Once I was fortunate enough to work at a company that did not take VC money. I was very very lucky. It was a combination of luck, and ethical founders.
On the other hand, a VC funded company I worked for (Hampton Creek) seemed like a ponzi scheme. When I quit the options strike price was so expensive I couldn't afford to pay for the options nor the taxes to "gain", the alleged hundreds of thousands of dollars in value it was "worth". What a joke. I think in the end we will see a lot of these companies are loaded with red ink and offer very little value.
I venture to say a majority of these unicorns are pump-and-dump schemes.
Your intuition seems right. I remember a time when companies used their developers to update their site without having to raise hundreds of millions of dollars.
1) Be rich/famous enough for people to pay attention to what you do
2) Pump a bunch of resources into something (company, stocks, whatever)
3) Everyone concludes there must be value, because you're investing your own cash
4) Others start investing, increasing the value further
5) You sell (dump) your stake at the new price before everyone realises they've invested in something worthless.
Say you invest $1 million in $1 shares and the extra investment/interest from others raises the share price to $1.20, you sell everything and get $200k profit for no work. Everyone else is left holding shares which turn out to be worthless.
On the other hand, a VC funded company I worked for (Hampton Creek) seemed like a ponzi scheme. When I quit the options strike price was so expensive I couldn't afford to pay for the options nor the taxes to "gain", the alleged hundreds of thousands of dollars in value it was "worth". What a joke. I think in the end we will see a lot of these companies are loaded with red ink and offer very little value.
I venture to say a majority of these unicorns are pump-and-dump schemes.
Your intuition seems right. I remember a time when companies used their developers to update their site without having to raise hundreds of millions of dollars.