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Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

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Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#41

Post by zapita »

jayess wrote: post #37
frisco wrote: post #26

Earlier quoted context omitted.

> The short version is: retain a competent wealth manager to advise you. This is not good advice. "Wealth managers" are totally useless and exist just to charge you fees and create complexity. I really like mgummelt's comment above; it doesn't have to be more complicated than that!

Exactly. From personal experience, "wealth managers" are a scam. They're just below the scam scale from mortgage brokers and real estate agents.

You're thinking of people who charge you a management fee and try to "beat the market". I'm talking about people who charge you by the hour to explain to you how to manage your money. Maybe "financial advisor" is a better term?

Either way qualifying any form of professional counsel as "a scam" seems a bit excessive, and also bad avice.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#42

Post by zapita »

closeparen wrote: post #40
frisco wrote: post #26

Earlier quoted context omitted.

> The short version is: retain a competent wealth manager to advise you. This is not good advice. "Wealth managers" are totally useless and exist just to charge you fees and create complexity. I really like mgummelt's comment above; it doesn't have to be more complicated than that!

The recommendation is typically to use a "fee only" financial planner, who actually charges by the hour for advice instead of taking commissions on the products they sell you.

Exactly.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#43

Post by jgalt212 »

mgummelt wrote: post #22
jgalt212 wrote: post #17

Earlier quoted context omitted.

More users -> more data -> better product -> more users s/b More users -> more labeled data -> better product -> more users ML systems need lots of labeled data, not just lots of data. This is one of the primary why game playing AI's have had such great successes, tons of labeled data are relatively cheap. Great discourse on this and other related issues here: https://medium.com/@karpathy/alphago-in-context-c47718cb9…

Supervised learning requires labels. Unsupervised doesn't. Self driving cars use elements of both. This is why companies like Cruise and Tesla are rushing to get basic self driving cars out there. They need driving data.

Fair enough. I guess I'm in the camp that unsupervised learning is of limited utility.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#44

Post by realbarack »

rifung wrote: post #31
mgummelt wrote: post #24

Earlier quoted context omitted.

If you had $1MM in cash, how much of it would you use to buy the company's stock?

This exactly. I work at Google and it astonishes me how surprised people are when I tell them I use autosale, the company program where your stocks are sold immediately as they vest. They always ask "Don't you think Google stock is going to go up?" And I always reply that yes I do think it will go up but 1) that's not the right question to ask, you should ask whether it will go up more/less than anything else you cou…

You're missing an important caveat in number 1, which is the tax implications. You've got to compare selling immediately and paying regular income tax vs selling in a year and paying long term capital gains tax.

If you can beat that difference regularly in the market then you're probably in the wrong industry...

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#45

Post by maxxxxx »

matte_black wrote: post #36
mistermann wrote: post #15

Earlier quoted context omitted.

I've thought for quite some time that rather than the broader overall market being allowed to participate in the possibility of crazy gains from technology startups, the rise of the VC financing model has resulted in the lion's share of gains (and losses) going to an elite group of well connected people, and once the easiest money is made, let the market have what's left over in a traditional IPO. As you point out, t…

This is something you can believe only if you think the vast majority of startups are making these returns. The fact is the lions share of risk also goes to VCs. If you gave an average investor the kind of deal flow that big name VCs have access to you’d fry their central nervous system. YC, for all it’s prestige, has only had one startup actually IPO, and only recently. Can an average investor survive this kind of t…

An IPO is not the only way for VCs to make money. When a company raises money there is often a chance for the earlier investors to sell their shares to new investors. At the time time of the IPO they have already made a lot of money.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#46

Post by jhundal »

realbarack wrote: post #44
rifung wrote: post #31

Earlier quoted context omitted.

