The Unicorn Bubble Will Burst – Here’s What Will Happen Next

My Entrepreneur Journeys book “Billion Dollar Unicorns” came out in December 2014. Leading up to it and after, I have had the opportunity to interview over 50 Unicorn entrepreneurs, and another 20 or so potential Unicorns.

By now, I imagine that you have read plenty of coverage predicting the crash of 2016. Experts hastily point out that it will be nothing like the Dotcom crash when middle class savings got destroyed. No. This one will only piss away a few hundred billion dollars. The damage is well contained.
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From Unicorn to Unicorpse: Etsy Falters on Amazon’s Entry

Etsy (Nasdaq: ETSY) went public earlier this year, a much awaited IPO at an $1.8 billion valuation. But since listing, serious issues with the company have resulted in a tumbling valuation under public market scrutiny. At its current stock price, Etsy is still appearing above the billion dollar mark, but barely so. And its trajectory indicates that Etsy is on its way from being a prized Unicorn to a faltering Unicorpse.

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Focus on Sustainable Growth, NOT Growth at All Cost

You may have read my recent piece Billion Dollar Unicorns: Box Struggles in its Public Avatar, where I discussed how this darling of the VCs is finding the public market rather unfriendly:

Their stock is trading at $13.71 with a market capitalization of $1.65 billion. It touched a high of $24.73 soon after listing in January this year. Box had listed on the exchange at $14 a share. As expected, its valuation has fallen since pre-IPO levels. Prior to listing, Box had raised $564.1 million with their last round of $150 million valuing them at $2.4 billion.

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Looking Forward to the Real Silicon Valley

I am one of those people who doesn’t like bubbles. Right now, we’re experiencing a bubble in Silicon Valley with funny money driving weird, unproductive behavior.

Some people want this party to go on.

I don’t.

Francisco Dao has written a poorly analyzed post on VentureBeat titled What will happen to Silicon Valley when demographics strangle the global economy:

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Billion Dollar Unicorns: Hortonworks Needs To Deliver Results

A Markets and Markets report on Hadoop estimates the total Hadoop market to grow 55% annually to be worth $13.95 billion by 2017. Billion Dollar Unicorn club member Hortonworks is one successful player in this rapidly growing Hadoop market.

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The Commoditization of Venture Capital

The venture capital market is getting more and more irrational every day. VentureBeat just reported this week that VCs are ‘collecting logos’ of unicorn companies.

According to Pitchbook, more than 60 percent of all VC-invested capital went to rounds of more than $25 million in 2014, the highest percentage since the dotcom boom. There were 414 rounds of $25+ million last year, 50 percent more than the 276 rounds in 2013. VC capital invested jumped $20 billion from 2013 to 2014, while the number of financings fell by 16 percent.

Historically, private company valuations have largely been tied to valuations in the public market. But there is now growing concern that VC valuations have exceeded reasonable public valuations — a dangerous sign. Facebook’s $22 billion acquisition of WhatsApp has inflated valuation expectations. Meanwhile, potential tech buyers such as Google, Yahoo, Alibaba, Apple, and Microsoft have tens of billions of dollars in cash holdings. Series D+ valuations saw a 50 percent jump from 2013 to 2014. Valuations now exceed some of the closely watched historical exit parameters. We’ve also seen a significant increase in median Series B valuations. Capital invested in late-stage rounds was up to $11.5 billion in Q2 and $10.6 billion in Q4, representing the only two $10+ billion quarters since the dotcom boom. Seed rounds declined to 221 in Q4 versus 564 in Q1 2013.

I discussed the danger of overvalued private unicorns in Why Not All Private Unicorns Will Become Public Unicorns earlier.

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Billion Dollar Unicorns: Cloud Investment Thesis of 5 VCs

Last fall, we had five VCs participate in our 1M/1M roundtables to discuss their Cloud Computing investment thesis. These interviews cover as well as build upon the themes discussed in my two recent books, Billion Dollar Unicorns and Carnival In The Cloud. If you are looking to build a Unicorn company in the Cloud Computing domain, I strongly recommend you listen to these five interviews. In each case, listening to just the first 30 minutes would be adequate.

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Billion Dollar Unicorns: Web 3.0 and E-Commerce Investment Thesis of 3 VCs

Last fall, we had three VCs participate in our 1M/1M roundtables to discuss their Web 3.0 and e-Commerce investment thesis. These interviews cover as well as build upon the themes discussed in my two recent books, Billion Dollar Unicorns and From E-Commerce to Web 3.0. If you are looking to build a Unicorn company in the Web 3.0 / e-Commerce domains, I strongly recommend you listen to these three interviews. In each case, listening to just the first 30 minutes would be adequate.

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