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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

#141

Post by TheCoelacanth »

lev99 wrote: post #68
anitil wrote: post #38

Earlier quoted context omitted.

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.nyti…

Even for CEOs and board members diversification is a good idea. They are just limited in how much they can diversify because it looks bad if they sell too much of their stock.

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

#142

Post by mistermann »

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…

It's not true that it's different?

How might an individual know about and do some baseline reasonable due diligence on these opportunities as identically easily as he could with a publicly listed stock?

And why do VC's bother going through all the work, if the outcome is no different than if they'd simply have left things be as they were, with these companies getting funding from the public markets?

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

#143

Post by s17n »

danieltillett wrote: post #107
s17n wrote: post #60

Earlier quoted context omitted.

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

This is why I said ignorant shareholders.

To "ignorant" shareholders, there's no difference between stock and cash compensation.

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

#144

Post by s17n »

danieltillett wrote: post #119
walshemj wrote: post #111

Earlier quoted context omitted.

As opposed to the use of multiple share classes with different voting rights?

Well yes another con of the shareholders. Why shareholders invest in companies doing this sort of stuff is beyond me. It is not as though they are they actual owners of the business or anything.

I agree with you there (one reason I sell all my goog)

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

#145

Post by wil421 »

maxxxxx wrote: post #133
wil421 wrote: post #118

Earlier quoted context omitted.

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.

Here is a pretty decent article about 90s companies [1]. Didn’t realize CompuServe was owned by H&R Block.

[1]https://www.npr.org/sections/alltechconsidered/2016/07/25/48...

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

#146

Post by mgummelt »

wpietri wrote: post #131
mgummelt wrote: post #25

Earlier quoted context omitted.

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.

It's actually exactly the opposite. Google's most valuable data is the long tail, which is substantial in search, since they have some data for rare searches, whereas Bing as none.

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

#147

Post by charlesdm »

lev99 wrote: post #68
anitil wrote: post #38

Earlier quoted context omitted.

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.nyti…

Honestly, it depends. Generally you want to divest, but you would have been an idiot to divest Facebook stock, for example.

If you believe it's a great investment (which you might -- given you work there!) then keep the money in. You might understand the business better than other investors that are not working in the company because you have a better view of the market and/or the stuff that is being worked on. If not, sell and reinvest in a different asset.

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

#148

Post by ggg9990 »

walshemj wrote: post #106
ggg9990 wrote: post #52

Earlier quoted context omitted.

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.

You must have some pretty poor apps - my local one doesn't even need an app. In the UK when I call my normal cab company it knows where my phone is and asks you to press 1 to book a cab to my location - I then get a SMS confirming the booking another when the cab is dispatched and one when it arrives

I have never used an app to call a taxi. I used taxis for decades, and when Uber came out it was such a night and day difference that I have taken exactly one taxi in the last five years, when my phone battery was dead.

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

#149

Post by abalone »

jjeaff wrote: post #67
abalone wrote: post #47

Earlier quoted context omitted.

> 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.

That's fine. The question is not "are there good reasons to invest in your employer." It's "are you rational enough to treat $1M equity and $1M cash the same."

Also, it is uncontroversially a bad idea to invest "everything" you have in one company.

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