
With Snap’s IPO, Los Angeles Prepares to Embrace New Tech Millionaires - lnrdgmz
https://www.nytimes.com/2017/02/20/technology/snap-ipo-los-angeles-real-estate.html
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askafriend
Realistically, with all the various ratchet terms in Snap's financing, how
many of the 2k employees will see very significant income from the IPO? By
very significant, I mean >$150-300k per year in wealth creation adjusted for #
of years it took to vest.

I honestly suspect not too many. A majority of the money that people will earn
will just offset the difference in salary between Snap and larger more
established companies that give out liquid RSUs - like Google. Plus Snap
significantly backweights their equity. So the people who can cash out on all
of their equity are a small percentage of the 2k employees (since it's still
such a young company) and most employees probably haven't vested the full 4
years.

Still, the IPO will have an impact on the local economy - but probably not as
much as is being purported.

Maybe someone with more experience in large financial liquidity events like
this can chime in?

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GuiA
Zach Holman recently blogged about this:

 _I saw GitHub’s valuation move from sub-$10M to more than $2B; beyond that,
GitHub is turning a decade old this year. Traditionally, this would be a great
point where lots of little companies get spun off from this created wealth,
and employees and former employees would be able to help with that.

In reality, I can probably count on one hand the number of people from GitHub
who are in a financial position to become true angels. This is far from a
problem unique to GitHub; the entire industry is concentrating its cash in a
select few._

[https://zachholman.com/posts/slow-exits](https://zachholman.com/posts/slow-
exits)

HN discussion:
[https://news.ycombinator.com/item?id=13655855](https://news.ycombinator.com/item?id=13655855)

~~~
abalone
Holman was writing about slow exits, and how they keep employees illiquid and
even claw back equity from those that leave.

Snap is not a slow exit. It may or may not produce a bunch of millionaires but
it's definitely not what Holman was complaining about. In fact he would
probably praise them for going public ASAP, like the old days.

~~~
GuiA
Mmh. Yes, but I think the two are two sides of the same coin. Not only are
exits rarer, but the companies who do exit produce fewer people who are then
in a position to keep the innovation cycle going. Holman touches on a few
reasons why in his post: _"...concentration of wealth, and legal stipulations
like gnarly 90 day exercise windows"_.

~~~
abalone
The exercise window is a non-issue after a company goes public. That's his
main complaint about what's keeping wealth tied up.

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Apocryphon
_Not everyone is happy with the changes. Gentrification has pushed artists and
working families out of Venice. Some restaurants have shut down because they
can no longer pay soaring rents. In response, some politicians and residents
in Venice have pushed for density restrictions, said Emil Schneeman, a real
estate agent at Berkshire Hathaway Home Services._

Why has no community adequately planned for this sort of tech boom? Looks like
the tragedy of the Bay Area housing crisis is going to replay itself, again
and again. Seattle and Austin have already faced similar challenges.

~~~
s0rce
I think its largely due to selfish residents in these cities. Other than a few
property developers who would benefit from building lots of condos most of the
residents benefit from keeping development at bay. They enjoy increased
housing values, fewer new homes built keeps the "character" of the city the
same and less new people who can afford to live in the area maybe results in
less traffic (probably not as people just commute long distances and its worse
but residents are often delusional).

~~~
rtpg
Not all residents, but just home/land owners, I think.

I think current renters have reasons to want price pressure to stay down as
much as new ones.

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empath75
Those who do not remember pets.com are doomed to repeat it.

This IPO is going to wipe out the unicorn bubble. The valuations for this
company are utterly delusional.

It's being pumped on all the investment forums by people who seem to honestly
believe that the embarrassingly dorky Spectacles are going to be the next
iPhone, even though investors seem to be the only people who have even heard
of the thing.

This IPO is going to tank.

~~~
adamnemecek
People said that about FB in 2012. And I dislike FB as much as the next guy.

Why do you think it's overvalued? And pets.com was in a fundamentally
different situation. So fundamentally different that you might as well compare
it to Enron.

I think that you are overestimating the speed at which the stock market
corrects itself esp when it comes to tech. Look at Twitter. It's technically
dying but it wasn't a fast death.

~~~
tbrock
Well Facebook built some actual technology. They aren't just making picture
filters for genetalia.

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drewblaisdell
> They aren't just making picture filters for genetalia.

And therein lies a wildly inept understanding of Snapchat that is so common
among people outside of its main demographic.

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king_magic
Is it really wildly inept though? I truly cannot wrap my head around what
value Snapchat brings the world, outside of maybe yet another way to
ultimately advertise to young people. Just to be clear I'm not saying you're
wrong, I just don't get it.

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empath75
To be fair, selling crap to young people is a totally valid business model. I
just don't see any evidence that snapchat can do it.

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JBlue42
Can you ELI5 this for me? I've worked since I was 16, and sure it was pure
profit, but I still feel like adults should have a bit more disposable income.

It's something I've always wondered about with the movie industry and it
obviously seems to be the groupthink across the board about young kids.

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shalmanese
There's a golden period between the time when your parents are making
financial decisions for you and when you make your own financial decisions
where your habits are in flux.

If an advertiser can reach you during that time and convince you to change
behaviors, they've locked in a lifetime pattern. Pretty much everyone, for all
but the few things they care about, once they form a habit, will continue on
that habit until some event is big enough to jolt them out of it. Once you've
decided what kind of cereal you eat and shoes you wear and car you buy, it's
exceedingly hard for advertisers to reach you and change your mind.

That's why 18-35 is such an important demo for advertisers.

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riffic
Los Angeles already has an established and healthy "tech scene" although it's
not a tech industry per se. Film and aerospace industries require
extraordinary tech resources.

------
adamnemecek
Out of the 1900 employees, how many are actually going to become millionaires
at a company like Snapchat?

~~~
Cyph0n
Snapchat has 1900 employees? That's way more than I expected.

For comparison, that's 5x the size of Valve, and around 2x the size of Riot
Games. Snapchat is doing nowhere near the amount of work being done at either
Valve or Riot, as far as I can tell at least. So is this just a case of
"growing because we have money", or is there in fact a legitimate reason
behind such a large workforce?

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40acres
Why are you comparing Snapchat to video game developers? They are a social
media company and advertising platform and are pioneers of a new technology
(AR). They should be compared to their peers.

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nailer
I guess because physics based lighting engines with online realtime
interaction are more complex than social networks and messaging.

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argonaut
Valve does not rely on advertising, and therefore does not require hundreds of
salespeople, marketers, and ad account managers.

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Cyph0n
Why do you make that sound like a bad thing? I'd say good on Valve for finding
a reliable and scalable revenue stream.

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argonaut
How does my post make it sound like a bad thing? My tone is completely
neutral. I was explaining why there are so many employees.

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Cyph0n
My apologies, you are right.

