The IPO success of Zomato has sparked a debate over why investors are racing to invest in firms that are still years away from profitability. Some foresee the company’s future potential, oblivious to the fact that, in this age of disruption, a superior business model could be just around the horizon. Others attribute it to a lack of investment opportunities in a troubled economy.
When consumers buy in Cryptocurrencies that have no underlying value or backing, the same scenario can be observed. Prices here, too, show irregular and dramatic swings that are unrelated to the status of the economy. What we’re seeing is a fundamental shift in how we think about money. The main assumption was that money was limited and hence needed to be hoarded. One wanted it to grow while hoarding it. This gave rise to the concepts of investing and return on investment.
The idea of ROI is coming unstuck when people invest in companies where the road to profitability is not clear. The notion that the supply of money is limited was demolished initially by our Central Banks. In a world that has an oversupply of various kinds of products, the sense of lack that played on the minds of our forefathers has disappeared.
The current generation is more present-oriented. The feeling of abundance allows it to be unconcerned about the future. The concept of future ROI is more of an abstraction than a reality for such a mindset. It is learning to deal with the future’s uncertainty through thoughts rather than earned wealth.
When a venture capitalist invests in a novel idea, he is essentially utilizing his money to materialize the value that the idea has. Ideas cannot be a permanent store of value in the classic sense since they are formed in a specific setting to meet a specific need. To comprehend the worth of an idea in a time-space context, we need a new model.