Are Private Startups Crushing the Public Companies?
Erin Griffith, in her latest piece in Fortune Magazine talks about how private startups need to be more transparent about their fund management. Recently, Uber’s CEO Travis Kalnick was accused of wimping out from making the company into a public sector.
Griffith points out why the private startups are in no hurry to pass over to the other side. “GoPro (GPRO 6.75%) lowered its guidance by $130 million this quarter, and the company’s stock, is a single-digit stock now, down from more than $65 this summer. LinkedIn (LNKD -43.63%) beat its quarterly expectations and its shares tanked 33%. Unless you’re a FANG (Facebook Amazon Netflix Google), investors are ruthlessly unforgiving”, she wrote in the article.
Though no solid information is available, it is pretty clear that Uber is doing well as a private firm. The spending rate of the company is off the top, but the investors do not seem to mind, given the private nature of the company. Reports show how Uber stock fails to offer any financial details to the investors and yet they are ready to pour funds into the company.
Griffith thinks aloud, wondering how many other starups are hiding system dyfunction similarly. Absence of transparency certainly poses a problem to the investors, and also for the firms that would do business with the said startups. They are basically venturing into a business relationship blindfolded.
This is exactly why it is imperative to publish crucial information like the burn rates of startups which employ more than thousands of peoples. Transparency is indeed utterly important for a healthy business relationship.