Financial Hits and Misses

We live in a crazy world. Consider the following story: A startup raised money for a business that operated in a legal gray area — and later became illegal in many jurisdictions. The startup subsidized its offering to attract customers. It encouraged customers to get into risky situations. The company lost money for years and was constantly hounded by lawmakers. And yet, the world’s most prominent investors flocked to invest in it.

I’m talking, of course, about Airbnb. Once a company is successful, it’s easy to forget how unreasonable it was to invest in it.

Some say that Airbnb is unique and that, despite the legal uncertainty, investors supported it because its founders were of exceptional character. But Airbnb is not the only company that fits the description above. Uber, too, launched a business predicated on skirting the law, putting customers in risky situations, subsidizing rides, and losing money for years. And unlike Airbnb’s Brian Chesky, Uber’s Travis Kalanick was not a “nice guy.”

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