If others are willing to trade ownership in your company such that 100% equaled 1 billion then the answer would be yes. Valuations are made based on exchanges relative to the whole's worth. That's a simplified way of how public stock markets work too.
No, but if a billion other people joined you in a similar fashion then yes.
It's kind of like the Architect scene in the Matrix. To paraphrase, "ignorance is the most predictable of all human responses, but rest assured. This is the sixth time we have valued a unicorn, and we have become exceedingly efficient at it."
Look into the efficient-market hypothesis. Basically, the potential for profit motivates the members of financial markets to always seek the most accurate valuation of a stock as possible. This means that if there was a discrepancy in the perceived value (in this case $9 billion) and the "actual" value (in your imagination something close to $0), then the price of the stock would be more-or-less automatically corrected because an enterprising individual such as your self would be able to capitalize on this gross negligence on the part of all other financiers.
If we generalize this notion, we can conclude that the price of a public stock already includes all available information because if it didn't the potential to profit would see a shift in its price by people either shorting or longing it.
A public stock market with common stock is very different than early funding with preferred stock. They are getting more than just at fraction of ownership; they are getting liquidation preferences and other perks that make the stake worth more than just the ownership percentage.
I'm all for the healthy skepticism of inflated valuations and the valley's tendency to forget that most venture funded startup wealth is illiquid, but c'mon -- what does this comment add to the discussion? Snark is not needed here; I'd rather engage in an earnest conversation about Stripe's valuation (if you have any thoughts there :))
Perhaps that was a bit snarky, but then let's also agree that the article is severely oversimplifying things. I guess I just react with annoyance when I see the press do that.
I didn't mean to belittle the accomplishment of the founders btw - keeping such a high stake in a company at such a late stage IS impressive.
it's interesting to think about why not. it probably comes down to noise and friction in transactions, so that 1e-9 of your company is not a meaningful/tangible quantity. you could imagine an economy in which you could indeed issue a billion shares at a dollar each and have them be worth buying individually.
The reason why it is not is that the assumptions you have to make about valuations in order for the one dollar investment to translate to the company actually being worth one billion do not hold. You have to assume that the investor is a rational actor, is capable of correctly evaluating a company's value, and is making the investment because they believe the company is worth one billion dollars.
There is no reason to believe any of these things. Lots of people who satisfy none of these requirements have a dollar to waste. They could be investing as a joke, they could be trying to pump up the value of the company for some other reason, or they could be incompetent at evaluating a companies worth. Just because a person is willing and able to throw a dollar away doesn't mean you can find people to throw a billion dollars away.
The problem is that there is no connection between someone giving me that dollar and the value of my company; just because they say that they are giving it to me because they value my company at one billion dollars doesn't make it so. Maybe they are doing it to be funny, or to prop up the value of my company. They are only sacrificing a dollar, so there is no real cost to them. It also has no bearing on or indication that anyone else would also value my company at that much.
The most useful purpose of being labeled a billionaire is being identified as one who has the ability to spend a billion dollars. Obtaining $1 mil doesn't qualify, and it's highly unlikely the other 99.9% of the company would be bought for $999M, so from my perspective the only other purpose of being labeled a billionaire would be for clickbait/marketing.
The ones I've heard about are usually publicly traded companies with sort of transparent finances so they're liquid. It's possible they're worth $1B, but I'd bet that more companies would like to claim they're worth $1B than actually are.
If you define as "millionaire/billionaire" as strictly the amount you hold in cash, yes. However, the commonly accepted definition includes entire net worth which would include the valuation of shares in companies owned.
There are two differences though. One being that the equity is highly illiquid. The other (and more important) being that there is no market validation of the valuation.
