I have a ton of respect for Silicon Valley. There have been a few occasions when I’ve personally called the Valley a place “where science fiction becomes reality.” (To be honest, I’m waiting for the day when someone figures out how to get a functional light saber into my hands.)

But sometimes, I have to wonder if these rock-star tech start-ups have lost touch with financial reality. 

There are programmers in Silicon Valley who, like Hollywood A-listers, have their own agents.

There are Silicon Valley interns who are raking in more than $5,000 per month. That’s more than the average annual income for an entire household in the United States.

Snapchat has offered fresh undergraduates from Stanford more than $500,000 annually to work for the company.

We’ve seen it before: young, overvalued tech companies lacking a sound financial model. They spend a ton of money and wait with bated breath to go public, even though it might not be the best idea for shareholders or the company itself.

This year might be their reality check…

Market downturns and rumors of another Silicon Valley bubble are scaring off investors.

Despite market turmoil, there are whispers flying around of a few large tech start-ups expecting to go public in the second half of 2015. Some of them are exciting, while others require a solid evaluation.

Let’s take a look at the most intriguing:

“Everyone’s personal driver.”

Rumors are flying that this disruptive start-up will go public by the end of 2015. Unfortunately, experts in the finance field are calling that IPO the “race to the bottom.”

There are endless issues and regulatory formalities that Uber needs to tackle, and in our opinion, those should be under control before a public offering.

The first one that comes to mind has to do with the drivers themselves.

Will Uber drivers be categorized as independent contractors or employees? 

In California and Florida, a handful of drivers are involved in lawsuits claiming they were full-time employees of Uber and are therefore entitled to unemployment benefits, health care, paid holidays, and mileage reimbursement. This could start a tidal wave of future cases, and it’s forcing the company to address implications of taxes, payroll, overtime, and benefits.

The company is facing outright hostility throughout various areas of the world — especially in urban areas where there is an embedded taxi industry. In New York, city and state laws give yellow cabs exclusive rights to pick-up areas. Uber rides have cost the industry millions.

This year, the company began providing auto insurance for their drivers. Other regulatory issues appear to be at the forefront of their agenda.

However, it doesn’t end there. There are also some doubts about the accuracy of Uber’s $50 billion valuation. One InvestorPlace article breaks it down as such:

Let’s suppose we’re valuing Uber by revenue… Uber keeps 20% of all fares. So, for a $50 billion value, it would have to be servicing $250 billion worth of fares…

New York’s average daily taxi revenue is just about $4.9 million per day, or $1.79 billion per year. I’m supposed to believe that Uber generates the fare equivalent to 29 New York’s?

Leaked financials show that Uber’s revenue for the second quarter of 2014 was just $57 million. The company posted $108 million in total losses for the same period. It makes us question the CEO’s claim that Uber is “at least doubling” its revenue every six months.

Uber is allegedly operating with half a billion in total losses.

An impending IPO could help raise the funding it needs, but many analysts still have concerns about the company’s long-term stability.

Uber’s model of safe and accountable rides puts it a cut above standard taxis, and for that reason, the company is being hailed as the next IPO “unicorn.” If this company can continue generating capital investments, the regulatory issues might not matter after all. 

“Fast and fun mobile conversation.”

Established just four years ago, Snapchat is already ranked among the leaders of social media platforms. It’s the fastest growing social app of 2015.

• More than 100 million people are active on Snapchat each month.
• Every day, there are more than 3 billion views of Snapchat media.
• Almost 75% of Snapchat users are female.
• One in every four teenagers is active on Snapchat.
• People between the ages of 18 and 29 spend about 20 minutes total on Snapchat every day. (I know I do.)

Personally, I find it to be one of the most entertaining ways to put funny emojis on pictures of my dogs.

Snapchat’s co-founder and CEO, Evan Spiegel, has openly publicized his plans for an IPO this year.

With a valuation of $16 billion, the social media start-up is still appealing to investors despite lacking a clearly established business model.

Snapchat’s financials, which leaked earlier this year, revealed some bad news. 

The financials showed significant instability — the company lost $128 million throughout 2014, taking in only $3 million in revenue.

Financials aside, Snapchat’s media model has already received some attention from tech giants Facebook (NASDAQ: FB) and Google (NASDAQ: GOOGL). Snapchat turned down both multibillion-dollar acquisition offers and therefore garnered increased attention from investors.

Snapchat’s golden ticket seems to be the connection to the “white whale, holy grail” demographic of the advertising world — teenagers, college-aged students, and females.

The company reports recently raising almost $538 million from venture capitalists. If Spiegel can turn the photo-sharing app into a profitable media platform, then it’s smooth sailing from here.

It’s an assuring sign that Facebook has essentially copied Snapchat’s idea. It’s also assuring that the app maintains an impressively large user base with increased daily activity.

To Spiegel’s credit, the company has already evolved into the advertising sector, offering sponsored “snaps” from ESPN, Discovery, National Geographic, and others.

Still, there are other doubts about how this 24-year-old first-time entrepreneur plans to keep Snapchat relevant.

“Pin Your Interest.”

The online scrapbooking site has evolved beyond wedding albums and healthy recipes. The app that was once a way to collect and share items of interest on categorized “boards” is now one of the most exciting IPO candidates of 2015.

Companies can now develop sponsored boards to “pin” their products. The “Buy” option has turned Pinterest into an entirely new type of online marketplace.

Just one year ago, Pinterest CEO Ben Silbermann assured everyone that a public offering was not the end goal of the successful social media site.

