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Illustration: Aida Amer/Axios

A huge shift in American business was overshadowed amid impeachment last week: Investors are rethinking hot startups with frothy valuations and putting discipline (and reality) above the myth of the almighty and all-knowing founder.

The big picture: The market is now bringing private valuations around to reality, as skittish Wall Street investors have been punishing billion-dollar-plus initial public offerings with questionable balance sheets or paths to profitability.

  • Suddenly, balance sheets and profits seem to matter to investors again, Axios Markets editor Dion Rabouin writes.
  • Peloton is down 13% from its IPO price in just two days of trading, and teeth-straightener SmileDirectClub is 44% below its offer price in two weeks.

Takeaways from Dan Primack, host of the Axios Pro Rata podcast and newsletter:

  • Venture capital went overboard on "founder friendly," but expect structures like dual-class shares to persist.
  • And the real test comes when there’s a hot deal with a hot founder. VCs will do anything to get in. Even if it’s against their professed conservatism.
  • And be cautious about extrapolation: WeWork had big problems. Peloton and SmileDirectClub are still worth lots more than in private markets. Datadog, a monitoring and analytics platform for developers, went public two weeks ago at huge price.

The bottom line from Felix Salmon, author of the weekly Axios Edge:

  • Unicorns (and minotaurs!) are mythical beasts. When exposed to the harsh light of reality, they often look less impressive.
  • Uber, Lyft, and Slack have all traded miserably as public companies, while WeWork has canceled its IPO altogether. Others like Airbnb, Palantir, and Stripe are likely to want to avoid the public markets for as long as possible.
  • The IPO market is now readjusting those frothy private valuations.

Go deeper:

Go deeper

Biden calls Fox News reporter a "stupid son of a b---h" on hot mic

President Biden blasted Fox News' Peter Doocy on Monday after the reporter asked if the nation's soaring inflation is a political liability, saying, "what a stupid son of a b----h."

Driving the news: The Biden administration has faced rising inflation rates over recent months, which it has labeled as "transitory."

Hope King, author of Closer
47 mins ago - Economy & Business

Investors reset their compass

Data: FactSet; Chart: Axios Visuals

The endpoints of a stimulus-fueled market are being defined.

Why it matters: Conditions that drove excess pricing in riskier assets are steadily being removed, and big swings in the market like those seen today are inevitable as investors try to adjust to the new landscape.

2 hours ago - World

Soldiers seize power in Burkina Faso as global coup surge continues

Mutinous soldiers in Burkina Faso declared on state television Monday that they had deposed the government, closed the borders and taken control of the country. President Roch Marc Christian Kaboré has reportedly been arrested.

The big picture: This would be the third successful military coup in west Africa in eight months, after juntas took power last year in Guinea and in neighboring Mali.