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

nytimes.com

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

#51

Post by mistermann »

sp527 wrote: post #35
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…

Isn’t that just a long-winded way of saying that early investors, who take on more risk, earn superior returns? As for the barriers to the general public investing in risky startups, that’s a feature not a bug. Look no further than dotcom 1.0 or the present day ICO market to understand why.

Not really, with initial and intermediate funding now being covered by deep pocketed VC's, the public no longer has the chance to invest in earlier stages of the development cycle.

Regardless of whether this is good or bad, it is different.

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

#52

Post by ggg9990 »

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…

Having ridden in thousands of cabs, and hundreds of Ubers, calling Uber a “taxi company with an app” is like calling an airplane a car with a crossbeam.

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

#53

Post by toast0 »

baron816 wrote: post #18

Let’s say the company you work for goes public and your stock is suddenly worth $1,000,000 (as an example). A wise investor, you normally put all of your other savings into broad market index funds. Now, do you sell your company’s stock that was given to you and took you four years to vest into, or do you hold on to it and hope the valuation keeps rising? (This is a rhetorical question btw)

Quite often, someone in this situation is going to also have more shares vesting over time. Even if you sell all you can on day 1, you will likely participate in future gains.

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

#55

Post by toephu2 »

adventured wrote: post #12
maxxxxx wrote: post #8

Earlier quoted context omitted.

I don't think these IPOs are designed to make profits for the rest of us.

That depends on what you're buying. Atlassian has tripled since the early days of its post IPO trading. Shopify is up 5-6 fold in two years. Square is up four fold in 2.x years. Baozun is up seven fold in 2.x years.

So?

A rising tide lifts all boats.

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

#56

Post by BurningFrog »

Retric wrote: post #7
BurningFrog wrote: post #4

Earlier quoted context omitted.

My impression is that Uber is making money of the rides. It loses money on all its other research and investment schemes. I don't know if there are any actual facts out?

No, "Uber passengers paid only 41% of the cost of their trips for the fiscal year ended in September 2015." Prices have not changed much since then, so they are a long way from break even. https://www.reuters.com/article/us-uber-profitability/true-p...

I just don't get where the money goes if that's true.

If I pay $10 for a ride, $7 goes to the driver, which covers all the cost for the car, gas, his wage etc.

$3 goes to Uber. What marginal costs do the have for my ride that are anywhere close to that?

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

#57

Post by praneshp »

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...

Cap gains is only on the stock's growth in the year after it vests. It's possible the stock doubles or more in a year, but generally unlikely.

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

#58

Post by danieltillett »

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…

The real question is why a company like Google is still giving stock to employees. The whole thing is a con at the expense of ignorant shareholders who somehow think all this dilution is not coming out of their pocket.

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

#59

Post by Buge »

allthenews wrote: post #6

So how do the "rest of us" profit from these IPOs?

As it becomes more profitable for VCs to invest in startups, they invest more and in more startups. Now that there are more startups and they have more money, they need to hire more software engineers, and have more resources to do so. So software engineer salaries go up.

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

#60

Post by s17n »

danieltillett wrote: post #58
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…

The real question is why a company like Google is still giving stock to employees. The whole thing is a con at the expense of ignorant shareholders who somehow think all this dilution is not coming out of their pocket.

Stock based compensation is reported as an expense in income statements, so, you're wrong.
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