Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

nytimes.com

Post reply on HN
Print view View original

151–160 of 163 posts

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

#151

Post by danieltillett »

walshemj wrote: post #124
danieltillett wrote: post #120

Earlier quoted context omitted.

Not at all. I just think the employees should be paid in cash and not in shares as a way to hide the total compensation cost.

Ah so we should just tug our caps and be good little peasants and get above ourselves and say "thankee kindly master Frodo after saving the world ill just get right back to cutting the grass at bag end"

If you work at Google and you are paid in cash you can buy as much or as little of Google stock as you want. There is no rational reason (other than to fool ignorant shareholders) to pay part of your total compensation in company stock.

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

#152

Post by danieltillett »

s17n wrote: post #143
danieltillett wrote: post #107

Earlier quoted context omitted.

This is why I said ignorant shareholders.

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

In the long run this is true, but in the short run ignorant shareholders overlook the dilution and just focus on the reported cash profit.

I do say I find it interesting that people even think that if you are going to be paid $x in total compensation it is better to be paid $x-y cash and $y in stock. I guess this sort of magical thinking is why companies do it.

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

#153

Post by rhombocombus »

mbesto wrote: post #125
mathattack wrote: post #81

Earlier quoted context omitted.

#2 is the dominant point. One of the subtle points on diversification is that it's ok to take less returns if they are uncorrelated to your other investments - you want things that go up when your main investments go down. Even if you're 90% sure that Google will beat the market, you want protection for the 10% case. (And yes - your human capital will take the upside when Google continues to do well)

This is not investment advice - but the other personal finance protip I've learned is - don't put a high percentage of your high net worth in the success of your immediate work. This is why you see SV-elite raising rounds (Levchin - Affirm, Moskovitz - Asana, Williams - Medium, etc) and not just using their own capital. It feels very counterintuitive if you're a founder, because you likely made a large portion of you…

This reminds me of the number one rule I hear from old-money types: never touch the capital.

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

#154

Post by mamon »

TheCoelacanth wrote: post #140
jon_richards wrote: post #132

Earlier quoted context omitted.

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.

Are we suddenly living in some alternate universe where former Google engineers have any trouble finding a new job? They are after all top 1% (of the top 1% :) of the talent pool. So what you say might make sense for smaller/less respected companies, but certainly not for FAANG.

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

#155

Post by TheCoelacanth »

mamon wrote: post #154
TheCoelacanth wrote: post #140

Earlier quoted context omitted.

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.

Are we suddenly living in some alternate universe where former Google engineers have any trouble finding a new job? They are after all top 1% (of the top 1% :) of the talent pool. So what you say might make sense for smaller/less respected companies, but certainly not for FAANG.

You could have said the same thing about IBM or Enron at some point. Things can change.

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

#156

Post by walshemj »

danieltillett wrote: post #151
walshemj wrote: post #124

Earlier quoted context omitted.

Ah so we should just tug our caps and be good little peasants and get above ourselves and say "thankee kindly master Frodo after saving the world ill just get right back to cutting the grass at bag end"

If you work at Google and you are paid in cash you can buy as much or as little of Google stock as you want. There is no rational reason (other than to fool ignorant shareholders) to pay part of your total compensation in company stock.

Tax efficacy and a much better gearing also owning shares in your employer is a good thing both for the company and socially.

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

#157

Post by walshemj »

rpedela wrote: post #139
walshemj wrote: post #104

Earlier quoted context omitted.

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.

Yes but take Enron for example or any other value trap an index fund must buy those.

And the Massive buying of indexes bids up the price of shares like FANG's beyond the shares real value.

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

#158

Post by rpedela »

walshemj wrote: post #157
rpedela wrote: post #139

Earlier quoted context omitted.

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.

Yes but take Enron for example or any other value trap an index fund must buy those. And the Massive buying of indexes bids up the price of shares like FANG's beyond the shares real value.

On average, one company in the portfolio going bankrupt isn't going to make much of a difference assuming the portfolio is large enough. Most index funds have a large enough portfolio.

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

#159

Post by BurningFrog »

adventured wrote: post #96
BurningFrog wrote: post #56

Earlier quoted context omitted.

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?

16,000 employees. Salaries, benefits. Global facilities and infrastructure. Numerous exploratory business ventures, like Uber Eats. What you're saying is that you've never built a $10 billion sales, global corporation before. Which is very understandable, few have.

> Numerous exploratory business ventures

This is my original point!

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

#160

Post by s17n »

danieltillett wrote: post #152
s17n wrote: post #143

Earlier quoted context omitted.

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

In the long run this is true, but in the short run ignorant shareholders overlook the dilution and just focus on the reported cash profit. I do say I find it interesting that people even think that if you are going to be paid $x in total compensation it is better to be paid $x-y cash and $y in stock. I guess this sort of magical thinking is why companies do it.

That's what I'm saying, the "reported cash profit" includes stock-based compensation as an expense exactly like regular salaries. You don't even have to know what dilution means.
Post reply on HN