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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

#131

Post by wpietri »

mgummelt wrote: post #25
wpietri wrote: post #23

Earlier quoted context omitted.

Google isn't invulnerable in search because of a network effect, which is about your product becoming more valuable because you connect your users to your users (e.g., the Bell System or Facebook). Google is invulnerable in search because search has a very long tail, requiring massive investment to reach adequacy for most users. Google's advantage is economy of scale . Self-driving cars definitely don't have a networ…

Network effects are not limited to products that connect users. A network effect is when more usage increases the value of the product [1]. More Google users means more click data, which means better search ranking. But yes, Google also has scale economies. [1] https://en.m.wikipedia.org/wiki/Network_effect

I don't think that qualifies, as network effects keep increasing with the size of the network. Click data's value tails off pretty rapidly once you nail the top few things that people click on, which is the great bulk of the usage.

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

#132

Post by jon_richards »

slivym wrote: post #109
jon_richards wrote: post #99

Earlier quoted context omitted.

It's not like you're taking much career risk by working at google, so you don't really need to diversify it away. It's much more important for smaller companies.

The problem isn't how risky your career at Google is, it's about the correlation of that risk with the risk of your investments. The most likely risk of working at Google is if you lose your job. Well losing your job is highly correlated with whether Google lays loads of people off. Which is highly correlated with the share price collapsing. Which is highly correlated with the tech sector crashing. So most likely sce…

That's sort of my point. It pretty much takes the entire tech sector collapsing for you to lose your job and (the value of your) shares. Something to think about, but not even close to the same league as working for a ~200 person startup or putting money in the investment banking institution you work for.

I'll also admit there's no reason I know of to keep your money in google stock if you work there, but that goes with point #1, not point #2.

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

#133

Post by maxxxxx »

wil421 wrote: post #118
adventured wrote: post #65

Earlier quoted context omitted.

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…

Let’s not forgot Apple’s rise, fall, and post 2000 rise again. If you were young in the 80s, bought Apple, and planned to save it for retirement you would be sitting on a nice chunk right about now.

In the 90s there was also a very good chance for ending up with 0.

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

#134

Post by Retric »

tmh79 wrote: post #64
Retric wrote: post #7

Earlier quoted context omitted.

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)

I notice you don't actually provide actual data to make a point. Which destroys your argument.

41% is such a ludicrously large way from 110% you need some real data to back it up. Further pretending the start date is means the data is a full year older is silly. At best you can have 2 more years of fiscal data.

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

#135

Post by lovich »

rhlsthm wrote: post #128
mistermann wrote: post #51

Earlier quoted context omitted.

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 .

This isn't really true. If you actually wanted to and tried to put in early stage money, you could. Lots of startups raise their first few hundred K from "friends and family" type rounds and are usually readily looking for small investors to write small (25k or even less) checks. I would bet within a couple degrees of separation within your network you can find someone raising money for a project you're at least some…

How many of those people get pushed out by later VC money because they want to clear up the cap table?

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

#136

Post by Retric »

posix_compliant wrote: post #11
Retric wrote: post #5

Earlier quoted context omitted.

Amortization over say 20 fairs per day * 20 days a month * 12 months a year, reducing the cost by 1 cent per ride per ~50$ dollars in cost savings. Suggests it's just not a meaningful savings.

Where are you getting the 1 cent reduction quantity? My only point was that a greater supply of drivers could yield a lower price, but I never asserted to what degree the price would decrease.

Increasing costs to add a driver does not prevent company's from adding new drivers it just makes that more expensive. Thus, you need to consider it as another form of cost savings not a difference in the number of drivers.

A company that pays 50$ less to get an employee can reduce fairs on the order of 1 cent or make an extra 1 cent per ride. It's possible Uber might add a few cents per ride this way, but it's not particularly significant even assuming the average driver does not last that long.

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

#138

Post by dominotw »

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…

Where do you invest that money subsequently.

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

#139

Post by rpedela »

walshemj wrote: post #104
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)

Not sure a wise investor would 100% use "index" funds especially one with such a large > 1M portfolio. At that level you would need to look at diversification both on a geographical and sector level. In the UK I would of course sell enough to use up my CGT allowance - you can also move up to 20k£ into an ISA to put the shares beyond tax for CGT and Dividend Tax

Index funds are already diversified. When you invest in one, you are betting that the entire economy or a sector of the economy, depending on the index fund, will increase in value.

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

#140

Post by TheCoelacanth »

jon_richards wrote: post #132
slivym wrote: post #109

Earlier quoted context omitted.

The problem isn't how risky your career at Google is, it's about the correlation of that risk with the risk of your investments. The most likely risk of working at Google is if you lose your job. Well losing your job is highly correlated with whether Google lays loads of people off. Which is highly correlated with the share price collapsing. Which is highly correlated with the tech sector crashing. So most likely sce…

That's sort of my point. It pretty much takes the entire tech sector collapsing for you to lose your job and (the value of your) shares. Something to think about, but not even close to the same league as working for a ~200 person startup or putting money in the investment banking institution you work for. I'll also admit there's no reason I know of to keep your money in google stock if you work there, but that goes w…

The entire tech sector doesn't have to collapse for Google stock to go down and for Google to need to lay people off. Google could easily become the next IBM and fail to keep up with rest of the industry or even worse it might become the next Enron and be completely destroyed by bad leadership. Both IBM and Enron were extremely successful companies in their day.
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