I suppose if you boiled it down, they are selling "5% of planned public offering." So.. costs of selling those shares would be slightly higher. But, they have some presence from people who see the company the roughly same way they do, not as a piece of a portfolio or investment strategy. They get some buzz around the IPO (this article demonstrates that), if vendors are discussing it. It's not like they're giving away the shares.
A part of what's interesting is what's underlying it: an environment where so much capital is in the hands of rich people that there's not much point thinking of 'the public' as a source of capital.
I think income distribution is a lot easier to measure, comprehend and comment on. But wealth disparities are much larger, and I think the societal effect is different. If someone owns $2m in capital but $1.2m is a house and $1.8 is actively invested to yield an income of $75k per annum, is that person rich or are a middle class investor?
There's definitely markets for the middle classes. Apple, Walmart, etc are the biggest companies in the world and their business is selling stuff to us. But if your business is selling financial services or you want to raise capital, the middle class is irrelevant. It's not about risk or sophistication of the investor, it's about them not really having capital. I reckon that's significant. WHo has the capital matters.
Money gets even more theoretical when talking about capital. When you earn an income and use it to buy goods as service, the metaphor-made-real of money is relatively straightforward. I work for a company that makes medicines. They may me a salary which I can exchange for stuff other companies make. With capital, the link to physical things is broken. It becomes more of an abstract right^ to things. The right to establish a company. The right to future revenues from some venture. Rent…
^"right" isn't exactly it. It's somewhere in the ability/resource/right realm.
> and $1.8 is actively invested to yield an income of $75k per annum
I would say "never actually having to work again if you don't want to" is a fairly strong indicator for being "rich" in the sense that most people understand it.
Wealth is best measured in terms of age. A wealthy 25 year old with only 3 million in the bank is in a very different situation than a 70 year old with 3 million. The difference is 'earning potential' over their lifetime.
By, only I mean they don't also own a home and unlike most 60 year olds they don't have a pension or Social Security income etc.
3M is enough to live a 100k lifestyle for the rest of your life, but that’s considered ‘normal’ by HN standards even if it’s far better than most of humanity. But, my point is a young person with 3M is far richer than a retiree with that same income is they can also be self-sufficient (hava a job or just do things to save money) and let that money snowball. A retiree needs to insure a steady income without a job but a 25 year old can invest for the long term and take risks.
PS: Put another way, no pension, social security, or home equity but 100k is doing well by most standards at 25, but not so hot at 60.
In so far as being given the chance to participate in an IPO is typically a lucrative opportunity IPO allocations are treated as rewards to be doled out. Left to their own devices investment companies reward their highest value customers by setting minimum account value in the six figures to participate. Someone with a $1.8 million investment account could probably easily get an IPO allocation if they wanted one. Etsy offering 5% of the shares to their sellers is just putting a different emphasis on who they want to reward. I don't think you can draw a larger conclusion about wealth distribution as a whole from it.
This is more common than you think, especially during the dot-com 1.0 heydays. It is usually administered as something called a Directed Share Program to rewards friends, family, vendors, etc.
As others have mentioned, Lending Club has done this in the form of opening DSP to their Lenders.
I suppose if you boiled it down, they are selling "5% of planned public offering." So.. costs of selling those shares would be slightly higher. But, they have some presence from people who see the company the roughly same way they do, not as a piece of a portfolio or investment strategy. They get some buzz around the IPO (this article demonstrates that), if vendors are discussing it. It's not like they're giving away the shares.
A part of what's interesting is what's underlying it: an environment where so much capital is in the hands of rich people that there's not much point thinking of 'the public' as a source of capital.
I think income distribution is a lot easier to measure, comprehend and comment on. But wealth disparities are much larger, and I think the societal effect is different. If someone owns $2m in capital but $1.2m is a house and $1.8 is actively invested to yield an income of $75k per annum, is that person rich or are a middle class investor?
There's definitely markets for the middle classes. Apple, Walmart, etc are the biggest companies in the world and their business is selling stuff to us. But if your business is selling financial services or you want to raise capital, the middle class is irrelevant. It's not about risk or sophistication of the investor, it's about them not really having capital. I reckon that's significant. WHo has the capital matters.
Money gets even more theoretical when talking about capital. When you earn an income and use it to buy goods as service, the metaphor-made-real of money is relatively straightforward. I work for a company that makes medicines. They may me a salary which I can exchange for stuff other companies make. With capital, the link to physical things is broken. It becomes more of an abstract right^ to things. The right to establish a company. The right to future revenues from some venture. Rent…
^"right" isn't exactly it. It's somewhere in the ability/resource/right realm.