Silbermann stated that the company wasn’t “concerned about rushing into it.” The CEO stressed that the company needed to be able to stand on its own two feet and that developing a sustainable corporate identity was at the top of the agenda.

However, things move quickly in the tech world, and it looks like Silbermann’s sentiments towards going public may have changed along with the company’s valuation.

Pinterest is the last of its kind in regards to private, unacquired social media platforms.

Pinterest is currently valued at $11 billion — an exponential increase from just one year ago, when the valuation sat at $4 billion.

“Pinterest is one of the few tech startups to hit a $1 billion valuation in less than five years.”

The company is overrun with investments. Funding has increased at a rate of 104% each round

Pinterest’s user base took only nine months to grow from 50,000 to more than 17 million. That makes the online scrapbooking website the record holder in user growth. Yes, even compared to giants like Facebook and Twitter.

The unique model behind Pinterest had to do with the fact that users “pin” the products they want and share those with others.

The site’s user base is a form of “pay it forward” advertising. The image or message is seamless, and users essentially choose their own advertisements.

Analysts estimate that this form of advertising could generate $500 million in revenues next year.

It looks like Pinterest’s waiting game is likely to pay off very soon.

“Belong Anywhere.”

Just as Uber is redefining personal transportation, Airbnb is redefining what it is to rent a hotel room.

Founded in 2007, Airbnb has grown to include 800,000 listings in almost 200 countries worldwide. As of right now, Airbnb is worth more than Hilton (NYSE: HLT), Hyatt (NYSE: H), and several other hospitality chains. The company’s valuation sits comfortably at $25 billion.

Airbnb’s revenue is expected to exceed $900 million this year and $10 billion by 2020.

Apps like Uber and Airbnb capitalize on the “we-commerce” movement, centralized on the sharing and community economy.

Unfortunately, Airbnb is also tackling questions of legality. Hosts who offer their rooms or homes for rent are skirting the zoning and taxes that hotels and other hospitality companies spend billions on.

In many states, permits are required to rent a space for less than 30 days — clearly, residents using Airbnb are also skirting those regulations.

In New York, Airbnb’s largest market, backlash to the room-renting service is most severe, with Airbnb feeling criticism for violating the state’s housing laws and renters’ rights. Residents claim that the app is fueling the city’s housing crisis. Attorney General Eric Schneiderman is firing on the company for tax evasion and housing-code violations.

Even more concerning than the regulatory issues are the reports of criminal activity, abuse, and manslaughter (yes, manslaughter) taking place in Airbnb locations.

Just a few weeks ago, a young male from Massachusetts was sexually violated in his Airbnb room in Madrid. When Airbnb was alerted of the incident, the company assumed zero responsibility and still does not have protocol in place for incidents such as these.

The 19-year-old is now in trauma therapy.

On the flipside, there are also risks for those individuals renting their homes to strangers. Issues with squatters and theft are common. Renters have reported property damage, drug paraphernalia, and the transition of their homes into “temporary brothels.” One user returned to their property to discover a prostitute who had been stabbed multiple times.

Many people (including myself) believe that Airbnb, as the mediator of these exchanges, is responsible for reliable screening and oversight.

Without handling regulatory issues, and without establishing disclaimers and legal protection for itself, Airbnb is incredibly vulnerable to risk.

Despite all this, the company’s valuation is impressive enough to foster significant interest, and popularity continues to increase despite the “horror stories.”

Airbnb has the potential to be a star IPO in the second half of 2015… if it can untangle the regulatory mess it’s involved in.

Last year, an executive at Airbnb told Forbes that he wanted the company to win the Nobel Peace Prize.  

(Sounds like someone needs a slice of Humble Pie.)

I’m going to go ahead call this what it is: egomania.

Maybe people like myself are part of the problem, inflating the egos of greenhorn programmers, flashy app creators, and inexperienced entrepreneurs.

Egos are healthy if they give someone the gumption to invent a light saber or a disruptive technology like Uber or Airbnb. They’re not fine if they lead to irrational decision-making, overvaluation, or disregard for the reality of risk.

Egos become dangerous hubris when they lead to a public offering before a company is financially ready or when the market is experiencing instability.

Companies like Uber and Airbnb have a really good chance of seeing a successful public offering, but we have to question if the accompanying risk factor is truly worth it for us as potential shareholders.

Maybe we should be looking beyond the newfangled “hotshot” tech start-ups. Maybe we should be looking for those more stable companies that are quietly accumulating their wealth and reputation — sans drama and turmoil.

That’s why I want to mention Apttus.

One of the most important values of the Apttus business model was the desire to operate without venture capital investing for as long as possible. The company did this for seven years and still managed to double in size annually, remain profitable, and acquire multiple valuable clients.

When the firm did decide to seek investments, it raised $37 million in the first round. Earlier this year, it managed to raise another $41 million. Now, it’s IPO-ready.

So what does Apttus do?

Essentially, the company makes every part of the sales process easier. Once a salesperson makes contact with a client, Apttus software develops product offerings, financial contract terms, and legal paperwork.

The software streamlines all the complex quote-to-cash processes — an industry estimated to be worth over $40 billion by 2018.

Apttus, with a 96% customer retention rate, expects to generate $120 million in revenue this year.

One Forbes writer calls Apttus a “unicorn without the utter nonsense.”

It may not be the flashiest tech company. It might not be run by young Silicon Valley hotshots.

Maybe that’s a good thing.

This company just managed to generate $108 million in recent venture capital funding.

CEO Kirk Krappe estimates that the funding puts Apttus’ valuation well over $1 billion, and it is now ready for a public offering.

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