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Alan Patricof, co-founder of venture capital firm Greycroft Partners, agrees with Salesforce.com founder Marc Benioff on an important point of contention----there is likely trouble ahead for unicorns. He believes these companies will be in for a rude awakening when they eventually have no other outlet but to go public. According to the legendary investor, they will be greeted by Wall Street investors with high expectations and short term demands.
This is the stage when he sees things taking a negative turn, since investors tend to have extremely high expectations. I think they are going to be surprised when the market, all the things we've been talking about, when market comparable metrics hit, and when the first quarter you go public or the second quarter and you don't meet your targets and you don't have the kind of the extraordinary growth rates, investors are going to say, "Where's the beef?" Patricof certainly isn't the only one to have brought this particular issue up. Marc Benioff, chief executive officer of Salesforce.com, said last month that startups putting a higher priority on valuations, instead of building their businesses, could be set for some struggles in the tougher market conditions.
