, intangible-asset-laden businesses like Uber and Airbnb -- built not on factories or resources, but ideas -- unleashed in the hope something will catch on and make them the next Facebook or Google. All of which is fine when times are good. When optimism dries up and the market appetites switch from hot intellectual property to cold hard cash, intangible-laden companies have started to become a luxury no one can afford.
The proliferation of money-losing public firms is being driven not just by tolerance among investors, but an overt preference for a certain kind of loss-making firm: one built on intangible assets, the author suggests. Businesses are being encouraged to sell stock years before they’re profitable because of a belief that some formula or idea will gradually attract a network of users that will one day prove exceedingly valuable.
-- businesses years away from being profitable, but that promised the scale to one day rewire and dominate existing industries. That was the bet, and the cash to fund them was dirt cheap.
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