Lyft's IPO Is Making the Same Circle of Men Rich, Again(nytimes.com)
nytimes.com
Lyft's IPO Is Making the Same Circle of Men Rich, Again
https://www.nytimes.com/interactive/2019/03/29/opinion/sunday/lyft-ipo.html
52 comments
Article headline seems to imply this is somehow a bad thing? Perhaps "Group of people who've invested in several apps people want (and therefore make those things possible) are now making some more money for their good decisions to be involved" doesn't trigger anyone?
>...their good decisions...
I think saying this is disingenuous. It's not about good decisions. I bet if we looked at these people's portfolios it would be diversified to cover pretty much every bet. They are able to do this solely because they already have money. There is no good decision that me or you could make that would have the same outcome.
I think saying this is disingenuous. It's not about good decisions. I bet if we looked at these people's portfolios it would be diversified to cover pretty much every bet. They are able to do this solely because they already have money. There is no good decision that me or you could make that would have the same outcome.
Diversification does not guarantee returns here. The majority of companies in their portfolio are likely to be worthless. A $400 million venture fund is often lucky to own 20% of a 'unicorn' $1 billion company, and they would need two of those just to break even. Look at the stats and it is far from a sure-bet even if they have the money.
"good decisions to be involved"
You can also make good decisions with your money, and bad ones. Those can pay off, or not.
You can also make good decisions with your money, and bad ones. Those can pay off, or not.
The investors here didn't make "good" or "bad" decisions, though. They just diversified their investments such that they can have an EV of millions of dollars even if most of their investments fail. That's not a thing most of us can do — not because we make decisions that don't pay off, but because we don't have enough money to even get in the game.
Having a diversified portfolio is a good decision.
Having a diversified portfolio on the magnitude of these investors is impossible for literally 99.99% of the US population.
That doesn't negate the fact that it's a good decision.
Shocking that investors are... getting a return on their investment.
Now that they got some cash out of it, they'll go and invest in other stuff again, thats how this works.
But these investors are men, and they're doing it again!
This is pure rage-bait, and it's why I roll my eyes when tier I media like the NYT act shocked and surprised that fewer and fewer people trust them. I hate clickbait and fake news as much as everybody else, but the mainstream media has made its own bed, here.
This is pure rage-bait, and it's why I roll my eyes when tier I media like the NYT act shocked and surprised that fewer and fewer people trust them. I hate clickbait and fake news as much as everybody else, but the mainstream media has made its own bed, here.
Seeing William Shockley in their graphic is a bit funny in my opinion. It's definitely relevant, since he "brought silicon to Silicon Valley" [1], but he seems like the _last_ person VCs would want to work with.
[1] https://web.archive.org/web/20050404102748/http://www.stanfo...
[1] https://web.archive.org/web/20050404102748/http://www.stanfo...
To anyone who’s wondering he is one of the co—discoverers of the transistor effect, for which he won a Nobel prize however he became an advocate for Eugenics towards the end of his life, not necessarily a purely racial superiority stance although there was enough of that too, he basically had a lot of weird ideas including restricting the reproduction of people who don’t meet the intelligence requirements.
That said how much different is it than taking money from China or Saudi Arabia?
That said how much different is it than taking money from China or Saudi Arabia?
He's there for historical reasons only (he's been dead for a while) and indeed he was part of that wealth genealogy.
My girlfriend bought his house on campus (Stanford gives tenured faculty assistance to buy houses on campus). As she's in a different field from me she was surprised to learn who he was. He would not have approved in her living there!
My girlfriend bought his house on campus (Stanford gives tenured faculty assistance to buy houses on campus). As she's in a different field from me she was surprised to learn who he was. He would not have approved in her living there!
Money is money, man.
If you need a significant fraction of a gigabuck every quarter, you don't ask where the money comes from.
If you need a significant fraction of a gigabuck every quarter, you don't ask where the money comes from.
This is ... stating the obvious?
I'm not sure what the author's point is, here.
I'm not sure what the author's point is, here.
The point is to stimulate rage by showing that some people make more money with less effort than others.
That the tech industry is more than the same small group of dudes, and we should try to spread the wealth it generates more equitably?
Sure - start your own company and generate some wealth then. The article is pure ragebait.
jakelazaroff(1)
The risk and effort are not spread "equitably" so neither should the profits.
