Trust me, it's not. I've seen start-ups worth 100x than a smaller successful business due to speculation, despite the smaller business employing more people and actually turning profit for many years.
The small business is successful and so the calculus as to what it is worth is much more explicit.
The extreme example of this is commercial real estate with a long-term tenant (think: the person who owns the land a post office is sitting on). Everything is known (lease length, amounts, current interest rates, etc, etc) that the value/sale price is a simple formula.
Why would it be surprising to value the latter kind of business higher than the former?
If you either create a brand new market, or are taking on a drastically undeserved market... you absolutely need to be growing faster than inflation. Or your brand new company would be worth $1 the first year, $1.03 the second year..
Even outpacing inflation by 1.2 - 2 times. It's not insane growth, but it is consistent. Better yet is that they tend to have a decent number of assets too.
> It’s really hard to grow a business at 10 or 500 times that rate.
How often is 10 to 500 times growth seen in reality? I think most start-ups fail before the second year.
> Why would it be surprising to value the latter kind of business higher than the former?
Highly stable and proven growth as opposed to highly unstable and unreliable growth.