Mind Matters Natural and Artificial Intelligence News and Analysis

TagInvestor motivations

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Why People Keep Investing in Cool Companies That Lose Money

If money is all that matters, a beautiful loser is still a loser,… But wait. IS money all that matters when we are buying unicorns (exciting startups)?

Recently, we’ve been looking at unicorns — those tech companies that are just so Now! that, like Uber, Airbnb, and DoorDash, they are part of our everyday conversation. But as Gary Smith and Jeffrey Funk have noted, they don’t make money. And seldom or never have. For years on end. The recent downturn could mean some don’t survive. So Mind Matters News asked Dr. Funk, “Why don’t people notice, year after year, that these companies are not good investments? Is the buzzy idea more important than the financial outcome?“ Here’s what he told us: There are many ways to answer this question. My favourite answer uses Nobel Laureate Robert Shiller’s concept of irrational exuberance. Some of the following words are…