I don't really agree with the article's argument that it's so bad if this or that group becomes wealthy. The government can easily solve that through taxation if it so chooses.
I think the more important piece of information embedded in articles like these is the truth of how venture capital (and capitalism generally) works.
I know a couple of the people listed in the web of connections here. In general, I'd say they view their exceptional talents as responsible for their investment success. They are undoubtedly smart and capable people, but the key element in their success is that they get the first look at startup ideas and venture investments because of their social status in silicon valley.
Top VCs can't really outperform the market if forced to invest in a level playing field. They know this, so they focus more on the pedigree of deals than on the actual ideas. That's how you wind up with big-name people investing in frauds like Theranos and obvious con-jobs like U-Beam.
I don't see anything wrong with this necessarily, but it's worthwhile to point out what's really going on. That way, young entrepreneurs and budding venture capitalists know what they're getting into. The truth of the matter is, if you want a sure way to make money, you should join a firm who has this kind of access. Go work at Goldman Sachs or Kleiner Perkins.
If you eschew that path, realize that you are actually taking on far more risk than averages might imply, since you are choosing not to have the first look at ideas and deals. In fact, you'll likely do rather poorly.
Long history suggests the only way to consistently make money in a level playing field such as public markets is the Buffett way -- essentially using behavioral economics to bet against emotional mistakes made by market participants at market highs and lows.
From a policy perspective, I've long thought you could argue for a much higher capital-gains tax on any gains in excess of 20% per year on investments (more or less what Buffett has returned). The rationale is that such gains must have been generated by labor, luck, connections, or some combination of the three. This is not to suggest there is anything unsavory about such returns -- it's just that they are not broadly available.
I think the more important piece of information embedded in articles like these is the truth of how venture capital (and capitalism generally) works.
I know a couple of the people listed in the web of connections here. In general, I'd say they view their exceptional talents as responsible for their investment success. They are undoubtedly smart and capable people, but the key element in their success is that they get the first look at startup ideas and venture investments because of their social status in silicon valley.
Top VCs can't really outperform the market if forced to invest in a level playing field. They know this, so they focus more on the pedigree of deals than on the actual ideas. That's how you wind up with big-name people investing in frauds like Theranos and obvious con-jobs like U-Beam.
I don't see anything wrong with this necessarily, but it's worthwhile to point out what's really going on. That way, young entrepreneurs and budding venture capitalists know what they're getting into. The truth of the matter is, if you want a sure way to make money, you should join a firm who has this kind of access. Go work at Goldman Sachs or Kleiner Perkins.
If you eschew that path, realize that you are actually taking on far more risk than averages might imply, since you are choosing not to have the first look at ideas and deals. In fact, you'll likely do rather poorly.
Long history suggests the only way to consistently make money in a level playing field such as public markets is the Buffett way -- essentially using behavioral economics to bet against emotional mistakes made by market participants at market highs and lows.
From a policy perspective, I've long thought you could argue for a much higher capital-gains tax on any gains in excess of 20% per year on investments (more or less what Buffett has returned). The rationale is that such gains must have been generated by labor, luck, connections, or some combination of the three. This is not to suggest there is anything unsavory about such returns -- it's just that they are not broadly available.
> The government can easily solve that through taxation if it so chooses.
Except the billionaires pay millions to ensure that doesn't happen. The system is corrupt by design.
Except the billionaires pay millions to ensure that doesn't happen. The system is corrupt by design.
Probably depending on country.
In the US the following shows how much tax is being paid by whom:
https://www.bloomberg.com/news/articles/2018-10-14/top-3-of-...
The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
In the US the following shows how much tax is being paid by whom:
https://www.bloomberg.com/news/articles/2018-10-14/top-3-of-...
The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
For those criticizing the article, I wish I could have invested in a lot of companies but can’t because I like many can’t due to 1) not being an accredited investor and 2) even if you are accredited you cannot easily buy private shares (access issue)
While I share similar frustrations with the system, your apprehension simply because of lack of accreditation status may be overblown. https://www.biggerpockets.com/forums/311/topics/366202-quest...
I didn’t say simply - a bigger issue outside of accredation is access. I.e. for “popular” small companies even second/third tier VCs can’t even invest.
Yes, agreed. It is overall frustrating to be someone without a lot of capital, trying to get ahead.
