something tells me all stars are aligning for a huge correction. real estate prices inflated beyond imaginable while wages bave been stagnant. almost a decade old tech companies not making any money valued in billions and an administration made up of moron wages war on issues that have no relation to the country. something tells me shit will collapse big time in Trump's last term and everything will be blamed on him and people who voted for him by the media and the elite. meanwhile the elite will have cashed in on all these ipos by having dumped overinflated stock of unicorns on middle class.
2020 will be a hell of a year
Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
61–70 of 163 posts
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#62something tells me all stars are aligning for a huge correction. real estate prices inflated beyond imaginable while wages bave been stagnant. almost a decade old tech companies not making any money valued in billions and an administration made up of moron wages war on issues that have no relation to the country. something tells me shit will collapse big time in Trump's last term and everything will be blamed on him…
The only problem with the "something tells me" line of reasoning is that it's always being espoused by someone. Literally at any point you can find people who feel the way you do. Good news is that if you keep it up you'll eventually be right for a little while.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#63Let’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)
An age-old question. If you look at Larry Ellison or Bill Gates, they would not be where their are without holding a whole lot of stock when the could have sold. Personally, in the case of your first liquidity event, it is a great time to take enough off the table to never have to worry about money again. Beyond that, it is a matter of risk tolerance and what you find entertaining.
Here are the wise words from the CEO of the first start-up that I worked at, which went public (but I was too junior to make much money): "Remember, at an IPO, the people that know the company best think that it is a very good time to be selling stock."
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#64Earlier 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...
thats 3.5 year old data (data started in FY Sept 2014) in a hugely changing and dynamic market, so basically not useful.
I work at Uber. We have publicly released financial statements each quarter. For q4 last year, our rides business was contribution margin positive (aka, it makes money). What loses money for us is R + D, and growth in new products (freight, eats, etc)
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#65Earlier quoted context omitted.
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.
You don't buy these companies to catch a temporary rising tide. Market timing is more often financial suicide, one of the worst mistakes amateur investors make.
You buy for the growth and long-term picture. If you believe in the growth potential, you buy in at an early opportunity.
ServiceNow's stock has gone up six fold in less than six years. Their revenue has climbed from $424m in 2013, to $1.93b in 2017. The last four quarters they've brought their burn rate down to meaningless while maintaining the growth, with immense gross profit margins that imply they'll likely become nicely profitable in the future.
That's a story not about rising tides, it's about the growth in the business and its future prospects.
Ask GE if rising tides lift all boats. Or AT&T, a functional, highly profitable business whose stock hasn't gone up in five years. Or Exxon, whose stock is down over five years. Or Procter & Gamble, which is still a thriving business, and whose stock also hasn't moved in five years. Those were all considered world-class blue chip stocks in the recent past.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#66Earlier quoted context omitted.
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.
Also, this is functionally equivalent to auto-selling RSUs and immediately repurchasing shares with the proceeds, from a tax perspective. RSUs should literally be treated like cash bonuses for public company employees - you should only keep the number of shares you would buy out of your paycheck.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#67Earlier quoted context omitted.
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.
There is one reason that it might behoove you to keep everything invested in the company you work for.
It may be that you have insider information that no one else knows.
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#68Earlier 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…
I had a friend lose almost everything in the dotcom crash by being solely invested in his employer. His advice exactly mirrored yours
I think it's very poor idea to own stock in your employer. This famously is highlighted by Enron encouraging it's employers to invest their retirement account disproportionately in enron stock. The employees that did lost their job and their retirement account at the same time. [0]
It's probably a less bad idea to own stock in a company you control on a managerial level (C level or on the board).
[0] https://www.nytimes.com/2001/11/22/business/employees-retire...
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#69Earlier quoted context omitted.
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.
[deleted]
Re: Silicon Valley Venture Capitalists Prepare for an I.P.O. Wave
#70Earlier 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.
And how will you verify that they are not taking commissions on the side in addition to your fees?