Tech Valuations and The State of The Market — with Aswath Damodaran

Risk Capital

Aswath Damodaran highlights a significant shift in risk capital, which has implications for startups and high-risk investments. He explains that for over a decade, risk capital was abundant, allowing companies to raise funds easily and scale without profits. Now, this capital is moving to the sidelines, potentially affecting the market for years to come 1. Scott Galloway adds that this shift could lead to a reevaluation of investment strategies, especially in volatile sectors like crypto 2.

It became too easy for companies to go out and raise capital. It became too easy for companies that were money losing to keep scaling up without making profits.

--- Aswath Damodaran

   

Inflation Effects

The conversation shifts to the impact of inflation on global markets and investment strategies. Aswath Damodaran notes that inflation has been a dominant theme, influencing financial decisions and market dynamics 3. He emphasizes the importance of understanding how inflation affects different sectors, including technology and real estate. Scott Galloway discusses how companies like Twitter are navigating these challenges, highlighting the need for new business models to sustain profitability 4.

If you take away 80% of your expenses, which is what I mean, it's labor costs, if not in this quarter, because you're still going to get the 90 days, I think in much of the world they still have to pay.

--- Aswath Damodaran

   

Crypto Market

Aswath Damodaran provides insights into the current state of the crypto market, expressing skepticism about its future prospects. He argues that the market needs to be cleansed of its strongest advocates, who often provide weak justifications for investment 5. Scott Galloway questions the sustainability of platforms like Binance, pointing out the lack of regulation and transparency 2. Damodaran warns that without tangible value, the crypto market may face significant downturns.

The weakest link in the crypto market are all the people who speak up for crypto because they tell the most awful stories about why I should be investing in crypto.

--- Aswath Damodaran