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Comment by cehrnrooth | Hacker News Reader

What are ways this can be bet on since these are non-public companies?

So far I've identified:

1. Commercial real estate. Could take a short position on any public companies (ex. CBRE) though they're likely too diversified to drive them down to zero.

2. Hiring. Could bet against LinkedIn? Most local recruiters / agencies are privately owned and the public ones are diversified.

3. Ancillary services. Seems like start-ups serving start-ups so there's no publicly available position to take.

4. Tax Revenue. Assuming a contraction, can you bet on local municipalities being short on budget / revenue with a smaller tax base?

Might be a fools errand to short these if the excess capacity can be picked up by all the behemoths (Google, Facebook, Apple).

I wouldn't dare take a short position on SF residential real-estate although outlying areas might see a larger contraction.

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Also, always keep in mind: "Markets can remain irrational longer than you can remain solvent." - Keynes.

Why not a bet on http://longbets.org/

Plenty of people are bullish on VC and Silicon Valley, and almost by definition have plenty of money to bet against you.

>What are ways this can be bet on since these are non-public companies?

Mirror in SF is building a platform for that:

https://mirror.co/

Disclaimer: I'm an advisor.

A short position on SF real estate is probably good from several angles: possibly overheated tech market, geographic diversification of the tech industry, and strong movements to build more residential capacity.

Geographic diversification of the industry seems to be a thing. A few years ago the major SF/SV VCs were pretty much restricted to investing in Bay Area companies only. Today I see a lot of non-Bay Area things in their portfolio. YC is a stubborn holdout here but in general I see the industry diversifying. The real estate costs are a factor-- in our own case moving to the Bay would about double our burn rate. That doubled burn rate would be going only to real estate (by way of higher salaries to afford it and higher office space costs).

Investors should just start cutting checks to real estate rentiers directly and bypass the middleman.

> strong movements to build more residential capacity.

Alas, you may be underestimating just how politically dysfunctional the Bay Area is.

...which is why the effort now is at a state level which takes it out of their hands. Then again, who's to say state politics are much better?

Shorting SF real estate seems like a really, really bad idea to me. There have been a lot of articles recently about the research that SF real estate has been going up 6.6% a year for 60+ years now. Of course, there have been some downturns along the way, but the only way to profit from these downturns with a short position is basically perfect timing. I'm sure someone will do it, get lucky, make a killing, and be the subject of lots of "look how smart this person was" articles, but we probably won't see any articles about the tons of people who tried to do the same thing, were unlucky with their timing, and lost their shirts.

I feel like you've pretty much described the entire industry.

Can you actually have a city where nobody $150k/year salary can actually afford to live there?

Of course your argument does boil down to the old "markets can defy reality longer than you can short them." Shorting is high risk.

as long as you have good public transportation to ship in the low skilled labor sure

Because people buying homes tend to not live alone. And 150k is pretty middle of the road for established tech workers in SF, so in reality you're looking at two people making 200k each.

400k/yr can buy you a home in the Bay Area easily.

I think I'd probably say it's possible rather than easily done. But why force young couples to ante up such a huge buy-in just for the opportunity to work at all the local companies? Even the YC partners are starting to point out, correctly I think, that expensive housing is becoming a significant headwind to Silicon Valley's future.

I like the idea of shorting LinkedIn. My main fear heat would be that someone would drive the price up by acquiring them if you wait too long with cashing in on the short.

Umm, LinkedIn is really too big to be acquired. LinkedIn acquires companies instead. They've recently acquired Lynda.com [1]

[1] https://www.crunchbase.com/organization/linkedin/acquisition...

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