Unicorns may be overvalued, but dinosaurs will die.

Introduction: This article is from the medium of a hot article, the Chinese version by the Heaven Zhuhai Sub-rudder to compile, the original text in this paper has been 675 recommendations. The question of whether brick-and-stone companies have recently been overvalued over the 1 billion-dollar rating is a heated argument, but few of them realise that valuations of listed companies are inherently costly and difficult to pinpoint. Given how much cash and operating margins are left in the future for heavy and bulky companies to prop up their way forward, it seems a bit too optimistic that they are now earning at 15-20+ levels. Unless they can speed up their innovation (or incorporate a company from an Internet industry-the following will explain why), otherwise these 500 ( The 500 enterprise dinosaurs described by the standard and poor 500 are bound to be disintegrated and destroyed by the use of the software and the Internet market by the 1 billion-level unicorns, when the tiny heads of these reptiles will be "tude" by unicorns.

The recent view of brick houses is that the $1 billion-a-level unicorn is overvalued.

To be sure, it is true that a large number of companies claiming to be valued at $1 billion have not been known to come out of nowhere recently. And then there are a lot of promising companies that are advancing at the entrance to the Unicorn club (Uber, Xiaomi, Airbnb, for example), the so-called one will be famous for the bone blight, in these forward a large number of victors at the foot, in fact, stepping on is also a large number of failed enterprises of the carcass. But it is this far-off outcome that has led most unicorns to be overvalued, while a small number of low-key, good companies that fall into the power laws are critically undervalued.

Because of the nature of venture capital, in any industry, a gorilla-level enterprise will take away most of the market value, and the remainder of the smaller chimpanzee and simian-level businesses are actually worth little or even zero. When the dust settles, all the apes (and their investors) tend to think they will be the next big gorilla to come ... It's a pity that they are basically wrong.

It may not be difficult for bricks to predict the eventual decline of those heavyweight unicorns and gorilla-level businesses, but they tend to overlook the fact that many listed companies (which use the word "dinosaur" to describe such companies) are in fact overvalued too.

Why do I personally think this is a true fact? 3 basic reasons are listed below:

• dinosaurs are often not with innovation . This is not news; those who are smarter and more eloquent than me have already published a number of relevant articles ("Schumpeter: The Tomb of innovation, Christensen: Innovators and Dilemmas"), so I will not swim the new article on this point of speculation again cold. It is easy for these dinosaurs to fall into the mire of focusing only on turnover and profits, and then never venture to innovate to find a better alternative. As time goes by, they slowly lose their advantage.
• dinosaurs are hard to capture and retain top technical talent . Dinosaurs may know the importance of technology and even realize that "software is devouring the whole world" (Editor's note: The source of this statement, please refer to the article on my website, one of the world's largest question and answer website, Stack Exchange how to form) this trend, but they ignore the fact that Top tech professionals tend to be more inclined to work in innovative developing companies in order to get a million-dollar stock in the future, rather than seek a gravy train in a bloated, slow-moving big enterprise (note: Some big companies on Wall Street will actually be tempted to do the wrong thing, but it's just an anomaly). This led to the dinosaurs losing the battle for talent, which would throw away the bigger battlefield of innovation. Then, brother ... There was no more then.
• dinosaurs did not know that the Internet market had become so vital . Nor do they know how important the online platform is for capturing and retaining users, so it is not clear how important it is to maintain future operating margins and profits. This 3rd is perhaps one of the most subtle cases, as the user of the dinosaur slowly moving from the line to the line is not really a very easy thing to notice. So, as with the 2nd reason mentioned above, capturing and retaining top market talent is also full of smoke. Most dinosaurs have no concept of the fact that they should be competing for the speed of a race to "help companies give long technical talent".

All of the above reasons eventually return to one of the most fundamental points of view: most dinosaur-listed companies never put mission-critical (mission-critical) software technology and the Internet market has become an important business competitiveness of this fact . As a result, a start-up unicorn can easily turn these extremely fragile dinosaurs, which lack internet genes, into lunch.
To put it simply: the average price-to-earnings ratio of dinosaur-listed companies means that our "Mr. Market" believes that one of the dinosaur X will have 15-20 years of liquidity and profit to survive. Unless this speculation is very fucking fucked-up, the unicorn will kick the dinosaur x out within 10 years.

Now you may say to yourself, "God, these dinosaurs can still rely on the original supplies for 15-20 years so long ah, so long time the market's self-regulation is not able to play a role in self-adjustment?" Obviously, these internet idiots (Editor's note: the word "idiot-moron" is not intentionally exaggerated by the editor.) Is ignorant of how capital and economy operate. If these statements are established, then our "market Mr" market regulation mechanism will start to operate, those who are "overvalued" dinosaur shares and related market value should be slowly automatically downward ... Right?

Since I am a well-behaved venture capitalist and an otaku-level economist, I prefer that our "Mr. Market" will always find a balance. But there is a small problem here: you can't sell a public market for a long time, at least for 5-10 years, for sure. There is no effective way of selling or hedging/deriving tools to capture the time when the unicorns will begin to fall and thus to collapse, so our only option is to believe in the current valuations (perhaps too high) of these unicorn businesses.

That's exactly what our "Mr. Market" is doing now, and that's why the unicorns look overvalued, and that's why all dinosaurs are going to die .

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Unicorns may be overvalued, but dinosaurs will die.