Age of companies when they achieve $1bn valuations

exponential-organizations-chart-1

I just saw the above chart in a post about exponential organisations from Salim Ismail of the Singularity University. It seems to me there are two obvious explanations for the dramatic reduction in the time it takes for companies to achive $1bn valuations:

  • The pace of change is increasing allowing new companies to develop and mature faster
  • We are in a bubble – at least for late stage companies

The fact that the trend has been going for some time – Google was founded in 1998 and Tesla and Facebook in 2003 and 2004 respectively – suggests that the bubble explanation can’t be the whole story. If we are in a bubble it hasn’t been going for more than a couple of years. So the primary explanation has to be the increasing rate of change.

That said, I think that froth in the late stage financing market has contributed in the last couple of years.

 

  • Charlie Pool

    Interesting, and I agree but perhaps rate of change shouldn’t be surprising? The pace of change itself is exponential because the disruption of technology lies in the exponential economic impact of three things all moving in the same direction:

    1.) Increasing production of information, i.e. data

    2.) Increasing web of connected devices, i.e. penetration

    3.) Increasing numbers of networks, i.e. distribution

    That said, the velocity of change is bound to compound market dynamics (fear and greed) and drive that frothiness in late stage financing.

  • Rico Trevisan

    Ben and James from the Exponent Podcast have a great discussion about it. Worth a listen.

    tl;dr: not in bubble, technology is competing outside of technology. eg: Uber disrupts taxi/transportation.

    http://exponent.fm/episode-041-bubbles/

  • http://www.theequitykicker.com brisbourne

    Thanks Rico. I agree businesses are growing faster than ever before and the markets tech is exploiting are larger than ever before (like Uber) and that means they are worth more. That doesn’t stop them being over-valued though..