[netcan]

Stark reminder of how top heavy returns are. A lot of the talk and criticism about the startup world: valuation, investment, focusing on numbers other than revenue and such is ultimately explainable by going back to this.

For a bit more, dropbox & AirBnb are worth 10 & 25 billion. That's over half the total $65bn from 2/940 companies, 0.21%. Even if we assume these stats grossly underestimate ultimate valuations because of most of the companies are still young, it's still likely to end at >50% of value from <1% individuals. This is for companies that get into YC, which is already a select group.

[JonFish85]

Remember: until there's an "event", there are no "returns". Until a buyout or an acquisition happens, there's no money made except on paper.

[austenallred]

Sure, but I wouldn't mind holding 7% - dilution of Airbnb, Dropbox, Teespring and Zenefits. You can give that to me on paper.

[beambot]

And after a liquidity event, the money is really just a bunch of electrons in a computer or magnetic domains on a disk somewhere...

[davnicwil]

Not sure why this is downvoted, it's a very interesting point.

Equity in a privately-held company has value in precisely the same abstract sense that money has value. Both are tokens of, and therefore exchangeable for, real work. Why else do people take equity as part of compensation?

I think what beambot is getting at here is the value of 'what you own' doesn't become any more or less real after you trade equity for money in a liquidity event. It's fundamentally just as abstract as it ever was, or will be.

[beambot]

Spot on. The only differences are risk, liquidity, and fungibility. But the "money" aspect is fairly abstract up until you're actually trying to spend/exchange it.