These valuations can go just as fast as they come though. I know for me, and a lot of people, the concrete value that was determined because someone actually paid it holds a higher weight than the valuations speculative investors have given the lastest hot startups.
Pro: I think selling the whole company for $x is harder than selling 10% for $x/10.
Con: Big companies can also destroy value effectively (doesn't appear to be the case at all with Salesforce/Heroku, but...look at anything Yahoo has bought, and a bunch of things Google, Microsoft, etc. have bought. Skype, etc.
There's also some bias in the press here -- people reading mass-market publications actually might use (or at least understand) dropbox and airbnb; they have no idea what Heroku does. And, in tech/venture press, independent companies are more interesting because they might get bought; it's unlikely anyone will buy Heroku from Salesforce, or buy Salesforce, so it's less interesting to the press.
The value destruction is a good point, it just depends on where we are looking. Whether people consider a good sale price that was driven into the ground as more of a success than a lower sale price which goes on to continue to thrive and be a good investment for the acquirer.
I disagree entirely. A professional investor at the early stage is no less a valuation expert than an investor after IPO. This holds true even more so for companies who acquire to integrate or to acquire talent.
I think it is about the cashout event, if a YC company went to IPO, we could talk about what kind of value YC/ others cashed out at. The company paying to hire talent is also cashing YC/ others out. It doesn't matter how badly they over/ undervalue it they have paid that amount.
My disagreement came from how to think about valuations and investing:
I know for me, and a lot of people, the concrete value that was determined because someone actually paid it holds a higher weight than the valuations speculative investors have given the lastest hot startups.
When an early stage professional investor, invests in a startup at a particular valuation, they are just as qualified as someone in a later round. Yes, for the entrepreneur they do not have an "exit", but you do not know the other terms of the deal. In many cases entrepreneurs cash out at many rounds so a big valuation in an early round can in fact make them wealthy.
The line of thinking that professional investors at early stages are "speculative" is true, but not as much once you consider they are making more than 1 investment.
-I work at a post IPO investment fund, but I respect those that make tough decisions earlier in the lifecycle of a business and respect entrepreneurs that get that far.
