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valuation

Why zero-revenue companies can be worth billions

on Mon, 12/02/2013 - 19:08

In a recent blog post, Fred Destin of Atlas Ventures (again) added sanity into the discussions about why zero-revenue companies can receive valuations of many billions of dollars.

I agree with everything he said. There's one more point I'd add: Large scale audiences have a valuation-per-engaged-user.

Facebook, Twitter, and LinkedIn all started out as zero-revenue companies. But after they achieved the scale and level of ongoing user-engagement that they have today, the smart management teams started inserting various ways to monetize the engaged users.