Confetti falls as Lyft CEO Logan Green (C) rings the Nasdaq opening bell celebrating the company's initial public offering (IPO) on March 29, 2019 in Los Angeles, California. The ride hailing app company's shares were initially priced at $72. Lyft's stock rose 9% on its 1st day trading on Nasdaq, with a $26.5 billion valuation. Its IPO success bodes well for Uber, Pinterest, Zoom.
Mario Tama—Getty Images
By Alan Murray and Jeff John Roberts
April 22, 2019

Good morning.

The Economist does a good job in its new issue dissecting the current IPO boom. The most compelling factoid is this: “A dozen unicorns that have listed, or are likely to, posted combined losses of $14 billion last year. Their cumulative losses are $47 billion.”

Think about those numbers. The last IPO boom, two decades ago, also brought to market a boatload of profitless companies. But they didn’t have the scale to generate such gargantuan losses. That was before Blitzscaling, as LinkedIn Founder Reid Hoffman calls it, became the reigning zeitgeist of Silicon Valley. The goal of the game now is to get big before anyone else. Only then do you worry about profits.

That, of course, worked nicely for Amazon and Facebook. But will it be the same for Uber, Slack, Airbnb? Not clear to me that the latter have the same scale economies of the former, or that barriers to entry are as high.

At breakfast on Friday, a former tech-CEO-turned-investor told me he worries about how this will end. The “blitzscaled” companies will get picked up by index funds following their IPOs, then turn south when the lock-up periods for early investors expire. That will leave ordinary investors holding the bag – and fueling sentiment, once again, that the system is rigged for the powerful.

On that last point, there’s an interesting piece in the Washington Post this weekend headlined “Capitalism in Crisis: U.S. billionaires worry about the survival of the system that made them rich.” CEO Daily, of course, has been peddling that message for a while. But it’s interesting how widely accepted it has now become. I was reminded of this testy exchange with venture investor Marc Andreessen at the Fortune Global Forum in 2015, when I asked if the winner-take-most dynamics of the tech business were contributing to inequality. “Is this Fortune magazine?” Andreessen sneered back. “Did I stumble into an International Workers Party conference?” Today, it has become clear that the issue is an existential one for the future of business, as well as society.

News below.

Alan Murray
@alansmurray
alan.murray@fortune.com

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