
Where Are the Tech Zillionaires? San Francisco Faces the IPO Fizzle - tysone
https://www.nytimes.com/2019/12/19/technology/tech-IPO-san-francisco.html
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safog
Who are all these tech workers who want private parties and yachts and pent
houses and sommeliers in their apartment?

Everyone I've worked with up to director levels at FAANG are mostly content
with just investing their riches and maybe thinking about retirement or
sending their kids to private schools. I haven't seen any extravagant displays
of wealth - some BMWs / Teslas in the garage but never a Ferrari for instance.

~~~
pm90
You’ve been living a sheltered life.

While most workers are trying to get by, the wealth and opportunity has
attracted all kinds of people, which is fine.

I’ve noticed that anywhere in America where there is money to be made, there
are clusters of people who are willing to also spend all of it.

~~~
strken
Where are those people? How does one come into contact with them?

~~~
josephwegner
They're around. They cluster, as you might expect. I worked at one a16z-funded
startup where probably 1/3 of the engineering department were big spenders. I
expect the cluster was a result of the CTO being an extremely big spender, and
very loud at broadcasting that fact.

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leet_thow
As someone who owns shares at a company preparing to IPO, all I can say is I'm
at least fortunate to have a stake in the massive asset bubble. The last thing
I'll be doing is buying a house in the Bay Area though.

~~~
umeshunni
Exactly. Why exchange one inflated asset for another inflated asset when you
can cash out and keep them in T-bills (or even a broad ETF), instead.

~~~
leet_thow
Plus I figure the majority of people who have significant gains likely vested
around 2011-13 and are closer to middle age now like myself and are thinking
about family and retirement, not wine cellars and penthouses.

~~~
brij0102
wine cellars and penthouses can definitely be part of retirement :)

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munificent
I've never heard of Yondr before but, wow, what a delightful little
technological window into today's burgeoning economic disparity. An entire
company whose business model revolves around helping rich people hide their
recreation from public view because they don't want the shame of their
consumption being a little too conspicuous.

I assume the next natural evolution is a photo-sharing social network that
only ultra-high-net wealth individuals are allowed to enter. That way you can
still "Instagram" your life, but just to the other ultra-rich tech bros and
Saudi royalty at your economic level. Now that I think about it, I wouldn't be
surprised if this already exists.

~~~
jdsully
I don't think that's an accurate description of why Yondr exists. The impetus
for solutions like that were to allow for things like phone free concerts. You
don't have to be rich to be annoyed with someone blocking your view holding
their phone in the air.

~~~
munificent
Sure, I think that's a valid good use case. But I honestly have a hard time
believing there's enough demand for that to support an actual _enforced
technological_ solution.

Maybe I'm wrong but I find it hard to believe stand-up comedians and musicians
who want the audience to be in the moment are enough to keep this business
afloat. I think it's more likely for things like:

[https://www.businessinsider.com/trump-clint-lorance-
mathew-g...](https://www.businessinsider.com/trump-clint-lorance-mathew-
goldsteyn-florida-statesman-dinner-miami-herald-2019-12)

~~~
jdsully
The startup economy is all about forcing a technological solution whether
theres demand for it or not. VC funding can make up for a lot.

Its much more likely they’re another zombie tech company than part of a
sinister plot for rich people.

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tempsy
Public equities investing is severely underrated. I've been following the "big
will get bigger" mantra for several years and it's paid off big time.

Apple all time highs (2x'd in a year!) Microsoft all time high Adobe all time
high Salesforce near all time high

List goes on.

~~~
pm90
Not underrated at all. Most investments are in public equities today. I have a
theory that the long boom is because we’ve wised up to investing most of our
wealth in index funds and thus making it hard for any one company’s failure to
bring down the rest of the economy.

~~~
tempsy
I mean in Silicon Valley.

Everyone thinks you have to be employee #10 at a future unicorn to get "rich"
but you could've made a very average salary and just invested your savings in
tech stocks over the last 10 years and probably be well ahead of 99% of people
trying to be the former.

