Unicorn: a term used in the venture capital industry to describe a startup company with a value of over $1 billion.

WeWork is the latest tech startup to file for IPO, and even the financial media couldn't take it seriously.

There are so many bizarre things about this company (such as "WeWork founder Adam Neumann and his wife Rebekah will give $1 billion to charity. If they don’t, their voting rights in the company will be diluted") that the fact of the company losing money hand-over-fist almost gets forgotten.

WeWork isn't some isolated case. It's just the latest and most extreme.

A good example is Uber. In May it was the largest IPO in history.

Last week Uber reported that it lost $5.24bn in the last three months, its largest-ever quarterly loss. That's more than the yearly GDP of Fiji.

Yet no one seems to be phased by such staggering losses.



I'm not going to talk about Uber’s losses here, even though the amount of money the company loses (its operating cash flow was -$1.6 billion in Q2) is astonishing. Everyone knows Uber loses money. At this point, the amount of money you’re able to lose seems to be a point of pride in Silicon Valley.

How is that anything but a flashing warning light?

“As we aim to reduce Driver incentives to improve our financial performance, we expect Driver dissatisfaction will generally increase.”

- Uber’s latest 10-Q, page 63

Wall Street and Silicon Valley tell us not to worry about the short-term losses, but the fact is that most unicorn companies are still losing money five years after their IPO.

It makes me wonder, how is this not a massive misallocation of resources, and a mismanagement of the economy?

Money that could be used to make the lives of millions of workers better through being rewarded in wages, is being flushed down the drain in money-losing gambling.

Isn't this just proof of a major flaw in capitalism?