Is there something very wrong with the tech startup industry?

A recent article from the Wall Street Journal “Tech Startups Woo Investors With Unconventional Financial Metrics — but Do Numbers Add Up?” is an eye opener. It painted a story that tech industry isn’t building sustainable businesses because founders twist and cover up financial metrics with dubious metrics. I’ve included scary snippets of the article below.

What do you people think about it?

“Jet.com, a members-only online shopping club in Hoboken, N.J., hasn’t opened for business yet but projected in April that its “gross sales” would hit $20 billion by 2020.”

“In 2010, Rubicon Project Inc. said on an in-house blog that it “achieved profitability.” Advertising volume on the Los Angeles company’s online network “generates over $100 million in revenue annually.” Rubicon also projected that revenue would “grow to $200 million in 2011.” The blog post’s headline bragged: “MAKING IT RAIN.” The company filed for an IPO in January 2014. A prospectus showed just $37.1 million in revenue during 2011 and a net loss of $15.4 million.”

“Twitter acquired MoPub in October 2013 for about $350 million. After the takeover, Twitter said MoPub had revenue of $6.5 million in the first half of 2013. Mr. Payne, who no longer works at MoPub or Twitter, says the $100 million cited in the blog post represented the total value of ad spots placed on websites by MoPub. “No one is really checking the numbers,” he says.”

“Uber Technologies Inc., the world’s most highly capitalized startup, has dazzled investors with its growth in “bookings.” Some investors have been told the number is on pace to reach $10 billion for 2015. Investors recently valued Uber, based in San Francisco, at $41 billion, and the company plans to raise $1.5 billion to $2 billion in new funding that could value Uber at $50 billion or higher. Uber keeps little of the money from all those bookings. After payments to drivers and discounts on rides, the company gets 20 cents to 25 cents of every $1, say people familiar with its finances.”