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Enterprise Cities Uber/Lyft

What Companies Give Up Staying Private

This year has been full of evidence technology companies are in no rush to go public, the latest of which is the news that Uber is on track to raise around $1 billion at a valuation approaching $40 billion—more than 1.5 times the public market value of Twitter.

I suspect that 2015 will bring more of the same and force the industry to reckon with issues we haven’t fully contemplated around massive, private tech companies.

Some of those issues will relate to the ongoing discussion around investor value creation; it’s no secret private market investors are capturing relatively more of the tech sector’s growth than public investors, although that may be somewhat muted by the fact that some historically public market investors like Fidelity and T. Rowe Price are often now investing in private rounds.

But there are other potential consequences of being in no rush to go public that companies like Uber, Airbnb, Dropbox, Palantir, SpaceX and others should contemplate. By the time they end up going public, their days of rapid growth may be behind them. Once that reality dawns on investors, their stocks are likely to trade accordingly. In that scenario, how will they adjust to life as slower-growth public companies?

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Just as the markets handsomely reward high-growth companies, they could easily punish slower-growing ones.