Wait for Your Pitch
Today, for the first time, I tried on a Magic Leap headset.
Coincidentally, it was also announced today that Magic Leap raised $280 million from NTT DoCoMo ($DCMYY), the Japanese mobile phone operator:
Per my post from yesterday citing Charlie Bilello’s look back at the year 2000, NTT DoCoMo was the third largest publicly traded company in the world around 20 years ago behind only Microsoft ($MSFT) and General Electric ($GE).
The Japanese company is far from that big right now.
In this age of very highly-valued private companies, Magic Leap has had a valuation of about $6.5 billion at last check.
Albert Wenger at Union Square Ventures shared his two cents on the current market:
“It is the season of mega tech IPOs including the recent offerings by Pinterest and the upcoming one by Uber. A key question to be answered is how well will these companies perform in the public markets over time? So far, Pinterest has traded up nicely in the first few days, but I am asking about long term performance. We are in new territory here because of how much money these companies have been able to raise previously in private markets.
To unpack the question and its implications further: will most of the gains in these investments be among the private investors who invested early or will there still be meaningful returns in the public markets? We will only know the answer to this in a year or so from now (and possibly not even then), but it will matter a lot for both future IPOs and for late-stage financings.
Because so much private money has been available for such a long time, the sorting between companies that truly have sustainable long-term growth and those that have bought their growth will happen in the public markets. My sense is that when some of these companies inevitably struggle, there will be a broad and indiscriminate sell-off among tech stocks as a result, with potentially the IPO window closing entirely. Anyone thinking of going public should probably do so sooner rather than later.
2020 will likely be a bumpy year as this sorting starts to take place. Plus there is the added complication of the ongoing tech backlash which has been building momentum for some time now. All of that is to say IPO buyer beware!”
Any investment, public or private, carries its own risks.
Warren Buffett famously made an apt baseball analogy to simplify this:
“The stock market is a no-called-strike game. You don’t have to swing at everything — you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’”
I may not make it down to the Tribeca Film Festival to see Magic Leap’s other cross-promotion with Game of Thrones in person:
But I will take a look at investing (a small amount) in the Taste app:
Taste is simple, fun, and helps me figure out which movies to watch.
Criterion Collection, here I come!
