The number of privately held Silicon Valley start-ups that are worth more than $US1 billion shocks even the executives running those companies.
"I thought we were special," said Phil Libin, chief executive of Evernote, an online consumer service for storing clippings, photos and bits of information.
He started Evernote in 2008 on the eve of the recession and built it methodically.
"A lot of us didn't set out to have a big valuation. We're just trying to build something that lasts," Libin said. "There is no safe industry any more, even here." Advertisement
But an unprecedented number of high technology start-ups, easily 25, possibly exceeding 40, are valued at $US1 billion or more.
Many employees are quietly getting rich – or at least building a big cushion against a crash – as they sell shares to outside investors.
Airbnb, Pinterest, SurveyMonkey and Spotify are among the better-known privately held companies that have reached $US1 billion. But many more with less familiar names, including Box, Violin Memory and Zscaler, are selling services to other companies.
"A year from now that might be 100," said Jim Goetz, a partner at Sequoia Capital, a venture capital business.
Sequoia counts a dozen such companies in its portfolio. It is part of what Goetz calls "a permanent change" in the way people are building their companies and financiers are pushing up values...........
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Last month the value of Twitter, which began in 2006, hit $US9 billion, based on an offer for employee shares by BlackRock, a global investment manager. On the first day that Microsoft sold shares to the public in 1986 it was 11 years old and worth just $US778 million. That would be only $US1.6 billion adjusted for inflation.
Pinterest, an online scrapbooking and social networking site with no revenue, became worth $US1.5 billion in less than three years. Amazon.com went public in 1997 after only three years but had a valuation of just $US438 million. And it had almost $US16 million in revenue for the 1997 fiscal year.
Silicon Valley entrepreneurs contend that the price spiral is not a sign of another tech bubble. The high prices are reasonable, they say, because innovations such as smartphones and cloud computing will remake a technology industry that is already worth hundreds of billions of dollars.
In addition, many of the billion-dollar companies, including MobileIron, Pure Storage, Marketo, DDS and SurveyMonkey (which two weeks ago raised $US794 million to reach a value of $US1.35 billion), sell products and services primarily to other businesses.
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