Drinking from the Firehose #141: 💵 Substitute goods. 💵
www.firehose.vc
Fred Wilson of USV wrote a blog post that's seen a LOT of circulation over the weekend. It got me thinking about the relationship between margins and valuation, as well as the implications for consumer companies. In the post, Fred draws a distinction between how late stage private markets look at a new set of lower margin, technology-mediated services businesses (Uber, WeWork, Peloton, etc) and "classic" high margin software businesses (Cloudflare, Zoom, Datadog, etc). As a group, the latter have higher revenue multiples than the former. The implication is that the two quantities are correlated. And,
Drinking from the Firehose #141: 💵 Substitute goods. 💵
Drinking from the Firehose #141: 💵…
Drinking from the Firehose #141: 💵 Substitute goods. 💵
Fred Wilson of USV wrote a blog post that's seen a LOT of circulation over the weekend. It got me thinking about the relationship between margins and valuation, as well as the implications for consumer companies. In the post, Fred draws a distinction between how late stage private markets look at a new set of lower margin, technology-mediated services businesses (Uber, WeWork, Peloton, etc) and "classic" high margin software businesses (Cloudflare, Zoom, Datadog, etc). As a group, the latter have higher revenue multiples than the former. The implication is that the two quantities are correlated. And,