Cannot read it because Firefox (Android) shows some garbage
So...it sounds like the path to wealth is knowable and repeatable multiple times in a single lifetime, if people will just make correct calculated decisions?
Somebody should have tested that in Firefox. I don't know what's wrong with it, but it's an unreadable mess.
It looks fine in mine and Im using the latest version.
It has to do with how wide your screen is. The responsiveness of this piss-poor design was clearly not thought out.
But neither was anything else in this design, apparently. There's a 300px square in the middle of the screen that the _entire_ article is contained in. Everything else is just bullshit "interactive" chrome that's totally useless.
Sorry NYT, you're not worth the money you're constantly begging for. I love ad blocking.
But neither was anything else in this design, apparently. There's a 300px square in the middle of the screen that the _entire_ article is contained in. Everything else is just bullshit "interactive" chrome that's totally useless.
Sorry NYT, you're not worth the money you're constantly begging for. I love ad blocking.
Ctrl+Shift+r
Sounds like the rich women of silicon valley missed their opportunity. I don't see how that is men's fault.
Warning: interactive graphic that doesn't work under Safari on Mac.
This is a bad thing. It's the rich getting even richer off the labour of workers. It's an increasing small circle.
They aren't some visionary geniuses who went and founded lyft. They are just guys with money who know the right people.
They aren't some visionary geniuses who went and founded lyft. They are just guys with money who know the right people.
> It's the rich getting even richer off the labour of workers
We could also view it as the people who paid for all of their labor for years getting even richer, considering Lyft being unprofitable.
We could also view it as the people who paid for all of their labor for years getting even richer, considering Lyft being unprofitable.
Since they're the ones with the money, they're the ones who have to end up paying. If you give someone else the money, they'll pay people, and you can celebrate them instead. Or, we could not have an economic system based on the bizarre idea that certain people always get money whenever someone else does work.
> certain people always get money whenever someone else does work
The people who did work were paid by the investors for almost 7 years now (Lyft was founded in June 2012 and is unprofitable to this day), along with some equity.
If Lyft were to fail this year rather than IPO, the employees would walk away with 7 years of great salary and 7 years less of their working life. The investors would walk away with their money gone and wasted.
The people who did work were paid by the investors for almost 7 years now (Lyft was founded in June 2012 and is unprofitable to this day), along with some equity.
If Lyft were to fail this year rather than IPO, the employees would walk away with 7 years of great salary and 7 years less of their working life. The investors would walk away with their money gone and wasted.
anth_anm(1)
Right, and a small number of people grow ever more absurdly rich.
While others starve.
Society should not allow billionaires.
While others starve.
Society should not allow billionaires.
This is one way to look at it. Another, is that the capital contributions of these investors allowed Lyft to afford to pay very good salaries to a large number of employees to work on a societally important project despite the company continuously burning through a ton of their cash. These investors took a huge risk (and are still taking a huge risk given how unprofitable the company currently is) and it easily could have gone the other way and still could.
If these investors eventually exit profitably, some portion of their gain will be used to cover the losses of other bets they made that didn't work out while some will be given to society at large through taxes. These investors are a huge net positive for the world.
It's completely reasonable to hold the opinion that they'd be an even bigger net positive if we increased the capital gains tax or had an even more progressive tax system (and I'd agree with ya!). Don't get confused though, even with the system as is, having investors who are willing to spend their money on society changing bets that probably won't work out rather than using it on themselves to buy an island or whatever is a very good thing for us all (even if it results in them being a billionaire rather than a millionaire at the end of it).
If these investors eventually exit profitably, some portion of their gain will be used to cover the losses of other bets they made that didn't work out while some will be given to society at large through taxes. These investors are a huge net positive for the world.
It's completely reasonable to hold the opinion that they'd be an even bigger net positive if we increased the capital gains tax or had an even more progressive tax system (and I'd agree with ya!). Don't get confused though, even with the system as is, having investors who are willing to spend their money on society changing bets that probably won't work out rather than using it on themselves to buy an island or whatever is a very good thing for us all (even if it results in them being a billionaire rather than a millionaire at the end of it).
Even when they use their wealth to do good society couldn't organise itself around for decades?
(e.g. SpaceX of course)
(e.g. SpaceX of course)
What percentage of billionaires actually use their wealth this way?