Selling the future I’m writing about Uber again, but it’s the story of the moment. And with public shareholders’ money now at risk, it’s more important than ever. Uber took a hit on Monday, its first full day as a publicly traded stock, with shares dropping 11 percent, wiping out $7 billion in value. True, the markets on the whole were down, but it was a grisly performance. CEO Dara Khosrowshahi attempted to rally the troops with a memo Monday, a copy of which CNBC obtained. I was struck by one line in particular: “There are many versions of our future that are highly profitable and valuable, and there are of course some that are less so.” This is Silicon Valley’s theory of investing in a nutshell. The past doesn’t matter. The present doesn’t matter. All that matters is the future. As the markets recovered Tuesday, so did Uber stock, rising nearly 8 percent. Perhaps Wall Street agrees with Khosrowshahi’s storytelling. You’ve probably heard the disclaimer that “past performance is no guarantee of future results.” When it comes to valuing tech stocks, not only is it no guarantee, it’s no relation. I’m reminded of what Cnet founder Halsey Minor said in 1997, shortly after his company announced seemingly subpar quarterly results: “We announced that our revenues were lower, our losses were higher, and our stock went up $3. The Internet is its own phenomenon.” Khosrowshahi is in essence asking the market to return to that dot-com bubble way of thinking: Don’t pay attention to Uber’s staggering losses, just think about a future where Uber controls a huge chunk of transportation, where self-driving cars swarm the street and self-flying ones take to the skies. At this rate, I might as well ask you to buy shares of RTLT on the premise that Ramona the Love Terrier could one day disrupt the global canine reward supply chain. Khosrowshahi has a big incentive to persuade investors to buy into this “Choose Your Own Adventure” way of thinking: He has a $100 million bonus riding on Uber trading at a value above $120 billion for 90 consecutive days, almost double its current market cap of $67 billion. Venture capitalists already invest this way, betting on companies in the hopes that they turn out to be huge winners. But there’s one key difference from the 1990s, when day traders placed huge bets on tiny internet startups: Private-market investors now capture most of the gains from such speculation. By the time highly valued private companies like Uber to go public, there’s little room for them to deliver gangbuster returns to public-market investors. It’s a tough story to sell.


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