Lyft's IPO Is Making the Same Circle of Men Rich, Again
nytimes.com
nytimes.com
I think saying this is disingenuous. It's not about good decisions. I bet if we looked at these people's portfolios it would be diversified to cover pretty much every bet. They are able to do this solely because they already have money. There is no good decision that me or you could make that would have the same outcome.
You can also make good decisions with your money, and bad ones. Those can pay off, or not.
This is pure rage-bait, and it's why I roll my eyes when tier I media like the NYT act shocked and surprised that fewer and fewer people trust them. I hate clickbait and fake news as much as everybody else, but the mainstream media has made its own bed, here.
[1] https://web.archive.org/web/20050404102748/http://www.stanfo...
If you need a significant fraction of a gigabuck every quarter, you don't ask where the money comes from.
My girlfriend bought his house on campus (Stanford gives tenured faculty assistance to buy houses on campus). As she's in a different field from me she was surprised to learn who he was. He would not have approved in her living there!
That said how much different is it than taking money from China or Saudi Arabia?
I'm not sure what the author's point is, here.
Because they gambled well.
I think the more important piece of information embedded in articles like these is the truth of how venture capital (and capitalism generally) works.
I know a couple of the people listed in the web of connections here. In general, I'd say they view their exceptional talents as responsible for their investment success. They are undoubtedly smart and capable people, but the key element in their success is that they get the first look at startup ideas and venture investments because of their social status in silicon valley.
Top VCs can't really outperform the market if forced to invest in a level playing field. They know this, so they focus more on the pedigree of deals than on the actual ideas. That's how you wind up with big-name people investing in frauds like Theranos and obvious con-jobs like U-Beam.
I don't see anything wrong with this necessarily, but it's worthwhile to point out what's really going on. That way, young entrepreneurs and budding venture capitalists know what they're getting into. The truth of the matter is, if you want a sure way to make money, you should join a firm who has this kind of access. Go work at Goldman Sachs or Kleiner Perkins.
If you eschew that path, realize that you are actually taking on far more risk than averages might imply, since you are choosing not to have the first look at ideas and deals. In fact, you'll likely do rather poorly.
Long history suggests the only way to consistently make money in a level playing field such as public markets is the Buffett way -- essentially using behavioral economics to bet against emotional mistakes made by market participants at market highs and lows.
From a policy perspective, I've long thought you could argue for a much higher capital-gains tax on any gains in excess of 20% per year on investments (more or less what Buffett has returned). The rationale is that such gains must have been generated by labor, luck, connections, or some combination of the three. This is not to suggest there is anything unsavory about such returns -- it's just that they are not broadly available.
Except the billionaires pay millions to ensure that doesn't happen. The system is corrupt by design.
In the US the following shows how much tax is being paid by whom:
https://www.bloomberg.com/news/articles/2018-10-14/top-3-of-...
The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent).
But neither was anything else in this design, apparently. There's a 300px square in the middle of the screen that the _entire_ article is contained in. Everything else is just bullshit "interactive" chrome that's totally useless.
Sorry NYT, you're not worth the money you're constantly begging for. I love ad blocking.
They aren't some visionary geniuses who went and founded lyft. They are just guys with money who know the right people.
We could also view it as the people who paid for all of their labor for years getting even richer, considering Lyft being unprofitable.
The people who did work were paid by the investors for almost 7 years now (Lyft was founded in June 2012 and is unprofitable to this day), along with some equity.
If Lyft were to fail this year rather than IPO, the employees would walk away with 7 years of great salary and 7 years less of their working life. The investors would walk away with their money gone and wasted.
While others starve.
Society should not allow billionaires.
(e.g. SpaceX of course)
If these investors eventually exit profitably, some portion of their gain will be used to cover the losses of other bets they made that didn't work out while some will be given to society at large through taxes. These investors are a huge net positive for the world.
It's completely reasonable to hold the opinion that they'd be an even bigger net positive if we increased the capital gains tax or had an even more progressive tax system (and I'd agree with ya!). Don't get confused though, even with the system as is, having investors who are willing to spend their money on society changing bets that probably won't work out rather than using it on themselves to buy an island or whatever is a very good thing for us all (even if it results in them being a billionaire rather than a millionaire at the end of it).