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Andy Rubin's Essential Is Now Valued at Over a Billion Dollars Without Shipping a Single Phone (theverge.com)
An anonymous reader shares a report: Essential, the new phone startup from Android founder Andy Rubin, is now a unicorn, according to reports from over the weekend. If you're not up to date on the parlance of Silicon Valley, a unicorn is a company that's valued at over $1 billion dollars, which is no small feat in today's market. This title is even more impressive, given that Essential has yet to ship a single device to consumers. According to a report, Foxconn's FIH Mobile filing for a $3 million investment in Essential for around 0.25 percent of the fledgling phone company revealed Essential's new unicorn status with a valuation of around $1.2 billion.
If this site can be trusted, the global smartphone market is some 400 billion dollars annually. The total invested in Essential to date seems to be around 300 million, which is definitely real money, but not necessarily a shocking figure. Something like 30-50 billion of VC funding gets thrown around on a quarterly basis. Andy Rubin has as good a chance as anyone to be able to deliver some value for that money, and he can probably be counted on to be able to put together a good team as well. If Uber can lose billions annually without anyone batting an eye then I don't know why these guys deserve the press, or why the "...without shipping a product" angle was necessary. Are we expecting that they're somehow less likely to do with the additional funding? Is there some part of bringing a smartphone to market that's expected to be quick, cheap, and easy?
Apparently it's a slow news day.
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In other news, AOL buys Time Warner, VA Linux has the largest first-day IPO price increase, and Pets.com announces free shipping on all 50 lb or larger bags of dog food...CEO says they'll "make it up in volume."
Unless things get crazier than they are now, I see this bubble deflating more slowly. There are fewer crazy pointless IPOs (Twitter and Snapchat are notable exceptions.) The average investor isn't being pushed so hard to buy tech stocks, and there's less cheerleading on CNBC this time. So maybe we've learned something.
It's amusing that one thing keeping this bubble inflated is the thing that I think we're going to take away from the bubble period and use...cloud computing. When a VC just has to cut a check to Amazon or Microsoft or Google instead of building a data center and buying network capacity, profitless startups can kick along for a lot longer. All that free capital can then be used to deck out a startup's hip trendy San Francisco office space with preschool furniture, free food and free massages for their employees.
Make no mistake though -- there are going to be thousands of scrum masters, DevOps ninjas and JavaScript framework of the month coders looking for work as the field contracts. Not because they're bad (although I hear startups are hiring anyone who can fog a mirror and write code in Rust...) but because you just don't need as many superficially-skilled web developers to go around. Just like last time, the good people will find or keep work, although I'm sure a lot of people's lives will be upended while they look to escape startup-land.