies going public, and their diverse businesses, has made for interesting valuations, but there are also more general lessons to be learned, even for those not interested in investing in these companies. First, our experiences with these IPOs should make it clear that it is the pricing game that dominates how numbers get attached to companies, and that is especially true for IPOs, not just on the offering day, but in the VC rounds leading up to the offering, and in the post-offering trading. Second, to the extent that the pricing game becomes centered on intermediate metrics, say revenue growth or on users or subscribers, it can lead companies astray, as they strive to deliver on those metrics, often at the expense of creating viable business models, and the pricing players (VCs and public investors) can get blindsided when the game changes. As I noted in my long-ago post on Twitter, these companies will face their bar mitzvah moments, when markets shift, often abruptly, from the intermediate users to the end game of profits, and many of these companies will be found wanting.