Lemmings Herding Unicorns

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This is what your company has to look like if you want a shot at the big bucks on Wall Street.

Wall Street has made an enormous contribution to the history of our country in recent years, one that no one can deny: it has made the Trump White House look in comparison like a bastion of sanity, a cloistered campus of stable geniuses genuflecting on the big issues of our time. Wall Street, meanwhile, has spent an inordinate amount of its time and money chasing unicorns.

A unicorn on Wall Street is a relatively new private company that has been valued at over a billion dollars by no one-knows-who for no apparent reason. Like the dot-com startups of old, the unicorns gallop onto the field, issue gazillions of dollars’ worth of stock to the public, borrow gazillions more from the hedge funds, and then try to figure out how to do business. Unless you’re one of the people with access to the best stock research tools who moves the stock and the money around and gets rich from fees — and these days who isn’t — these things seldom turn out well. So, naturally, Wall Street is doing more and more of them, and they’re getting weirder and weirder.

Some examples (and remember, I am not making  this stuff up. You can’t make this stuff up):

• WeWork: As far as I can figure it out, WeWork’s ostensible business plan is to lease large office spaces and sublease tiny cubicles to cubicle dwellers. It’s sort of an Airbnb for worker drones. The company, which is about a half hour old, borrowed a gazillion dollars, leased 50 million square feet of office space, hired 15,000 people, bought a $60 million private jet, and in the first six months of this year lost nearly a trillion dollars. It was going to do a stock IPO (initial public offering) last year, with a suggested valuation of nearly $50 billion dollars, but on reflecting that the enterprise had yet to make a single dollar in profit, the market threw up in its mouth and the IPO was pulled (proving once again that, theoretically, it is possible to gag a hyena). Now, days away from running out of cash, the company is laying off up to a third of its employees and begging for more loans. (Hey, they’re offering returns of up to 30%, what do you say?) Which reminds me of
• Uber: the internet-based ride-hailing company whose business plan seems to be to ignore all laws, regulations and conventions regarding driving for hire and labor relations and thus make a ton of money ferrying people around. Uber has been around longer than WeWork, long enough for its drivers to discover that what they thought was generous pay for an easy job evaporated fast as they paid for their cars’ fuel, insurance, maintenance, repairs and replacement costs. Like WeWork, Uber has never made a dime in profit, and in recent years has been losing a billion dollars per quarter. So far this year it has laid  off 1200 people. Which brings to mind
• Lyft: which, one supposes, was so impressed with Uber’s financials it decided to get some of those losses too, which it has been doing even faster than Uber.  In its most recent quarter Lyft took in $3 billion and recorded a loss of $5 billion. According to Business Insider, investors are not likely to care about the losses as long as the company keeps growing. If that’s true, they will also love 
• Zume: which set out three years ago to revolutionize losing money in the pizza business. Its pitch: we have robots assemble the pizzas, which guarantees quality control, and we put the ovens in our delivery vans, cooking the pizzas on their way, which guarantees they will be hot and fresh. Because the company made prominent and frequent use of the word “robotic,” it was valued by Wall Street at $2.25 billion and showered with loans, the most recent from SoftBank in the amount of $375 million. No financials that I can find yet, but customers report the pizza tastes kind of like cardboard but without the flavor. And it’s usually cold. 

The list goes on and on, and it requires us to rewrite that old adage for thinking and acting rationally that said “if you hear hoofbeats, think horses, not zebras.” Uh-uh. No. Think unicorns. And get out of the way fast.  

“Sweetie The Unicorn” by DBG Photography is licensed under CC BY-NC-ND 2.0