Credit Suisse explores how flawed assumptions, incentive structures, and behavioral biases distort decision making across investing, technology, and machine learning. The paper highlights how Uber’s market was underestimated by more than 10x while private market optimism and compensation design created unintended risks throughout Silicon Valley.
2016 Thought Leader Forum
Credit Suisse
Michael Mauboussin
Research
71 Pages
Key Takeaways
Uber TAM Misjudgment: San Francisco ridesharing expanded from a $120 million taxi market in 2011 to roughly $1.2 billion while penetration remained near 13% of the population.
RSU Incentive Problems: Executives receiving RSUs earned meaningful compensation with flat stock performance while equivalent option holders previously required nearly 50% appreciation to match payouts.
Unicorn Liquidity Risks: More than 200 private companies surpassed $1 billion valuations despite near zero IPO liquidity and some firms burning over $600 million annually.
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