This exactly. I work at Google and it astonishes me how surprised people are when I tell them I use autosale, the company program where your stocks are sold immediately as they vest. They always ask "Don't you think Google stock is going to go up?" And I always reply that yes I do think it will go up but 1) that's not the right question to ask, you should ask whether it will go up more/less than anything else you cou…

You're missing an important caveat in number 1, which is the tax implications. You've got to compare selling immediately and paying regular income tax vs selling in a year and paying long term capital gains tax. If you can beat that difference regularly in the market then you're probably in the wrong industry...

When the stock units vest (or are exercised in the case of options), you are taxed on their current value at the regular income tax rates. What would be taxed at the long term capital gains rate are any gains that happen _after_ the stock is in your possession. The former component is likely the one that will dominate within the timespan of a year.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#47

Post by abalone »

YZF wrote: post #29
mgummelt wrote: post #24

Earlier quoted context omitted.

If you had $1MM in cash, how much of it would you use to buy the company's stock?

This is absolutely the right way to think about this. However if you have options the situation is different. There may also be tax considerations. Another variable is whether your personal effort materially affects the outcome for the company. If you think your work will dramatically increase the value of the company you may want to own more stock ... presumably though if this is the case it's already reflected in y…

> Another variable is whether your personal effort materially affects the outcome for the company.

Well no, the question supposes you work for the company in either case. If you held $1M in cash, would you invest it all in the company you work for because maybe you can affect the outcome? If not then probably you shouldn't hold onto $1M in equity... if you're perfectly rational that is.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#48

Post by whitepoplar »

rifung wrote: post #31
mgummelt wrote: post #24

Earlier quoted context omitted.

If you had $1MM in cash, how much of it would you use to buy the company's stock?

This exactly. I work at Google and it astonishes me how surprised people are when I tell them I use autosale, the company program where your stocks are sold immediately as they vest. They always ask "Don't you think Google stock is going to go up?" And I always reply that yes I do think it will go up but 1) that's not the right question to ask, you should ask whether it will go up more/less than anything else you cou…

Spot on re: 2. That might even extend to reducing exposure not just to Google, but to the entire asset class. If you're a Boglehead, one could simply reduce exposure to large growth stocks and increase exposure to small/large value stocks. That way, you reduce the correlation risk of losing your job and having your portfolio tank at the same time.

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#49

Post by AndrewGaspar »

xsmasher wrote: post #13
asabhi wrote: post #2

There are some good and some not so good among these companies. Uber is a taxi company with an app. Cars still cost the same as before to run, drivers still cost the same as before, all costs are the same as before. So once the subsidization by VCs stops, Uber rides will be as expensive as any other ride. Self-driving cars will not save Uber either. There is no network effect with self-driving cars, and once the tech…

Re: "all costs are the same as before" If you mean the same as running a Taxi, you're ignoring the higher prices caused by the artificial scarcity imposed by the medallion system, and ignoring the cost / fee for of the medallion itself. Uber could absolutely return some of that to the user in the form of lower prices than traditional taxis; and keep some for itself, of course.

Uber also has some efficiencies - its ability to pair customers and drivers makes robust taxi markets in a lot of places that wouldn't otherwise have them. (I honestly don't even know if my city has a traditional taxi company, but it definitely has Uber and Lyft)

Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave

#50

Post by dbasedweeb »

posix_compliant wrote: post #3
asabhi wrote: post #2

There are some good and some not so good among these companies. Uber is a taxi company with an app. Cars still cost the same as before to run, drivers still cost the same as before, all costs are the same as before. So once the subsidization by VCs stops, Uber rides will be as expensive as any other ride. Self-driving cars will not save Uber either. There is no network effect with self-driving cars, and once the tech…

I disagree. Uber facilitates the process of becoming a driver, therefore there will be a larger supply of drivers. I believe the price of a fare will decrease due to the increased competition.

Has Uber stopped operating at a massive loss, subsidizing every ride with VC cash? Fares are already artificially and unsustainably depressed, and without Lvl 5 automation (clearly not incoming soon) the fares eventually have to rise. Those fares will rise even more as driver backlash against how little they’re paid increases with time.
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