Am I too cynical for my own good? (question about unicorns)

Question

How does a start-up, in a mature market, with no discernible tech advantage and very few customers command a billion pound valuation?For example this week Marshmellow, which is an "insurtech", raised $85 million valuing the company at $1.25 billion.This is interesting as in Britain (where third party car insurance is a legal requirement), online car insurance isn't new. I've managed our families car insurance online for at least a decade.We have several big players Admiral, AXA, Direct Line who seem to offer a similar service, regularly innovate products and have millions of policies, compared to Marshmellows 100k.Mashmellow's press release makes vague claims about "using a wider set of data points and clever algorithms" which surely any half-decent VC can see right through?I routinely read about these valuations and shrug my shoulder and ask "why?". Am I too cynical? Should I just shut up, create my own company with a bunch of meaningless buzzwords and become a billionaire founder myself?

jimmyvalmer · Accepted Answer

&ldquo;If the people believe there&rsquo;s an imaginary river out there, you don&rsquo;t tell them there&rsquo;s no river there. You build an imaginary bridge over the imaginary river.&rdquo; -- Nikita Khrushchev

yann2 · Answer

Dont be cynical. Do the math.It usually boils down to some simple scaling formula. So work it out.They say they are targeting expats (pulling driving data from multiple national dbs) which seems to be their differentiator from incumbents.Say 5 coders + 10 sales guys acquire 1000 customers in 6 months costing 1 Mil.So what can you pull off with 5 mil, then 20 mil, then 80 mil...

NetOpWibby · Answer

No / YesYou&rsquo;ve asked a lot of questions, choose your answer advice. If you&rsquo;re willing to put in the work, go and create your vapor empire.

yuppie_scum · Answer

Your salary is real. Your equity is real(ish). I&rsquo;ll leave it up to you to decide if the company is evil or now.

Am I too cynical for my own good? (question about unicorns)

“If the people believe there’s an imaginary river out there, you don’t tell them there’s no river there. You build an imaginary bridge over the imaginary river.” -- Nikita Khrushchev

No / Yes
You’ve asked a lot of questions, choose your answer advice. If you’re willing to put in the work, go and create your vapor empire.

Your salary is real. Your equity is real(ish). I’ll leave it up to you to decide if the company is evil or now.