~~~
pm90
I think it’s not just the money. There is something about going against all
odds and coming out ahead in the end that many (especially younger) people
find tantalizing. There’s also the fact that many people that work for
startups have a very individualistic, creative streak and resist the corporate
neutering that happens at most bigger companies.

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usaar333
This article didn't mention how holders can be extra hurt by tanking IPOs due
to taxes. Many companies release their RSUs at IPO (often withholding too
little tax) and then you are locked up, as the price may fall.

You can't write off the capital loss occurred during the lockup against the
ordinary income from the RSU release, meaning take home is even less than
price would suggest.

No idea why companies don't wait until end of lockup to release the RSUs.

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adamnemecek
This is how startups kinda work. It's really hard to make money from an ipo
even if you joined early.

~~~
umeshunni
That wasn't how things were 10-15 years ago. What changed over the last decade
was the pumping up of private valuations such that by the time the startups
finally hit a liquidity event, they were overvalued.

~~~
kelp
This. The bulk of the returns and growth now happens pre-IPO. Then the price
at IPO is disconnected from public market expectations. But you’re also at the
top of the growth S curve so growth is decelerating.

~~~
eloisant
But as a early employee, when you join before valuation goes up... You still
make only scraps, because you're not getting that many shares to start with
and "common stock" aren't worth as much as "preferred stock".

~~~
leet_thow
Common and preferred shares start to converge as a company approaches IPO. An
employees gains are likely to exceed those of VCs in such an event. When
companies are acquired and when liquidation preference comes into play is when
employees get screwed.

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umeshunni
> “We are excited by any resetting of Bay Area rents that bring them down from
> their artificially inflated high,” said Fred Sherburn-Zimmer, the executive
> director of Housing Rights Committee, which fights against evictions.
> “Eventually all bubbles burst.”

What a typical Bay Area NIMBY. Instead of fucking building more housing, he's
just sitting there hoping for a bubble burst to reduce rents.

~~~
floatingatoll
The credits on the YIMBY protest photo in this article are given to Housing
Rights Committee:

[https://shelterforce.org/2019/02/19/yimbys-friend-foe-or-
cha...](https://shelterforce.org/2019/02/19/yimbys-friend-foe-or-chaos-agent/)

You may wish to do more research on their alignment before declaring them
NIMBY.

~~~
dcolkitt
My understanding is that HRC broadly opposes the construction of any higher-
end housing. Effectively that's a NIMBY position. In American history new
housing construction has almost always been "high-end".

The way housing becomes affordable is that high-end new construction displaces
demand for yesteryear's construction turning it into mid-end housing. Which
then in turn displaces demand for the previous mid-tier which now becomes low-
tier affordable housing.

In effect rich consumers subsidize poor consumers by insisting on continuously
replenishing the housing supply with new modern housing conforming to the
latest hip trends in architecture and design. The car market is a very good
example of how this works absent arbitrary supply constraints. Arguably the
used car market is the biggest single vector of wealth redistribution in
America. The poor benefit from a massive oversupply of cheap but reliable used
cars, because the rich insist on getting a new car every two years.

HRC refuses to acknowledge this dynamic. So they may be "YIMBY" in the sense
of having some sort of vision about new construction. But that vision, mass
construction of new affordable housing, is completely unviable. That makes
them YIMBY in principles, but NIMBY for all practical intents and purposes

~~~
ryanmercer
>In American history new housing construction has almost always been "high-
end".

Anecdotally this is the case right now here in central Indiana. Fiance and I
are starting to look for a house, we can get something 20-50 years old for
150-180k or the new construction physically across the street with the same
square footage (and much smaller yards) is starting around 200k headed well
past 300k (because, apparently, fancy counter tops and stainless appliances
are worth an extra 100k _eyeroll_ ).

There's a half dozen new additions going in where we're looking and the cost
for a tiny 1 bedroom house will get you 2-3 bedroom house with 0.25-0.5 acres
within a 1/2 mile drive door to door purely because of all of the 'features'
which are almost entirely cosmetic.

