Not surprisingly, Instagram has become the new trope for the post-dot-com, post-great-recession startup makes good story. And while I don’t want to in any way denigrate startup founders who bag $1 Billion for their 2 year old company (since that’s what we ALL want), I am thinking a lot about job creation and valuation. We don’t really talk about job creation as part of valuation, but we probably should.
While valuation math for popular software startups has always been a bit of voodoo, we do associate it with perceived total value, whether in future profitability, market impact, customer acquisition, etc. But as I’ve talked to entrepreneurs, colleagues, and friends about the deal, what I keep thinking about is that $1 Billion went to a firm that has a dozen employees. I think it’s food for thought in these times of slow job growth and long, slow recession recovery that our investment motivations are rarely about the number of jobs created or the downstream economic impact of a company’s success.
I’m obviously a great believer in the value creation enabled by technology and the benefits of scalable efficiencies that drive disruptive innovation. But I think our discussion has to include lives affected and jobs created.
