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How private investors spoiled Uber and WeWork

This year has seen a number of high-profile I.P.O. flameouts, with Uber, Lyft and the home-exercise bike maker Peloton dropping below their debut prices and WeWork pulling its offering. The venture capitalist Fred Wilson argues that the reason is simple: Reality is setting in.

Mr. Wilson argues that these companies were spoiled by the private markets:

• Investors have been too eager to value many companies as software businesses, at 10 times revenues or more. “Now that narrative is falling apart,” Mr. Wilson writes.

• Uber’s gross margins were 46 percent, while WeWork’s were 20 percent. By comparison, Zoom, which makes videoconferencing software, has 81 percent gross margins.

• That disparity explains why Uber’s stock is down 33 percent from its I.P.O. price and WeWork’s stock sale fizzled — and Zoom’s stock has more than doubled since its debut.