Jason Lemkin

When you pay up for high growth companies and the growth slows even a little, and the belief goes out of the multiple,

You're in for a long, hard haul.

And we've come back to this, I think, a few times before you can be valued on free cash flow.

It's a long journey from the hope and the sizzle of a forward revenue multiple and a high growth rate to the steady anchor of 12 times free cash flow.

It's a long and tedious journey.

And there's a long, flat period for the stock while that happens.

But you say that, I mean, you describe the system correctly, but you kind of imply it's called a scam.

I don't think it is a scam.

One level more sophisticated analysis here says, what's really happening is everyone has long since internalized the following sense.

In the end, the surviving tech companies at scale are astronomically good businesses.

Microsoft dominates the PC era.

And going back along, it's an astronomer.

So therefore, you know you want to own that.

And therefore, you just work your way backwards that says, OK, at the point in time when I don't know which company is Microsoft, I can't wait until it's trading at 10 times EPS to buy.

So I got to take a chance.

And as you say, buy a basket of things that might be Microsoft.

And you price them long before they have EPS.

So you price them on forward sales, right?

And the truth is, four out of five of them turn out not to be Microsoft.

No one even remembers what Bolin Software does.