Which one of these will be the biggest “unicorn” failure ever?

Given their debt levels, could some of these companies may take down financial companies with them though?

If these (and other unicorn companies) secured what could be some several billions of dollars in low interest debt with their stock as collateral, that means those loans have been securitized, resold, and leveraged again into the market using other derivatives. It also means that the interest rates hikes coming from the Fed may cause those companies to sell more stock to make their interest payments - which will drive their stock down, knocking the collateral out from under the loan, with a bazillion or so in derivatives hinging on it.

Totally hypothetical though. I am sure they have it under control.

It does sound like unicornageddon if interest rates jump though. The 2008-billion dollar question would be, who is holding the derivatives on those loans? It's probably different this time, it's not like 2008 could happen again, and we learned from history so much so that Margot Robbie in a bathtub explained it to us. The US could probably afford another bailout if it came to it, and it's not like the conseqeunt inflation would trigger rapid de-dollarization of the global economy as big national holders dumped their reserves and created huge bubbles in anything that facilitated capital flight out of USD - like oil, fertilizer, and other necessary things to keep whole continents of people from starving. Co-operation would need to persist instead of nations turning inward to solve their own problems and fend off internal strife, instead of co-ordinating a response. This is fine.

In the case of rideshare/delivery companies on the list like Uber, Lyft, and Doordash, the bulk of their expenses/losses aren't salaries, it's in subsidizing every ride/delivery to compete on price while still compensating drivers enough for it to be worth it to them.

In other words, Uber didn't burn $30B on salaries, it burned it selling $1 bills for $0.70 over and over and over again.

There is a big distance between the unmentioned 0 and your 1.

0.1 - 0.999 - they raised round after round of VC, paying back the previous round with big profits.

1 - they sold the gullible public (which never should have happened - regulators should have prevented the IPO!) on a business model with no real hope of profit.

> Now to be clear, some of these companies are hopelessly screwed.

I'm not sure about that. I imagine that for the founders and top executives of these "loser" companies, they are having the time of their lives: Earning top money fast without doing too much. So, from their point of view, the company is doing fine. Now, sure, employees are always screwed no matter what ;)

> venture capital/startup tech scene is arguably the biggest Ponzi scheme in the last 20+ years

Between VC returns, at the top decile (where it outperforms) and broadly (where it simply performs), and the tangible track record of VC-backed companies from SpaceX to Moderna, this comparison is foundationally false.

I think/hope the crime companies are a minority. I wish the industry would do more to root them out, but I guess there's no profit motive in it. I've never understood why the government didn't come down hard on Uber/AirBNB/etc. and those who invested in them. (Isn't this why RICO exists?)

The core of ponzi schemes is recruitment. There is no recruitment happening here, just terrible business

Uber, AirBnb, Door dash etc. have added tremendous value to my life and society in general. That’s not a Ponzi scheme. At worst you could call it a social wealth redistribution program of sorts.

The kool-aid is strong in here!

Where good return == lower than inflation rate. TIPS are positive rate now but unless in a tax advantaged account could fail to keep pace with inflation too.

I had a similar question, and I would really like to know how "cumulative losses" are calculated.

As someone else posted, it is possible that, in addition to equity financing (the "amount raised" number), the company also received debt financing, and they've spent most of that, but I don't think that can explain everything, e.g. the huge delta in Teladoc Health only raising $170 million but having $11.2 billion in cumulative losses.

Doing a little searching, it looks like Teladoc recently took a $6.6 billion goodwill impairment on its acquisition of Livongo in 2020 that it did for $18.5 billion. The original acquisition was for "Livongo shares will be exchanged for 0.5920 shares of Teladoc plus cash of $11.33 each consideration per share." So if a lot of the merger deal was done with inflated Teladoc stock, and then that stock fell, it would be considered a loss in a particular quarter, but I feel like it's weird to call the non-cash charge part of its "cumulative losses".

In any case, the numbers are at least "funny" in the sense that they're not comparing apples to apples (or, more accurately, "cash to cash").

A very large chunk of GAAP losses are attributable to stock comp expense (a quick and easy way to check cumulative profits/losses is looking at the balance sheet’s equity section for “accumulated deficit”) which still gets counted as an expense but since it’s non-cash it’s not a drain on whatever the company has raised. If you look at Uber’s last three FY’s, they’ve cumulatively reported losses of about $16 billion, and stock comp has been about $6.5 billion of that. For the vast majority of public companies this isn’t as material but for all these VC-backed, Bay Area-type tech companies they have this systemically dysfunctional culture where they dole out stock and options to no end.

Seems pretty obvious that the answer is debt. For example, Uber has $11 billion in long term debt as of 2021: https://www.marketwatch.com/investing/stock/uber/financials/...

I could be wrong but I would imagine that funds raised would be the amount strictly raised from outside investors, not total revenues.

Example, Uber still makes revenue from its rides, just not enough for a profit and in this case funds raised would be making up the difference.

It's a combination of the two reasons cited by others here.

1. They may have revenue which is adding to total cash pile; and 2. They may have taken on additional debt

Maybe obvious, but probably worth repeating is that raising capital does not raise debt for your company (i.e. you're selling off a piece of your company, not taking on debt which you have to repay). I'm assuming that the "Funds raised" column is the amount they've taken in venture funding, and not debt. If it does include debt, you can ignore point #2.

Raise money. Use raise as an asset to secure credit. Accrue liabilities during normal business operations. Fail to generate revenue and raise more money and credit. Demonstrate growth without profit. Rinse, repeat.

> How come they can lose more money than they raised?

The difference is debt they've taken on.

Uber raised 25B in VC rounds, 8B in the IPO, iirc

They used their high stock price to buy Livongo, and then did massive write downs on it when it ended up not being that great (~$9 billion in total). They had two quarters in a row where they did good will impairments of 30-40% of their market cap.

Bought Livongo October 2020 (stock price $200)for $18 billion- https://www.fiercehealthcare.com/finance/teladoc-finalizes-b...

Q1 2022 6.6 billion write down- https://www.fiercehealthcare.com/health-tech/teladoc-takes-6...

Q2 3 billion write down- https://www.insiderintelligence.com/content/teladoc-health-t...

The losses they're showing aren't all cash / operating losses, which rather damages the article.

Spoiler alert: they had help. Robinhood is a wolf in sheep's clothing - they are controlled by, and beholden to, criminal enterprises such as Citadel. This "in-house" trade clearing system is actually Ken Griffin's personal honeypot. It is built for one, and only one purpose, and that is to fleece retail investors at all costs while simultaneously creating the appearance of being retail's champion.

It's a neat trick, and I'd almost respect their enginuity if they weren't robbing people blind. I wouldn't touch Robinhood's products or common stock with a 100 foot pole, and neither should you.

Edit: See my other comments below for an idea of how/why this works.