Adopts Schumpeter’s concept of creative destructionto value startups in the case when only technological uncertainty ispresent.A creative destruction-real options approach (CD-ROA) is used toexplain the high prices investors pay for growth stocks. It is shown that it isnot a case of overpricing but ratherrecognition of the large growthpotential present in highly innovative industries. In the CD-ROA, the firm'svalue is the sum of its project's value without flexibility, plus the value ofthe real options it has. In the case of creative destruction, it accounts for agrowth option if the firm decides to invest only if the product is a drasticinnovation. Two facts not taken into account by traditional approaches (years to paybackandnew present value) are that the firm is undergoing a creativedestruction progress (which encourages expectation of being the next monopoly),and a real growth option that allows it to make additional investments only ifsuccessful. Taking these facts into account, the CD-ROA better estimates the value ofthe firm. In addition to other determinants of value, such as industrycharacteristics and scrap value in the case of preemption, the CD-ROA alsoaccounts properly for the likelihood of preemption by other competitors. Thevaluation of Gilead Sciences, Inc., at the time of its initial public offeringis presented as a case study using the CD-ROA. Three different conditions areconsidered. The CD-ROA approach shows that the success of Gilead's initialpublic offeringwas due to the two facts usually overlooked invaluation.(TNM)