[exw]

I don't think you are viewing this through the right lense. Valuations are a point in time vs. thinking about a company as a long-term investment - you should more think about which of these businesses has the best long-term potential to become the winner in a massive market, with a strong "moat" that makes it hard to compete, as well as extraordinary margins.

Based on that criteria, Uber & AirBnB should be on top of this list, followed by Palantir and Stripe. Zenefits has not really shown the type of defensible traction that Uber / AirBnB have (right now they are simply a rapidly growing insurance agent with a difficult-to-scale direct sales model). I would not add Spotify to this list - bad margins, and hard to defend against Google / Apple.

[npizzolato]

I'm not going to speak to their ability to become winners in massive markets, but I don't see how Uber or AirBnB have a strong moat that makes it hard to compete. Both seem extraordinarily easy to switch away from to a competitor. Many drivers already drive for both Uber and Lyft at the same time, and it's very easy for consumers to use both apps. I haven't used AirBnB, but it seems like it would be easy to list your apartment/house on multiple marketplaces.

[exw]

Both of these businesses have what are called supply-side network effects (https://en.wikipedia.org/wiki/Network_effect), which are not as strong as demand-side effects, but can still lead to dominant market positions. In more concrete terms this means that for you as a consumer, there is no DIRECT additional value of someone else joining the service (you don't care if your friend joins Uber), but the value of the service does go up with every additional supplier that joins the network (for Uber, this would mean shorter wait times when you want a car, etc.) The defensibility of these types of services is created through their supplier network, and their ability to create more value for those suppliers (and consequently consumers as well) that the competition. Uber / AirBnB can then use the revenue from their leading market position to innovate faster than their competition, create more services for consumers, pay for distribution / new customer acquisition, spend money on marketing and awareness, etc. all of which leads to them creating a massive moat around their market that makes it nearly impossible for anyone to compete with them.

[MrApathy]

Spotify is not like Netflix. Spotify is solely dependent on content creators who know exactly how profitable Spotify is at any time, and therefore how far they can be squeezed for royalties.

Netflix has two major advantages: (1) consumers are far more likely to accept a limited video catalog than they are a limited music catalog, and (2) Netflix has spent a lot of money developing their own content. Could Spotify do the same? Possibly, but probably more difficult to do so.

I think Spotify will in the future generate consistent low profits, much like a utility, and their valuation will likely reflect that.

So agree with you completely.