Pando plays Fantasy Unicorn: The Final!
There are only two companies that can possibly win Fantasy Unicorn.
Last week, I showed Pando readers my inner calculations as I filled out the first two rounds of CB Insights' amazing March Madness style bracket to agree on the world’s most undervalued unicorn. As its readers are voting on round three, I decided to complete the whole damn thing and crown the winner before CB Insights has a chance.
As the field winnows down, it becomes a battle of promise vs. existing dominance that may be a tad overvalued. The calls aren’t easy. But my ultimate winners made me feel slightly less hopeless about the state of the Valley. They aren’t just undervalued unicorns. They are truly unique companies that deserve the silly mythical title, tainted as it may have forever become.
Round three: The sweet sixteen. As a reminder, this is based on upside considering current price.
Lyft v. SurveyMonkey: Lyft, easy. It’s “only” valued at $2.5 billion – one third of what Uber has raised. The market will always need a number two.
Airbnb v. Twilio: This one is harder than it seems, as Twilio is a mini-corn, valued at just $1.1 billion. But I’m going to go with Airbnb. It’s a heady price at $25 billion, but it’s a real business and a powerful concept the world just gets. But it’s possible, I could just as easily be convinced the other way if I knew more about Twilio’s business. This is probably the hardest call in this round.
Buzzfeed v. Nextdoor: This is easy. I think Nextdoor has a ton of promise. As I wrote last time, it was a painstakingly hard to build a social network based on real world neighborhoods and ever-elusive trust in the online world. It’s valuable for all sorts of future monetization opportunities. But Buzzfeed is one of only three content companies since the dawn of new media that could actually be worth north of $1 billion, and could create a new, lasting independent media company. The only reason it’s valued at a paltry $1.5 billion (for the times, “paltry,” at least) is because content has been such a shit industury for returns since… the Internet began. (Come to think of it, since rich families had to lose money for decades on now hundred-year-old brands). Nextdoor has promise, but Buzzfeed wins, easily.
Palantir v. Prosper: Duh, Palantir.
Domo v. SpaceX: Duh, SpaceX.
Eventbrite v. GitHub: I’m going to go with GitHub. As I wrote in the first rounds of brackets, Eventbrite is a company that painstakingly built a solid business, based on real customers and a reliable service. More of those in the Valley, please. And yet, it’s a boring business. Github is valued at double Eventbrite, but I still think it has far more upside.
Slack v. InsideSales.com: I don’t know a ton about InsideSales, but as we saw from our article on unicorn terms last week, Slack negotiates from a position of incredible strength. Beyond its $2.8 billion valuation, Slack had the cleanest terms of all unicorns we looked at, thanks to data from Pitchbook. Clearly, it has numbers to back up the hype.
Stripe v. Pinterest: Pinterest. As I’ve said repeatedly, no one has ever made a compelling case to me why Stripe taking funding at a $3 billion price was a good move, let alone $5 billion. I don’t totally get Pinterest either, but I’d pick them easily.
And now, let’s skip ahead to the next round. The eventual winners are starting to look obvious anyway. The Elite 8. The rankings start to get interesting with monster companies going up against incredibly promising ones. Here’s how my votes would land:
SpaceX v. Github: Sorry Github. Developers may not be able to live without you, but we’re talking about privatizing space exploration.
Slack v. Pinterest: This is a tough call. Pinterest – while I don’t really get it – has long been hyped as the last Web-first social network. It’s impossible not to think Pinterest is a driver of ecommerce and a potentially valuable ad platform. And yet, I still think it’s application and appeal are limited. I don’t have reason to think it’s overvalued at $11 billion, but it’s hard to know how much upside is there. Slack on the other hand, still has an incredibly bright future ahead of it. Also, you have to consider the potential acquisition price tag of Slack. Enterprise software companies have shit loads of cash and are willing to spend up to take out a potential competitor. If Yammer was worth $1 billion, it’s certainly not crazy to expect Slack to clear its $2.8 billion valuation if it keeps growing – even without an IPO. Slack.
Lyft v. Airbnb: The battle of the only two remaining companies of any heft in the over-hyped on-demand space, since Uber got unceremoniously booted in round one. Ughhhhhh…. Airbnb will most likely be the larger company at the end of the day. And it’s the most differentiated offering clearly. But it’s impossible for me to imagine a world where there isn’t a second ride sharing alternative. Uber is just too malevolent. They’ll be dominant in the US, but everyone will want an alternative to exist… even Uber fans. And the disparity in price is just so insanely great – with Airbnb valued at $25.5 billion and Lyft valued at just $2.5 billion. If this is a game about valuations, Lyft has to win.
Buzzfeed v. Palantir: I mean, how do you not take Palantir? It simply does something that’s highly valuable that no one else does at that level. It’s one of the most differentiated companies in a game of startup Clue where this clone of X, raised Y billion, in the library. Palantir.
Final four, decided. Let’s keep going:
SpaceX v. Slack: Ditto what I wrote above about SpaceX v. Github. How do you go against one of the greatest entrepreneurs in Valley history, and space?
Lyft v. Palantir: Ditto what I just wrote. Even with the huge upside in front of Lyft, how do you go against a team of the most able minds in Valley history, and national security?
So this is how it all ends: SpaceX v. Palantir. Two companies so distinct from everything else that they could only be compared to one another. Two elite decacorns. The former valued at $12 billion and the latter valued at $20 billion. Both products of the PayPal mafia, with Elon Musk founding one and Peter Thiel co-founding the other. Both doing things none of us can quite comprehend. Neither of them apps relying on advertising. Both providing a service that’s undoubtedly worth billions of dollars.
It doesn’t matter who wins between these two, and I could articulate both. They are the most undervalued unicorns, precisely because they aren’t of this wave. They are companies that likely wouldn’t have been formed without the sheer force of nature of their founders and a place like Silicon Valley (or its cash and network, in the case of SpaceX) existing.