Swiggy reported loses increasing by 80% in 2022. This set my mind racing since I notice similar news frequently. Now I want to give you a perspective on valuation. And for that I want you to walk backwards, almost 80 years in to history.
Historically the first generation of businesses created value for itself by processing primary resources. Be it crude, cement, steel and the likes, all of these are primary. You can extrapolate this to any space and observe. Large businesses have grown by exploiting primary resources. Then came the second generation of businesses which created value add using primary procesed resources. This was the period of plastics and its applications. This was closely followed by an information age along with the new age aided by internet.
But all of these businesses were solving structured problems. Business models were predictable and revenue streams were real.
But now comes the new age of technology businesses which actually intend to solve lifestyle problems. Valuations now became perceptions.
Here restaurants with real kitchen where chef does magic is valued less then a delivery platform which uses underpaid and unstructred resource to ply a beaten two wheeler risking several lives to deliver food to homes at discounted prices.
Here an entrepreneur owning a clean four wheeler is valued less than the platform aggregating taxis.
There could be several examples but the problem of these pokemon valuation where today one is a decacorn, tomorrow a unicorn, next day a gazelle and thereafter a cheetah (in either order) is just a perception.
Solving life style problems are not sticky business models and none of these businsses have demonsrated an ability to create real shareholder returns. Mind you none.
Worry is most new generations might end up learning a misplaced sense of business valuation.