The Unicorn Stampede Is Coming

Remember when people were worried about unicorns? It was a specific worry; the worry was not just that a lot of technology companies seemed to have valuations that were not justified by fundamentals, but particularly that a lot of private technology companies seemed to have valuations that were bound to lead to disappointment when they went public. There was a theory that the public and private markets for tech-company shares had become disconnected, that venture capitalists and (particularly) non-traditional venture investors like mutual funds and (most particularly) SoftBank were now willing to pay higher prices than the public markets were, and that when those private investors eventually tried to sell to the public markets they’d run into trouble.

I won’t exactly say that I shared that worry—my basic rule around here is never to worry about market prices—but not because I thought its premises were wrong. Instead I thought that the relationship between private and public markets had changed, not by becoming disconnected, but by becoming the same. “Private markets are the new public markets,” is a thing I say a lot around here. Because hot tech companies can stay private longer and raise much more money privately, and because the investors in those private companies are increasingly the same investors as those in the public markets, and because there are more opportunities for secondary liquidity in the private markets, the distinction between public and private companies has blurred. And if big private tech companies are essentially public companies, then, just like real public companies, their stock price can sometimes go down.