The American start-up finance industry has some serious flaws. From Wolf Richter at wolfstreet.com:
They have accomplished an amazing feat: losing tons of money year after year during the Good Times in what were profitable industries.
What do the companies Wayfair, Zillow, Uber, Lyft, WeWork, Carvana, Tesla, Airbnb, Casper Sleep, Zume, and many others have in common in addition to their current or former status as unicorns with huge valuations?
There is one fundamental thing they all have in common: Supported by what seemed to be an endless flow of investor money, they barged into profitable industries, such as retailing furniture, house flipping, real estate brokerage, taxi operations, serviced temporary offices, selling used cars, manufacturing new cars, retailing mattresses, pizza delivery, and the like, and they disrupted them by throwing around often billions of dollars that they obtained in wave after wave from investors.
And in these profitable industries, they accomplished an amazing feat: they managed very successfully to lose a running ton of money, not just the first year or two while getting their feet on the ground, but year after year, in many cases for over a decade, without hopes of ever making a profit as defined, not by their own home-made metrics, but by Generally Accepted Accounting Principles, or GAAP.
