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Uber debuted below its IPO price on Friday and ended up down more than 7%, crawling across the finish line with a valuation below $80 billion.
That's a far cry from the $120 billion that was floated as recently as December. Founders and early investors will still going to get spectacularly rich, but late-comers and retail investors may find there's not much upside left unless the company can solve the quandary of serving a two-sided market profitably.
While disappointing for investors, Uber's debut may signal a welcome turning point for many in Silicon Valley. The Uber IPO caps an era characterized by big investments in relatively small ideas and an almost stubborn unwillingness to grapple with the larger challenges facing society and the world.
It kicked off around 2010 in the wake of the Great Recession, and has been fueled in part by a decade of record-low interest rates. As investors searched for ways to stay ahead of inflation, they poured money into the high-risk/high-reward venture capital sector, hoping for another Google or Facebook. Every time the venture capital industry seemed like it was about to slow down, another set of late entrants kept the party going — most recently, Masayoshi Son with the $100 billion SoftBank Vision Fund, funded in large part by Saudi money.
Some of these companies had truly innovative ideas. They found real demand and served real needs. A lot of them were riding the rise of mobile computing, which combined always-on internet with location tracking and cameras to enable new scenarios. But they are a far cry from the Silicon Valley start-ups of yesteryear, which invented and enabled microprocessors, personal computers, the internet and mobile computing.
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