[DSingularity]

Why do you start a startup? Is it to build an idea you believe in and believe it is potentially lucrative or is it so you can go through the motions, say the trendy things, and get outcompeted because in the end you are primarily focused on getting acquired with a 1B exit?

[qeternity]

Spoken like someone who has never started a business. Brex raised much less than $5b and Capital One apparently thinks it is worth more than that (otherwise they wouldn’t buy it).

This is called value creation.

[jjfoooo4]

I think the investors who put $300m in at a $12b valuation would disagree

[qeternity]

I don’t think you understand how liquidation preferences work.

They will get $300m back.

Opportunity cost sure. But zero nominal loss.

[pinnochio]

Definitely. No company has ever overpaid for another company. No fraud or FOMO-driven overvaluation has ever occurred in an acquisition. And all acquisitions have always turned out for the best. It's all 100% pure value creation.

[solarkraft]

Your statement is true on average because the world’s economy is continuing to function.

[komali2]

> Your statement is true on average because the world’s economy is continuing to function.

The entire field of economics depends on post ipso facto statements like this.

[shafyy]

"functioning" is doing a lot of heavy lifting here

[pinnochio]

Oh wow, I don't even know where to begin with that.

Like, the world economy can't continue to function even if acquisitions were only 80% value creation on average? Or does the entire world economy depend on companies acquiring other companies with 100% value creation on average, such that it continuing to function logically implies 100% average value creation?

[re-thc]

> can't continue to function even if acquisitions were only 80% value creation on average

The number is much much lower than that. Most acquisitions fail or don't have much impact.

[qeternity]

Definitely. And some random guy on HN knows the value of Brex to Capital One better than Capital One does.

Brex can be worth $5b today and also be worth less in the future. These two realities don’t conflict. Acquisitions can and do end poorly. But the vast majority work well. I am not sure what you don’t understand about that?